Major Appraisal Changes Coming, Again

It seems like an annual tradition at this point, but brace yourself as major appraisal changes are headed to the mortgage industry again.  The Uniform Appraisal Dataset (UAD) is a set of new reporting requirements that will be going into effect on September 1st for all single-family mortgage loans delivered to Fannie Mae and Freddie Mac, so this affects all Conventional loans.  The word on the street is that FHA plans to follow suit shortly after this goes into effect, so it appears these changes will apply to all loan types moving forward except VA.  The stated goal of the changes is to make sure that appraisals are conducted and communicated consistently, accurately, and effectively.  The reality is that these changes are going to greatly impact the flow of business at seemingly just the wrong time as appraisers and lenders are already terribly busy right now as the super low rates have created a surge in refinances.  The significant appraisal changes will include the following:

  • New appraisal forms
  • New appraisal methodology, terminology,  and coding (more details on this in the last paragraph below)
  • Stricter compliance requirements due to increased government regulation
  • Appraisers will be required to do more research, especially as it relates to improvements made to the property (a description including the condition and quality of all improvements to a home and its basements must now be included in each appraisal)


Without question, these changes are going to be very demanding on both appraisers and lenders.  The newness of the UAD requirements as well as the need for additional information is going to make for a messy transition.  It is going to take longer for appraisers to do appraisals and for lenders to review them.  At Fairfield, our expected appraisal turnaround time is being extended from one week to two, at least in the short run.  Be aware that most lenders’ turnaround time is longer than a week, so I would be shocked if you don’t see some really long delays due to these changes.  Of course, these appraisal delays will naturally trickle down to realtors and buyers as well and are certain to cause approval and closing delays.


Also worth noting, even more restrictive measures are headed our way before the end of the year.  Fannie Mae and Freddie Mac are working on additional Quality Control measures that will require lenders to electronically send appraisals to Fannie/Freddie prior to closing for the comparables used to be tested to see if they are indeed the closest and most recent comps available.  This process is expected to add two more days to the process and, more importantly, may lead to 11th hour approval problems.  More on this at a later date.


The impact of this week’s changes is that the realtor job will become more important than ever.  Your expertise and timely information will make the difference in a smooth transaction.  With this in mind, I have come up with the following six actions points that all realtors should strive to do for all listings and transactions:

1.        Get the contract to the lender as soon as you possibly can.

2.        Follow up and make sure the lender gets the appraisal ordered right away.

3.        Notify the appraiser of all home renovation details that do not show up in MLS/FLMS and the year the renovations were completed.

4.        Send the appraiser photo’s of the renovations notated if possible.

5.        Make sure all of your listings in MLS / FLMS have correct renovation information listed

6.   Cooperate with appraisers who call you for help as quickly and thoroughly as you are able


To emphasize the importance of these actions points, consider this quote from one of our approved appraisers:

“Most of the time, we do not have the luxury of meeting up with the seller during the appraisal inspection, therefore, it is critical that we get all home renovation information from the listing agent when we call to set up the appointment.  It would be even better if the information in MLS / FMLS was accurate preventing us from having to track anyone down.  This would certainly save everyone time!  The more specific the information, the better, too.  We also have to verify the extent of the renovations and the year in which they were done.  Even though we do not have to report the year of renovation for the comparables, it is so helpful if this information is correct in MLS / FLMS as it enables us to adequately compare the subject property with the comparables.”


Lastly, below is a sampling of some of the actual changes in the appraisal report moving forward:

  • The # of days on the market now has to be listed in the appraisal for the subject property as well as all comparables and is defined as the total number of days a home has been listed (short-term gaps that home is off the market have to be ignored)
  • The history of all prices changes must now be reported
  • For the first time, the appraiser will have to notate a sale as one of the following: REO, Short-sale, Court-ordered, Estate, Relo, Non-arms length, or Arms length
  • Old descriptions such as 1 story or 2 story home are replaced with appropriate architectural designs such as Ranch, Colonial, and Traditional
  • The condition of the home and comparables must be rated on a scale from C1 to C6
  • The quality of the construction of the home must be rated on a scale from Q1 to Q6
  • The remodeling of the home must be categorized as “Not Updated,” “Updated,” or “Remodeled” with specifics and time-frames of work done given
  • More specific finished v. unfinished basement info must be reported


 I hope you find this overview helpful and educational and please contact me if you have any questions…..


August 24, 2011 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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