As we develop new products for appraisers, compliance with industry standards is always front and center. Our objective is to help improve appraisal quality and provide efficiencies to the process. Everybody wins by connecting industry needs with appraisal reporting techniques through technology, industry guidance, and practical advice. This is ACI’s contribution to the industry – and we hope you find it informative and helpful. Enjoy.
You’ve likely been there. The sales contract is changed after the effective date of the assignment and the client then asks you to reflect the revised information in your (new) report. You must then review the new contract and summarize your (new) analysis. I’ve blogged on this scenario in the past regarding whether this constitutes a new assignment or just a new report. Perhaps now this nuisance issue will largely become a thing of the past.
On December 6th Fannie Mae published announcement SEL-2016-09 which should make life a little easier for appraisers. Essentially, if the sales contract is changed regarding the sales price or seller concessions, the lender is no longer required to forward that information to the appraiser. Fannie Mae is apparently recognizing that changes to seller concessions or sales price don’t affect the opinion of value. If, however, the contract “is amended in a way that affects the description of the real property used by the appraiser, then the lender must provide the updated contract to the appraiser and the appraisal should be updated.” Note that “updated” in this context would amount to a new assignment, not just a new report. Here’s an excerpt from the announcement.
Currently, we require the lender to provide the appraiser with all amendments made to a sales contract, including amendments that are made after completion of the appraisal. With this update, we have clarified when the appraiser must be provided with updates to the sales contract and circumstances that warrant updates to the appraisal. For example, if the contract is amended in a way that affects the description of the real property used by the appraiser, then the lender must provide the updated contract to the appraiser and the appraisal should be updated. However, minor updates to the contract, such as changes to seller paid closing costs or changes to the contract price, do not require an updated appraisal. In addition, we have updated the policy to require disclosure of changes to financing information (such as loan fees and charges, and subordinate financing provided by interested parties) to the appraiser only for purchase transactions.
So, does this mean you will never again get a request to review an amended contract and issue a new report when the sales price is renegotiated? Probably not, as lenders and their agents often take time to become aware of announcements like this. But it means you will have an opportunity to educate those individuals who ask you to unnecessarily issue a new report. Simply refer them to Selling Guide Announcement SEL-2016-09 issued December 6, 2016. Reference item number 4, “Disclosure of Information to Appraisers.” We suggest you download a PDF copy now, for future use. Here’s the link: https://www.fanniemae.com/content/announcement/sel1609.pdf