By RICHARD HEYN, SRA and DAWN MOLITOR-GENNRICH, SRA

Earlier this year, Fannie Mae and Freddie Mac provided clarification of C5 and C6 Condition Ratings in the "Notes" section of Appendix D.

Based on the "Notes," the key differences between a C5 and C6 rating are the terms, "significant repairs" and "substantial repairs." In Webster's Dictionary, the word "Significant" is defined as momentous or important. On the other hand, "substantial" is defined as being of considerable importance. Does this help differentiate the two ratings? Hmm… this is another one of those "there's more to the UAD than meets the eye" moments! Proper application of these new ratings requires more than just a cursory reading.

As we mentioned in previous blogs, a common misunderstanding about the Condition and Quality ratings is that they are comparable with the prior Excellent, Average, or Poor ratings. However, that is simply not the case. Without reading the definitions carefully, it's challenging to appreciate the nuances that differentiate one from the other. Applying the old subjective definitions to the UAD condition ratings C1 through C6 is a mistake that can have some serious consequences. This misapplication of the definitions will lead you down the wrong path in developing an overall rating for the subject and comparables and result in UAD non-compliant appraisal reports.

In Webinar 2, ACI has asked us to tackle these types of difficult questions as well as many others about the distinctions between the different condition ratings. So join us and improve on your own "UAD efficiency" by getting better informed. See you "in class."

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