What Are The Appraisal Requirements & Responsibilities

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Appraisals play a huge role in obtaining financing for a property.  Therefore, everyone in the Real Estate and Lending Industries needs to be informed, and have a basic understanding of What Are The Appraisal Requirements & Responsibilities especially for Conventional Loans.  The last opportunity I had to attended a seminar on understanding appraisals and the appraisal process, was three to four years ago, and even though I had been a Loan Originator for several years, there was a lot I was not aware of.  Even though this seminar was a three to four of years ago, the information I will share in this blog remains the same.  

All the information presented at the seminar was important, but what stood out to me the most were the requirements and responsibilities Fannie Mae & Freddie Mac require from Lenders and Appraisers.  Fannie Mae & Freddie Mac require Lenders be accountable for:

  • The selection of an Appraiser qualified to perform an appraisal of the subject property, without attempting to influence the Appraiser's results.
  • Provide the Appraiser with a Sales Contract and other information about the subject property and the transaction, including whether funds are paid on behalf of the Borrower come from a contribution from an interested-party and are within allowable contribution limits.
  • Reviewing the appraisal to ensure the Appraiser's opinion of value meets all the Fannie Mae or Freddie Mac definition of "Market Value", the appraisal is accurate, and is fully supported, and in compliance with Secondary Market guidelines.
  • Effective May 1, 2009 the Lender must also verify that the appraisal was ordered and completed in accordance with the Code of Conduct.

In sellecting the Appraiser the Lender MUST follow and meet the following criteria.  The following is right out of a Fannie Mae Announcement 2010-09:

"Lenders are reminded that appraisers must have the requisite knowledge to perform a professional quality appraisal for the specific geographical location and particular property types.  The use of an appraiser who has the appropriate knowledge of specific geographical markets, access to the appropriate data sources, and experience in appraising specific property types within those markets will help to ensure that valuations are accurate and that appraisal practices are appropriate.  Although the Uniform Standards of Professional Appraisal Practices (USPAP) allows an appraiser who does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae requires that lenders only use appraisers who have the appropriate knowledge and experience, and does not allow the USPAP flexibility. Consequently, the Selling Guide has been updated to state that appraisers who lack the requiste knowledge, experience, and access to appropriate data must not be utilized.

 Additional revisions have been made to clarify that the lender is responsible for the appraiser's qualifications and quality of the work, and to provide guidance for determining an appraisers's qualifications"

 Besides the above requirements and responsibilities of the Lender, Apprasers are requrired to Certify and Attest to a number of things on the Appraiser's Certification Section of the appraisal. There are 25 statements the Appraiser Certifies and agrees to on the Appraiser's Certification Secection of the appraisal.  I have seen the two pages which make up the Appraiser's Certification Section of the appraisal many times but never took the time to read them.  I expect most Realtors and Loan Originators have also not read them as well.  If you have never read what Appraisers have to attest and agree to on EVERY appraisal, I suggest you do so.  All of the 25 statements are important, but there are two I think Realtors and Loan Originators will find very interesting.  The two statements I am refering to are statements 11 & 12.  They read as follows:

11)  "I have knowledge and experience in appraising this type of property in this market area."

 12)  "I am aware of , and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records, and other such data sources for the area in which the property is located."

Prior to attending the Seminar I was not aware of any of the above, so this was very enlightening for me, as I am sure it will be to many others who read this blog.  These requirements as well as other Appraisal Requirements & Responsibilities for Conventional Loans required by Fannie Mae & Freddie Mac are all available to the public.  So if we educate ourselves and become aware of the required responsibilities, we will be better prepared to ask the questions on an appraisal we may have an issue with.




 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net


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  1. Gabe Sanders 01/27/2017 11:48 PM
Mortgage / Finance
Real Estate Rookie
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appraisal requirements responsibilities

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Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

The appraisal process is so very important and in Northern AZ we have less now than years ago to do the job. Thank you for the informative post. 

Jan 18, 2017 07:05 PM #1
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

George what a powerful post, in our market if the property is over $3m we need two appraisal for obvious reasons, Endre

Jan 18, 2017 07:27 PM #2
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

This process can make or break a   deal very quickly

Jan 18, 2017 07:59 PM #3
Troy Erickson
Diverse Solutions Realty www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

George - Great info about the appraisal requirements. It is a crucial element when it comes to buying a home.

Jan 18, 2017 08:18 PM #4
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Thanks for the heads up George...and it is good appraisal news for many agents ...we have many appraisers that come from out of area and fall short of knowing the neighborhoods.

Jan 19, 2017 04:47 AM #5
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning George.  This is fascinating reading and I will be saving this for future study.

Jan 19, 2017 05:17 AM #6
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

I had no idea about this either, George. Thanks for the information. We had a spate of appraisals in our area in the past years where appraisers were coming from other ends of the state to appraise in Charlotte. There was no way they knew this geographical area. It happened to me when we sold our last house... appraiser came in from Raleigh, three hours away. He was two hours late because he'd never been to this part of Charlotte and couldn't find it. Do I need to say the appraisal had issues?

Jan 19, 2017 05:49 AM #7
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

In recent years the government M's have also started to accumulate their own database of appraisals and will question something that they see that doesn't agree with that they have.  Their database does not adjust the same way the real market does and that could be an issue

Jan 19, 2017 06:34 AM #8
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi George - I really learned so many things I didn't know from an appraiser in my BNI.

Jan 19, 2017 06:54 AM #9
Patricia Feager
Selling Homes Changing Lives

Everyone needs to know and understand the Appraisal Process. Since the rules are always subject to change, it pays to stay current. Thanks, George Souto for sharing valuable information.

This past June, I took an MCE on "What? Your Property Didn't Appraise?"  It was a great class for the Agents in Texas. I would encourage every agent to know more about the Appraisal Process.   

Jan 19, 2017 08:05 AM #10
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