Raising the BarRaising the BarFannie Mae begins to look more closely effective January 28, 2012

Ginger Lord, Senior Vice President, Quality Assurance and Training

Natalie Thompson, Vice President, Residential Quality Assurance Tracey Yarbrough, Vice President, IT and Special Projects

Stronger position on enforcing the proper UAD format.

Begin use of appraisal data collected in over 4,000,000 UAD-format reports received by Fannie Mae since September 2011.• Changes effective

January 28, 2013.

Focus on UAD & Quality of Data in Appraisals

Focus will be on using information in these 4 million appraisals to issue “warnings” for a report or prevent delivery regarding specific warnings or “hardstops”. (“Appraisal Message Warnings”)

Begin use of same data for assessing the content of appraisal work.

Fannie Mae will begin reviewing 100% of appraisals submitted prior to purchasing a loan.

January 28, 2013.

More Than UAD Format; Beginning of Analyzing the Content for Reasonableness.

1. Data reasonableness

2. Adjustments

3. Comparables

• Certain areas of a report’s content will now being analyzed and compared to a database of market data Fannie Mae has collected since 4. Policy Compliance

5. Property eligibility (types of property eligible for a Fannie Mae loan)

Mae has collected since September 2011 when the UAD format became mandatory for their appraisals.

There Are Still “Unknowns”

Tolerances - Fannie Mae has established tolerances – they consider proprietary and, at present, indicate they do not plan to share what these tolerance benchmarks are.

• “The Fannie Mae Proprietary messaging covers the following categories: data reasonableness, adjustments,

Criteria for Hard Stops – No information is yet available on what, exactly, will become a hard stop issue. It is said that there is a “short list”.

Lenders Reactions to Warning Messages – All we can address are what to expect from our mutual clients.

adjustments, comparables, policy compliance, and property eligibility.”

Content of the Appraisal Report is the Added Focus

Content is now subject to comparison with what your peers are doing that work in the same market.

• Fannie Mae asserts that the rules and messaging were developed to offer feedback to lenders on the quality of the appraisal data submitted Any comparables used, condition and

quality ratings used , and adjustments and/or amounts of adjustments will now be compared to what the majority of what peers are doing in appraisals in the same market area.

Clients will expect these warnings to addressed and resolved if they believe that Fannie Mae will not accept the appraisal (and ultimately purchase the loan.)

appraisal data submitted to either “both GSEs” or Fannie Mae only through Uniform Collateral Data Port (‘UCDP’).

Fannie Mae indicates to Lenders that…..

These messages were created to assist underwriters in identifying significant market data issues in appraisals, Fannie Mae policy issues, or the eligibility of a property to qualify for a Fannie Mae loan.

A warning message does not necessarily • Impact of Fannie Mae

Appraisal Messaging –A warning message does not necessarily mean that an appraisal is unacceptable – a message may flag that an appraiser is adjusting appropriately or may highlight key issues such as a value conclusion being subject to completion.

They say it is also important for lenders to note that lack of warning message does not necessary infer their acceptance of an appraisal and that lenders are responsible for the accuracy of the appraisals they submit.

Appraisal Messaging –What Do These Warning Messages Mean for Appraisers?

Sample “SSR” Successful Submission Report (top p. 1)

Sample “SSR” Successful Submission Report (top p. 1)

Sample “SSR” Successful Submission Report (top p. 2)

Sample “SSR” Successful Submission Report (p. 3)

Example of a monthly report sent to a client on most frequently “fired” Fannie Mae Proprietary Messages in December 2012:

Category Section Message

Adjustments SALES COMPARISON APPROACH FNM0135:View adjustment for comparable property #[] is smaller than expected.

Data Reasonableness SALES COMPARISON APPROACH FNM0045:The property address could not be confirmed with USPS for comparable property #[].

Adjustments SALES COMPARISON APPROACH FNM0134:Location adjustment for comparable property #[] is smaller than expected.

Comparables SALES COMPARISON APPROACH FNM0163:Gross living area for comparable property #[] is significantly different from the subject property.

Adjustments SALES COMPARISON APPROACH FNM0130:Number of line adjustments appears excessive for comparable property #[]. FNM0134: Location adjustment

Adjustments SALES COMPARISON APPROACH FNM0130:Number of line adjustments appears excessive for comparable property #[].

Comparables SALES COMPARISON APPROACH FNM0160:Comparable property #[]'s proximity to subject property is farther than expected.

Property Eligibility RECONCILIATION FNM0100:At least one of the subject to boxes is checked. The lender must obtain a certificate of completion, stating the nature of the subject to issue has been resolved before loan delivery.

Comparables SALES COMPARISON APPROACH FNM0164:Number of bedrooms for comparable property #[] is significantly different from the subject property.

Adjustments SALES COMPARISON APPROACH FNM0132:Gross living area is significantly different from the subject property with no adjustment amount for comparable property #[].

Comparables SALES COMPARISON APPROACH FNM0161:Property age for comparable property #[] is significantly different from the subject property.

FNM0134: Location adjustment for comparable property #__ is

smaller than expected.

General Tips for Day-to-Day Business

• Beware of the issues created if the delivery date of the appraisal report & possible value conclusions are discussed with property owners or borrowers!

• Also beware of issue created for clients when you may make a comment about a client’s requirements for appraisal reports.client’s requirements for appraisal reports.

• Neglect to report to us any issues you feel violate appraiser independence, receive undue pressure from a loan officer, property owner, borrower, etc.

• Please keep the status on every job up to date. Doing so is the most efficient and effective way to communicate to you client(s)!