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Freddie Clarifies New Forms, Disaster Valuations and Fraud In a recent speech, Freddie Mac’s Collateral Policy Director, Jacqueline Doty, said that the government-sponsored entity is accepting the same modifications to the URAR and associated forms, as Fannie Mae recently announced they will. In particular, appraisers will be allowed to more clearly define the intended user on the forms. In addition, Doty addressed the new policies regarding appraising properties in disaster areas and the current state of mortgage fraud. Doty clarified some confusion about the new forms, which have an effective date of January 1, 2006 for Freddie Mac, but will be accepted immediately. Doty said Freddie Mac will not require the cost approach or income approach, except when these approaches are necessary and applicable for a reliable and credible appraisal. In regard to Certification #23, Doty said, “Although the forms state that the Intended User is the lender/client, if the appraiser believes that any of the parties listed in certification #23 are also intended users, the appraiser should identify them as such and Freddie Mac will accept such appraisals. We will also accept appraisal reports that include a statement clarifying that the Intended User is the lender/client.” Doty said the language Freddie will accept is the same as Fannie Mae’s recent addendum: ”The Intended User of this appraisal report is the Lender/Client. The Intended Use is to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the Scope of Work, purpose of the appraisal, reporting requirements of this appraisal report form, and Definition of market value. No additional intended users are identified by the appraiser.” Doty said the statement must not be preprinted on appraisal forms and Freddie will not accept appraisals that contain statements that conflict with Certification #23. Doty also outlined changes that involve appraising properties in the disaster areas, stating that an appraisal report with an interior and exterior inspection are required, and must be performed by a person who is able to complete appraisals without a supervisor. In other words, trainees may not perform such appraisals. If there is damage to the property, the appraisal must be performed subject to completion of the repairs to the damaged parts of the property. In closing, Doty addressed mortgage fraud, which she terms as “a serious problem” with 21,994 reports to the FBI of suspicious activity through September 2005, compared with 17,127 the previous year and 5,623 in fiscal 2002. Stating that “mortgage fraud cannot succeed when appraisals are accurate,” Doty stressed the following: Do not accept assignments from lenders or brokers who pressure you for a predetermined value, and be very thorough in the analysis of the sales history of the subject and comparable sales. “If the transaction type is a refinance and the owner of public record is not the borrower, find out why and explain it on the appraisal report. Similarly, if the transaction is a purchase and the property seller on the sales contract for the subject property is not the owner of record, find out why and explain it on the appraisal report,” she said. “Embrace accuracy, reliability and accountability like never before.” |
