The Appraisal Buzz recently had a chance to speak with Robert T. Murphy of Fannie Mae and ask him a few questions. He is the Director of Property Valuation & Eligibility at Fannie Mae and an influential leader in the appraisal industry. We wanted to speak to him about their recently released Lender Letter and find out how it affects appraisers. Below are some of his responses.
Buzz: Bob, what is the goal of Appraiser Quality Monitoring? Isn't this a huge departure from Fannie Mae's historical policy on appraiser selection?
Bob Murphy: The goal of Appraiser Quality Monitoring (AQM) is to make sure that the loans we buy meet our underwriting and eligibility standards, which includes making sure the collateral backing the loans is appropriately valued through a quality appraisal. We want to make sure that we have accurate data about the property, that a thorough market analysis was performed, and that the appraiser selected appropriate comparable properties and made appropriate adjustments.
Fannie Mae holds the lender who sells us the loan responsible for the qualifications and quality of work for the appraisers they select. The Selling Guide provides requirements and guidance to lenders regarding appraiser selection. So with respect to "appraiser selection", there is no departure from our existing requirements.
Buzz: I think Fannie Mae's Appraisal Selection Criteria has been strong but this takes it to a whole new level. Finally, appraisers are being held accountable for the quality of their appraisal reports. I presume this has everything to do with having access to appraisal data in UCDP (Uniform Collateral Data Portal), yes?
Bob Murphy: In order to make sure the housing market is stronger and more sustainable, we worked with Freddie Mac, and our regulator FHFA to develop and implement the Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP) as part of the overall Uniform Mortgage Data Program (UMDP). As you know, the UAD provides uniform data fields in several of our appraisal report forms while the UCDP allows for appraisals to be submitted electronically. Implementation of this technology has allowed Fannie Mae the ability to identify appraisal data issues which require further analysis to make sure appraisals meet our standards and gives us greater ability to monitor ongoing trends in the market.
Buzz: What type of infractions are you seeing that prompts Fannie Mae to initiate a letter to an appraiser and what is the intent of the letter?
Bob Murphy: Fannie Mae will provide information directly to appraisers whose appraisal reports exhibit a pattern of minor inconsistencies, inaccuracies, or data anomalies. I have addressed these issues at several CRN meetings and Valuation Expo Conferences, infractions include "self-discrepancies", in other words how often an appraiser disagrees with him or herself over time and across transactions. For example, our systems notice if the appraiser changes the condition and/or quality ratings for a specific transaction in subsequent appraisals.
The intent and expectation of communicating these issues directly to appraisers is for training and educational purposes, and to provide them with an opportunity to improve their work. Future appraisal reports from those appraisers will be monitored to assess improvement.
Fannie Mae also has developed a process to identify appraisers whose appraisal reports exhibit egregious issues. In those cases, Fannie Mae will contact the appraiser and the lender that delivered the loan(s) informing them that either 100% of the loans submitted with appraisals from the identified appraiser will be reviewed by Fannie Mae in the post-purchase file review process or Fannie Mae will no longer accept loans with appraisals completed by the specific appraiser.
Buzz: What sort of rebuttal process does the appraiser have?
Bob Murphy: The appraiser can submit written responses to Fannie Mae, and is advised of how to do so in the communications they receive from Fannie Mae.
Buzz: Will lenders and Appraisal Management Companies be provided access to Fannie Mae's list of appraisers requiring 100% review?
Bob Murphy: Approved sellers/servicers have access to the AQM list identifying appraisers whose appraisals will be subject to 100% review or whose appraisals are no longer accepted by Fannie Mae. Lenders may inform service providers with whom they have a business relationship, including AMCs, of appraisers on the list. However, seller/servicers may not distribute the actual AQM list.
Buzz: Bob, thanks for taking the time to answer some of these questions for us and our subscribers.
Bob Murphy: It was my pleasure.
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