Fannie Mae
329) Fannie/Freddie/Andrew Cuomo Agreement
05/29/08
Hello Mr. Harrison,
What is your opinion regarding the Fannie/Freddie/Andrew Cuomo activity?
Anna Richardson richardson313808@bellsouth.net
Dear Anna,
The editorial in the current Spring 2008 issue of Real Estate Valuation Magazine - online at www.revmag.com - expresses in detail how I feel.
H2
What is your opinion regarding the Fannie/Freddie/Andrew Cuomo activity?
Anna Richardson richardson313808@bellsouth.net
Dear Anna,
The editorial in the current Spring 2008 issue of Real Estate Valuation Magazine - online at www.revmag.com - expresses in detail how I feel.
H2
309) Fannie/Freddie Changes
05/05/08
Hi Henry,
I've just had a moment to stop and read your recent questions and answers - which I always look forward to. I'm actually writing to express my frustration over the results that the Fannie/Freddie changes have bestowed upon us to date. Our largest client (which we have worked with for many years) just switched to ServiceLink, an appraisal management company, to avoid any appearance of lender pressure.....and what a horror it has become. We are in a resort area in southwest Florida and have enjoyed reasonable appraisal fees over the years. We were just contacted by this management company only to be informed that their #1 rated appraiser in one of our counties that we provide service to is being paid $170 per report and the highest fee paid is $225. Do you think that they are going to draw the "top of the line" appraisers at these fees?
Prior to approval, they feel the need to check your criminal background as well to explore your credit status. We are fingerprinted here in Florida, so they would know if we were criminals and our credit has nothing to do with an appraisal report. I hope that helps those appraisers that wonder if our industry will be damaged or destroyed. There's no doubt in my mind....as we are already living the nightmare.
Thanks for letting me vent. I've been in this business for almost twenty years and this is the hardest hit we've come across yet. What do you think about this whole mess?
Carol M. Krakoff krakoff@mindspring.com
Dear Carol,
I agree with much of what you say. See my editorial in the new SPRING 2008 issue of REV Magazine. It will be posted on our website shortly -- probably by the time you read this online. [Click here: Henry's Editorial: www.revmag.com/spring2008/04.html )
Many lenders are considering changing to management companies and this is certainly going to affect many appraisers. There is no simple answer to this problem.
H2
I've just had a moment to stop and read your recent questions and answers - which I always look forward to. I'm actually writing to express my frustration over the results that the Fannie/Freddie changes have bestowed upon us to date. Our largest client (which we have worked with for many years) just switched to ServiceLink, an appraisal management company, to avoid any appearance of lender pressure.....and what a horror it has become. We are in a resort area in southwest Florida and have enjoyed reasonable appraisal fees over the years. We were just contacted by this management company only to be informed that their #1 rated appraiser in one of our counties that we provide service to is being paid $170 per report and the highest fee paid is $225. Do you think that they are going to draw the "top of the line" appraisers at these fees?
Prior to approval, they feel the need to check your criminal background as well to explore your credit status. We are fingerprinted here in Florida, so they would know if we were criminals and our credit has nothing to do with an appraisal report. I hope that helps those appraisers that wonder if our industry will be damaged or destroyed. There's no doubt in my mind....as we are already living the nightmare.
Thanks for letting me vent. I've been in this business for almost twenty years and this is the hardest hit we've come across yet. What do you think about this whole mess?
Carol M. Krakoff krakoff@mindspring.com
Dear Carol,
I agree with much of what you say. See my editorial in the new SPRING 2008 issue of REV Magazine. It will be posted on our website shortly -- probably by the time you read this online. [Click here: Henry's Editorial: www.revmag.com/spring2008/04.html )
Many lenders are considering changing to management companies and this is certainly going to affect many appraisers. There is no simple answer to this problem.
H2
292) Agricultural Property
04/05/08
Dear Henry,
Regarding the question on agricultural properties, I believe the regulations are in regard to use and not zoning. In our market, many properties have some additional acreage, are in an AG zone, are not farms and are accepted by Fannie and Freddie.
Regards,
James T Scholl jamestscholl@yahoo.com
Dear James,
It is not really the appraiser's problem to determine if a mortgage is eligible for purchase by Fannie Mae or Freddie Mac. However, when a lot is large and the zoning is agricultural, it is helpful to your client to make it very clear how the property is being used and what the highest and best use is.
H2
Regarding the question on agricultural properties, I believe the regulations are in regard to use and not zoning. In our market, many properties have some additional acreage, are in an AG zone, are not farms and are accepted by Fannie and Freddie.
Regards,
James T Scholl jamestscholl@yahoo.com
Dear James,
It is not really the appraiser's problem to determine if a mortgage is eligible for purchase by Fannie Mae or Freddie Mac. However, when a lot is large and the zoning is agricultural, it is helpful to your client to make it very clear how the property is being used and what the highest and best use is.
H2
282) Fannie & Freddie's NEW RULES
03/26/08
Dear Henry,
What is your opinion on the new agreement reached between OFHEO, Fannie Mae, Freddy Mac and Mr. Cuomo, the NY State Attorney General? Will this much needed agreement equal better fees and more work? Is this the end of AMCs? Will other states follow?
Richard Gomez RG67@bellsouth.net
- - -
Dear Henry,
It this new Code of Conduct just more of the same "pass the problem on to the Appraisers?" I see no penalities for the lenders (for coercion)....
Dave Hanson Hanson@boscgi0604.eigbox.net
- - -
Dear Henry,
I am confused. Is it true that Fannie Mae and Freddie Mac will have to obtain appraisals from independent fee aprpaisers, not in-house appraisers or appraisers working for AMC's? Is this new agreement going to apply nationwide? Please clarify.
Thanks,
Rick Daniel rickdan@erols.com
- - -
Hi Henry!
What is your opinion of the new developments with Fannie Mae & Freddie Mac regarding the ordering of appraisals in 2009? Many of my colleagues feel that this is the end of their profession because the new requirements will force us to seek out AMCs to belong to...in hopes of getting some appraisals now and then. Also, to go along with having to seek out AMC's or try and get on lenders lists, do you think we face having our fees slashed again? It costs a small fortune being an appraiser what with having to belong to an MLS board, upgrade software, CE, licensing...the list goes on and on. Please state your opinion of these new developments.
Sincerely,
Mary karmtra@gmail.com
- - -
Dear Henry,
Just finished going through the new Fannie/Freddie guidelines. Appraising residential real estate in the Houston market for the last 32 years, I know that the "devil is in the details". Not all is as seems. What are the repercussions of this policy change for appraisers?
Thomas Ponce, MRA thomas@theponcegroup.com
- - -
Dear Friends,
As you can imagine, I have received many questions similar to the ones above. regarding the new Fannie/Freddie regulations. I think this agreement is a big step in the right direction but it is far from perfect. It is going to take some time to really understand all its implications.
Also there is a 45 day comment period which began on March 14th and goes through April 30th, after which the agreement may be changed.
Many appraisers tell me they are afraid they will lose work because of it, which is very possible. On the other hand, it may produce a lot more appraisal business. It seems to be the intent of the agreement to stop lenders and their representatives from putting pressure on appraisers to "make the number."
So far, based on the mail that I receive, little that has been tried in the past has worked very well. Maybe it will be different this time. It is not at all clear to me how the new proposed national complaint investigating agency that will be created as a result of this agreement, will work. What puzzles me is how this function, which is in the hands of the 50 state appraisal commissions, is going to be taken over by a new organization without a change in Federal legislation.
I have received many comments that this will be the end of AMCs. I find this hard to believe. Others have asked if this will end Fannie Mae's Desktop Underwriting program. I don't know. I am very interested to hear from appraisers who can add to our understanding of how they think this will all work.
Here are some of the most frequently asked questions on this subject and my "take" on the situation:
Can the lender use an in house appraiser to make a mortgage appraisal? No, but they can use them to review appraisals and a variety of other functions.
Can the lender use an appraisal management company? Yes - as long as it is independent of the lender as described above.
Can AVMs be used? Nothing has changed in this regard.
Who is responsible for paying the appraiser? The lender or the appraisal management company.
Can settlement service companies order appraisals? No.
Who can make appraisals? The settlement does not address this; therefore I assume it is up to the state and the AQB as before.
When will this go into effect? Not later than January 1, 2009. It is possible that Fannie Mae and Freddie Mac will issue regulations sooner.
Is this all cut in stone? No - there is a 45 day comment period currently in effect (March 14th - April 30th), after which anything can be changed. REV Magazine is sending out an email later today (March 28th) telling you when and how you can comment.
H2
What is your opinion on the new agreement reached between OFHEO, Fannie Mae, Freddy Mac and Mr. Cuomo, the NY State Attorney General? Will this much needed agreement equal better fees and more work? Is this the end of AMCs? Will other states follow?
Richard Gomez RG67@bellsouth.net
- - -
Dear Henry,
It this new Code of Conduct just more of the same "pass the problem on to the Appraisers?" I see no penalities for the lenders (for coercion)....
Dave Hanson Hanson@boscgi0604.eigbox.net
- - -
Dear Henry,
I am confused. Is it true that Fannie Mae and Freddie Mac will have to obtain appraisals from independent fee aprpaisers, not in-house appraisers or appraisers working for AMC's? Is this new agreement going to apply nationwide? Please clarify.
Thanks,
Rick Daniel rickdan@erols.com
- - -
Hi Henry!
What is your opinion of the new developments with Fannie Mae & Freddie Mac regarding the ordering of appraisals in 2009? Many of my colleagues feel that this is the end of their profession because the new requirements will force us to seek out AMCs to belong to...in hopes of getting some appraisals now and then. Also, to go along with having to seek out AMC's or try and get on lenders lists, do you think we face having our fees slashed again? It costs a small fortune being an appraiser what with having to belong to an MLS board, upgrade software, CE, licensing...the list goes on and on. Please state your opinion of these new developments.
Sincerely,
Mary karmtra@gmail.com
- - -
Dear Henry,
Just finished going through the new Fannie/Freddie guidelines. Appraising residential real estate in the Houston market for the last 32 years, I know that the "devil is in the details". Not all is as seems. What are the repercussions of this policy change for appraisers?
Thomas Ponce, MRA thomas@theponcegroup.com
- - -
Dear Friends,
As you can imagine, I have received many questions similar to the ones above. regarding the new Fannie/Freddie regulations. I think this agreement is a big step in the right direction but it is far from perfect. It is going to take some time to really understand all its implications.
Also there is a 45 day comment period which began on March 14th and goes through April 30th, after which the agreement may be changed.
Many appraisers tell me they are afraid they will lose work because of it, which is very possible. On the other hand, it may produce a lot more appraisal business. It seems to be the intent of the agreement to stop lenders and their representatives from putting pressure on appraisers to "make the number."
So far, based on the mail that I receive, little that has been tried in the past has worked very well. Maybe it will be different this time. It is not at all clear to me how the new proposed national complaint investigating agency that will be created as a result of this agreement, will work. What puzzles me is how this function, which is in the hands of the 50 state appraisal commissions, is going to be taken over by a new organization without a change in Federal legislation.
I have received many comments that this will be the end of AMCs. I find this hard to believe. Others have asked if this will end Fannie Mae's Desktop Underwriting program. I don't know. I am very interested to hear from appraisers who can add to our understanding of how they think this will all work.
Here are some of the most frequently asked questions on this subject and my "take" on the situation:
Can the lender use an in house appraiser to make a mortgage appraisal? No, but they can use them to review appraisals and a variety of other functions.
Can the lender use an appraisal management company? Yes - as long as it is independent of the lender as described above.
Can AVMs be used? Nothing has changed in this regard.
Who is responsible for paying the appraiser? The lender or the appraisal management company.
Can settlement service companies order appraisals? No.
Who can make appraisals? The settlement does not address this; therefore I assume it is up to the state and the AQB as before.
When will this go into effect? Not later than January 1, 2009. It is possible that Fannie Mae and Freddie Mac will issue regulations sooner.
Is this all cut in stone? No - there is a 45 day comment period currently in effect (March 14th - April 30th), after which anything can be changed. REV Magazine is sending out an email later today (March 28th) telling you when and how you can comment.
H2
260) Agricultural Property & Freddie Mac
03/05/08
Dear Henry,
My subject property is zoned Agricultural/conservation (7 acres). Would this be a problem for sale to Freddie Mac?
Name Withheld by Request
Dear Friend,
Yes. Agricultural properties are a specific exclusion from Fannie Mae's or Freddie Mac's portfolio acquisitions.
H2
My subject property is zoned Agricultural/conservation (7 acres). Would this be a problem for sale to Freddie Mac?
Name Withheld by Request
Dear Friend,
Yes. Agricultural properties are a specific exclusion from Fannie Mae's or Freddie Mac's portfolio acquisitions.
H2
210) Fannie Approved Appraiser
01/14/08
Dear Henry,
I have a potential new client, a local bank, asking me if I'm "Fannie Mae approved". I am State Certified in Wisconsin and FHA approved. I have never been asked this before. Is this something new or just a bank not knowing what to ask for?
Thanks
Name Withheld By Request
Dear Friend,
Fannie Mae does not approve appraisers.
H2
I have a potential new client, a local bank, asking me if I'm "Fannie Mae approved". I am State Certified in Wisconsin and FHA approved. I have never been asked this before. Is this something new or just a bank not knowing what to ask for?
Thanks
Name Withheld By Request
Dear Friend,
Fannie Mae does not approve appraisers.
H2
171) Using Fannie Mae Forms
12/02/07
Dear Henry,
I am writing in response to Question #158 on this website. I too have spoken with many appraisers and USPAP instructors in regards to the question posed and I believe your response is incorrect.
Fannie Mae's new forms are for Mortgage finance transactions only. They were not developed as general purpose forms as the old forms were. Fannie Mae clearly states that their forms and use cannot be modified. The only exception is to certification #23. If an appraiser were to modify a new Fannie Mae form then they are in violation of Fannie Mae's copyright. Since an appraiser's scope of work requires an appraiser to meet the supplemental standards of the appraisal reporting form, the appraiser would be violating Fannie Mae's copyright -- thus violating the supplemental standards provision of USPAP.
If the nature of an assignment is for anything besides a mortgage finance transaction then the appraiser must complete the assignment on an old Fannie Mae form or on a general purpose form (Appraisal Institute Form, ACI or alamode general purpose form, etc..)
I know many appraisers who simply give the client what they want: they complete an appraisal report on a new Fannie Mae form for an assignment whose purpose is nott a mortgage finance transaction and in the process are unknowingly violating Fannie Mae's copyright and USPAP. What are your thoughts?
Ed Bedinotti efb803@aol.com
Dear Ed,
I am not a copyright lawyer. However, I do have my doubts about whether Fannie Mae has a valid copyright on their forms. Even if they did, I have never heard of them trying to enforce it.
Many appraisers do use the current version of the Fannie Mae form for other purposes. In order to do so, they must make several significant changes to it, which I think can be confusing to the client. In most cases I would agree that it is better to use these forms only for Fannie Mae work, and to find other forms for non-mortgage related appraisals.
H2
I am writing in response to Question #158 on this website. I too have spoken with many appraisers and USPAP instructors in regards to the question posed and I believe your response is incorrect.
Fannie Mae's new forms are for Mortgage finance transactions only. They were not developed as general purpose forms as the old forms were. Fannie Mae clearly states that their forms and use cannot be modified. The only exception is to certification #23. If an appraiser were to modify a new Fannie Mae form then they are in violation of Fannie Mae's copyright. Since an appraiser's scope of work requires an appraiser to meet the supplemental standards of the appraisal reporting form, the appraiser would be violating Fannie Mae's copyright -- thus violating the supplemental standards provision of USPAP.
If the nature of an assignment is for anything besides a mortgage finance transaction then the appraiser must complete the assignment on an old Fannie Mae form or on a general purpose form (Appraisal Institute Form, ACI or alamode general purpose form, etc..)
I know many appraisers who simply give the client what they want: they complete an appraisal report on a new Fannie Mae form for an assignment whose purpose is nott a mortgage finance transaction and in the process are unknowingly violating Fannie Mae's copyright and USPAP. What are your thoughts?
Ed Bedinotti efb803@aol.com
Dear Ed,
I am not a copyright lawyer. However, I do have my doubts about whether Fannie Mae has a valid copyright on their forms. Even if they did, I have never heard of them trying to enforce it.
Many appraisers do use the current version of the Fannie Mae form for other purposes. In order to do so, they must make several significant changes to it, which I think can be confusing to the client. In most cases I would agree that it is better to use these forms only for Fannie Mae work, and to find other forms for non-mortgage related appraisals.
H2
136) Altering Fannie Forms
10/26/07
Dear Mr. Harrison,
Is the use of any of the new Fannie Mae forms for a use other than a federally regulated mortgage a violation of USPAP? If so, what is violated?
Randy Davis rdavis7772@chartermi.net
Dear Randy,
As I have explained before, I do not believe there is anything in the USPAP covering the use of a Fannie Mae/Freddie Mac form as long as you make all the needed changes to the forms so that they fit your situation and your client is agreeable to the use of the forms in question.
You may not make any changes to the form when you do work for Fannie or Freddie using these forms, due to their Scope of Work requirements.
H2
Is the use of any of the new Fannie Mae forms for a use other than a federally regulated mortgage a violation of USPAP? If so, what is violated?
Randy Davis rdavis7772@chartermi.net
Dear Randy,
As I have explained before, I do not believe there is anything in the USPAP covering the use of a Fannie Mae/Freddie Mac form as long as you make all the needed changes to the forms so that they fit your situation and your client is agreeable to the use of the forms in question.
You may not make any changes to the form when you do work for Fannie or Freddie using these forms, due to their Scope of Work requirements.
H2
62) Free Fannie Mae Guidelines
03/07/07
HI HENRY,
WHERE CAN I DOWNLOAD THE FANNIE MAE GUIDELINES?
THANK-YOU
Pegggy Reicher preicher@comcast.net
Dear Peggy,
The single family Fannie Mae Guidelines may be downloaded free at www.AllRegs.com
They also have the other Guidelines but there is a fee for these.
Sincerely,
H2
WHERE CAN I DOWNLOAD THE FANNIE MAE GUIDELINES?
THANK-YOU
Pegggy Reicher preicher@comcast.net
Dear Peggy,
The single family Fannie Mae Guidelines may be downloaded free at www.AllRegs.com
They also have the other Guidelines but there is a fee for these.
Sincerely,
H2
47) Fannie Mae Guidelines
02/07/07
Dear Henry,
I would like to find out where it is possible to get a copy of the new Fannie Mae guidelines. I do have your new 1004 form book and it has gotten me to complete my appraisal reports in a totally different way. [EDITOR'S NOTE: Harrison's Illustrated Guide to the 2005 URAR Form is available from Forms and Worms. Call 1-800-243-4545 or go on their website: www.formsandworms.com]
Thank you!
Jeff Miller millerappraisals@earthlink.net
Dear Jeff,
I believe you can purchase them from Fannie Mae at www.efanniemae.com What you are looking for is the Seller's Guide. It is quite expensive however.
H2
I would like to find out where it is possible to get a copy of the new Fannie Mae guidelines. I do have your new 1004 form book and it has gotten me to complete my appraisal reports in a totally different way. [EDITOR'S NOTE: Harrison's Illustrated Guide to the 2005 URAR Form is available from Forms and Worms. Call 1-800-243-4545 or go on their website: www.formsandworms.com]
Thank you!
Jeff Miller millerappraisals@earthlink.net
Dear Jeff,
I believe you can purchase them from Fannie Mae at www.efanniemae.com What you are looking for is the Seller's Guide. It is quite expensive however.
H2
1) Cost Approach Clarification
10/09/06
Dear Henry,
On Page 8 of the Winter 06 issue of REV, you say Fannie Mae has “eliminated the cost and income approach.” This is not true; all approaches to value must be considered. By what you said, you are telling appraisers to not do the cost approach because Fannie Mae has eliminated it from their 2005 forms. Telling appraisers who don’t have much experience that you don’t have to do it is misleading. They may get into real hot water. All approaches to value must be considered when making an appraisal. If, in the best judgment of the appraiser, one of the approaches is not necessary to produce a “credible appraisal” it may be omitted. The cost approach to value is the only way you can get true depreciation from the market. My most knowledgeable clients want a detailed appraisal that includes the cost approach.
Brian Lucas btlreapp@charter.net
Dear Brian,
I agree: our article was misleading regarding the implications of Freddie Mac and Fannie Mae excluding the cost and income approaches from their scope of work requirements. See the Fall 2006 issue of REV [www.revmag.com] for a detailed article on the subject of determining depreciation via extraction from the market. In it we stress that it is the appraiser’s responsibility, in consultation with their client, to determine what has to be done to make a credible appraisal. While Fannie Mae and Freddie Mac do not require either thet approach or income approach in their scope of work, there are two reasons you may use one or both of these approaches: (1) The client wants you to, and/or (2) you decide it is needed to make the appraisal credible.
Sincerely,
H2
On Page 8 of the Winter 06 issue of REV, you say Fannie Mae has “eliminated the cost and income approach.” This is not true; all approaches to value must be considered. By what you said, you are telling appraisers to not do the cost approach because Fannie Mae has eliminated it from their 2005 forms. Telling appraisers who don’t have much experience that you don’t have to do it is misleading. They may get into real hot water. All approaches to value must be considered when making an appraisal. If, in the best judgment of the appraiser, one of the approaches is not necessary to produce a “credible appraisal” it may be omitted. The cost approach to value is the only way you can get true depreciation from the market. My most knowledgeable clients want a detailed appraisal that includes the cost approach.
Brian Lucas btlreapp@charter.net
Dear Brian,
I agree: our article was misleading regarding the implications of Freddie Mac and Fannie Mae excluding the cost and income approaches from their scope of work requirements. See the Fall 2006 issue of REV [www.revmag.com] for a detailed article on the subject of determining depreciation via extraction from the market. In it we stress that it is the appraiser’s responsibility, in consultation with their client, to determine what has to be done to make a credible appraisal. While Fannie Mae and Freddie Mac do not require either thet approach or income approach in their scope of work, there are two reasons you may use one or both of these approaches: (1) The client wants you to, and/or (2) you decide it is needed to make the appraisal credible.
Sincerely,
H2