Fannie’s New Forms: Something To Talk About

The latest version of the new Fannie Forms are set to go into use soon. These forms for appraising single-family residential and small income-producing properties have some very disturbing and questionable requirements within the certification pages. One of the biggest concerns for appraisers is items #21.

If you are not aware of its contents, you should be. As it now reads item #21 states:

The lender/client may disclose or distribute this appraisal report to: the borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns; mortgage insurers, government sponsored enterprises, other secondary market participants; data collection or reporting services; professional organizations; any department, agency, or instrumentality of the United States; and any state, District of Columbia, or other jurisdictions, without having to obtain the appraiser’s or supervisory appraiser’s (if applicable) consent. Such consent must be obtained before this appraisal report may be disclosed or distributed to any other party (including, but not limited to, the public through advertising, public relations, news, sales, or other media).

Since USPAP does not mandate or even reference any specific report form for appraisal results, it is being assumed that this certification, since incorporated within the reports mentioned, would fall under supplemental standards. This is something any practicing appraiser must be aware of and fully agree to, as part of accepting the assignment.

I can only assume this is the lenders’ way of eliminating the need for a new appraisal, when they request an update or reassignment to another client. It appears to make the appraisal their sole property and gives them the full right to reassign to anyone they choose.  What it doesn’t explain is why they would want to include “data collection or reporting services” among the list of possible parties being given a copy. The list of prospective recipients is mind-boggling and warrants some serious thought.

For starters, how will confidential information within the report be addressed? Will the appraiser now be subject to more explanation or additional information from these additional parties? When will the appraiser/client relationship end or will it?

How will the general public feel about their home information being given out to telemarketers or other data collection agencies? How will non-disclosure states see this issue? Will your client be charging a fee to supply that report to another party? How will your errors and omission carrier feel about liability? How willing will property owners be in allowing for inspection or photographs of their homes with this in mind? Will the data collection necessary to supply a competent appraisal be compromised?

The appraiser, in accepting any appraisal assignment, should be well aware of the intended use and intended users and carefully document that information as often as deemed necessary within his or her report. It is also in the best interest of all appraisers to note in the letter of transmittal and in the body of the report that this is not nor intended to be a home inspection. Unfortunately, there is no trial period to see what the consequences will actually be and how they will affect the appraiser, the lender or the public.

Denise Siegel: dsiegel@townshipofwall.com