Have Selling Questions? Ask Poli

AskPoli

Fannie Mae customers! Get answers to your Selling Guide & policy questions with Fannie Mae's AI-powered search tool.

Launch Ask Poli for Sellers  

Guide Resources

Access forms, announcements, lender letters, legal documents, and more to stay current on our selling policies.

View Resources  

B4-1.1-02, Lender Responsibilities (11/03/2021)

Introduction

This topic contains information on lender requirements, including:

 

Lender Responsibilities

The lender is responsible for ensuring that the subject property provides adequate collateral for the mortgage. For most loans, Fannie Mae requires that the lender obtain a signed and complete appraisal report that accurately reflects the market value, condition, and marketability of the property. Some loans may be eligible for an appraisal waiver, and an appraisal is not required if the lender exercises the waiver and complies with the related requirements. (See B4-1.4-10, Appraisal Waivers, for additional information.)

If an appraisal is obtained, the lender is responsible for

For certain loans, the lender is relieved of a number of responsibilities related to the appraisal and subject property value. See A2-2-06, Representations and Warranties on Property Value, for additional information.

 

Confirmation and Documentation of the Current Owner

Confirmation that the property seller in a purchase money transaction (or the borrower in a refinance transaction) is the owner of the subject property based on publicly available information helps to identify property flipping schemes, which typically involve various combinations of transactions and result in a sale of a recently acquired property for significant profit based on a misleading or fraudulent appraisal with an inflated property value.

Lenders must confirm and document in the mortgage file that the property seller in a purchase money transaction or the borrower in a refinance transaction is the owner of the subject property when an appraisal is required. Examples of acceptable documentation include, but are not limited to:

  • a copy of a recorded deed, mortgage, or deed of trust,

  • a recent property tax bill or tax assessment notice,

  • a title report,

  • a title commitment or binder, or

  • a property sale history report.

This documentation is especially important for transactions involving an assignment (or sale) of a contract for sale and back-to-back, simultaneous, double transaction closings, or double escrows to support the property acquisition, financing, and closing.

When the transaction is part of an employee relocation, the relocation company may be the assignee of the seller, which should be indicated on the sales contract. Additionally, the appraiser must comment on this condition in the appraisal report.

 

Objective and Unbiased Appraisals

A lender must ensure that the appraiser

  • described the property and the neighborhood in factual, unbiased, and specific terms;

  • considered all factors that have an effect on value; and

  • was objective and unbiased in the development of the opinion of market value in the appraisal report.

A number of federal, state, and local laws prohibit discrimination in the appraisal of housing. Fannie Mae expects professional appraisers to fully understand that discriminatory valuation and appraisal reporting practices are not only illegal, but also unethical. Unintentional discrimination can occur as the result of what an appraiser states, or fails to state, in his or her appraisal report. The lender and appraiser must ensure the appraisal is not in violation of any unacceptable appraisal practices (see B4-1.1-04, Unacceptable Appraisal Practices).

 

Reporting Unfavorable Conditions

The lender must ensure that appraiser comments regarding unfavorable conditions, such as the existence of an adverse environmental or economic factor, also discuss how the condition affects the value or marketability of the property being appraised and explain how the condition was taken into consideration in the valuation process. In such cases, the appraiser’s analysis must reflect and include comparable sales that are similarly affected whenever possible. The appraiser must address the impact these factors may have, if any, on the value and marketability of the subject property. (See B4-1.3-06, Property Condition and Quality of Construction of the Improvements, for further information).

 

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-2021-10 November 03, 2021
Announcement SEL-2018-07 September 04, 2018
Announcement SEL-2018-05 June 05, 2018
Announcement SEL-2017–03 March 28, 2017
Announcement SEL-2016–09 December 6, 2016
Announcement SEL-2016–08 October 24, 2016
Announcement SEL-2016–02 February 23, 2016
Announcement SEL-2014–03 April 15, 2014
Announcement SEL-2013–06 August 20, 2013
Announcement SEL-2013–03 April 9, 2013
Announcement SEL-2011–06 July 26, 2011
Announcement SEL-2011–01 January 27, 2011
Announcement SEL-2010–16 December 1, 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.