Selling Guide

Published June 02, 2021

For best results, pose your search like a question.

Guide Resources

For a comprehensive list of resources such as forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

Customers Recommend Ask Poli

AskPoli

If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Launch Ask Poli  

Download PDF Guide

You can also download the printable 1,200+ page PDF, which include links.

Download Now

D1-3-04, Lender Post-Closing Quality Control Review of Appraisers and Appraisals (05/05/2021)

Introduction

This topic contains information on the lender's post-closing QC review of appraisers and appraisals, including:


Overview

The lender must continually evaluate the quality of its appraisals through the normal underwriting review of all appraisal reports, and by utilizing prudent collateral risk assessment processes as part of the QC process. (See B4-1, Appraisal Requirements, for additional information regarding appraisal policies, guidelines, and requirements.) The lender should also utilize third-party tools and information (such as analytical tools and public record databases) to help identify areas of inaccuracy or inconsistencies that may be indicators of appraisal deficiencies.


Oversight of Appraisers

The lender’s QC plan must include requirements for monitoring and assessing the overall quality of work performed by an appraiser, including a process for loan-level QC reviews of origination appraisals. Fannie Mae holds the lender fully accountable for the quality of the QC appraisal reviews regardless of whether the work is performed by the lender itself or by an outsourced QC service provider.

The lender must also develop and maintain a documented process to monitor the appraisers it uses. The process, at a minimum, must include an annual review of an appraiser’s state licensing or certification status and a procedure for suspending or terminating business with individual appraisers. Additionally, the lender must have a procedure for referring appraisers to the applicable state appraiser licensing and regulatory board.

See B4-1.3-12, Quality Assurance, for information concerning Fannie Mae’s right to refuse to accept appraisals prepared by specific appraisers.


Verification of Origination Appraisals

The lender must complete a collateral risk assessment for all mortgage loans with an appraisal as a part of its random QC sample. It is acceptable for the collateral risk assessment to be completed by an individual who is not a licensed or certified appraiser. However, the collateral risk assessor must be competent in appraisal theory and must be able to specifically:

  • determine that a property meets eligibility requirements including the LTV, CLTV, and HCLTV ratios;

  • assess appropriateness of comparable sales;

  • assess appropriateness of the data presented in the appraisal report;

  • conclude that the rationale for the reconciliation of value is supported;

  • prescribe corrective actions for defects identified in the appraisal process; and

  • reconcile flags and messages that were identified in Collateral Underwriter (CU) if the property was able to be scored in CU. If the property was not able to be scored in CU then reconcile any known quality messages (messages, alerts, flags) that are reflected in other third-party tools if utilized.

If the lender is unable to complete the above assessment or appropriately determine the quality of the origination appraisal, it may order either a desk review or field review from a licensed appraiser. The desk review or field review must account for all of the points in the above requirements.


Reporting

The lender must determine whether any defects identified through its collateral risk assessment process results in the value not being supported or the loan being ineligible. If the lender determines that the mortgage loan was not eligible as delivered, the lender must advise Fannie Mae of these findings using the self-report functionality in Loan Quality Connect. For additional information, see D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit.

Example: The lender delivered a two-unit property loan to Fannie Mae and, after reviewing the appraisal, the lender determines that the property is a mixed-use property. Because mixed-use properties are limited to one-unit dwellings, the loan is ineligible as delivered to Fannie Mae and the lender must self-report the loan.


Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2021-04 May 05, 2021
Announcement SEL-2019-03 April 03, 2019
Announcement SEL-2015–13 December 15, 2015
Announcement SEL-2014–10 July 29, 2014
Announcement SEL-2013–05 July 30, 2013
Announcement SEL-2010–16 December 1, 2010
Announcement SEL-2010–03 March 29, 2010

Have You Tried Ask Poli?

Poli knows. Just ask.

Ask Poli features exclusive Q&As and
more—plus official Selling & Servicing
Guide
content.

Try Ask Poli

Related Articles


AskPoli

Customers Recommend Ask Poli

If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Guide Resources

For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

X
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.
     

Email Us
If you still have Technical Support questions, feel free to emailAsk_Poli@fanniemae.com.