Freddie Mac Increasing Appraisal Requirements

From Appraisal Scoop, Freddie Mac is modifying their appraisal requirements.

Looks like Freddie is requiring an appraisal update from 60 days of delivery of the mortgage. That used to be 120 days and 60 days on the conversion of a construction loan to permanent financing.

Freddie Mac is increasingly concerned about the quality of the property that is secured by their loan, and thus they are requiring more appraisals to ensure the value of the property is accurate. Theoretically, this should lead to more appraisal work.

This comment under the Scoop blog-post is also very interesting.

Basically, they are ensuring that they only buy quality and avoid loans that were rushed through the system to obtain a commission. This does mean a higher volume of appraisal work, as revisions from the same appraiser to certify the value are not accepted and a BPO can not substitute in this case.

Looks like the free-market is doing its thing and requiring quality appraisals.


    Doing away with as is appraisals would solve the issues of condition. Too many lending institutions instruct the appraiser to appraise as is and list repairs with cost up to a certain amount to cure. This includes major things like roofs. These loans are doomed from the beginning as the collateral will not stand for at least half the loan period. Not having escrow accounts for the repairs is another sore spot of mine. Giving people the money who say they will make repairs and then do not weakens the strength of the loan.