5601.8: Age of appraisal reports, age of automated collateral evaluation offers and appraisal updates (01/01/18)

(a) Age of appraisal reports and appraisal update requirements

(i) Acceptable age of appraisal reports

If the effective date of the appraisal report is more than 120 days but not more than 12 months before the Note Date, an appraisal update is required. The effective date of an appraisal update must be no more than 120 days before the Note Date.For the purpose of Section 5601.8(a), the Note Date is equivalent to the Effective Date of Permanent Financing when the Mortgage is sold to Freddie Mac as a Construction Conversion or Renovation Mortgage.
If the effective date of the appraisal report is more than 12 months before the Note Date, a new appraisal with an interior and exterior inspection is required

(ii) Appraisal update reporting requirements

Appraisal updates must be reported on Form 442, Appraisal Update and/or Completion Report.

If the update indicates that the value of the subject property has not declined, a new appraisal is not required
If the update indicates that the value of the subject property has declined, the Seller must obtain a new appraisal, based on either:
- An exterior-only inspection reported on the appropriate Freddie Mac form for the property type (Form 2055 or 466, as applicable), or
- An interior and exterior inspection reported on the appropriate Freddie Mac form for the property type (Form 70, 70B, 72 or 465, as applicable)
The original appraiser should perform the appraisal update. If the original appraiser is not available to perform the update, another appraiser may be used. Freddie Mac will accept an appraisal update performed by an unlicensed or trainee (or similar classification) appraiser if a supervisory appraiser signs the appraisal update.
See Section 5601.10(d) for appraisal update exhibit requirements.

(iii) Appraisal requirements for Settlement Dates more than 120 days after the Note Date

If the Settlement Date is more than 120 days after the Note Date, the Seller must warrant the value of the subject property at the time of the Settlement Date is not less than the appraised value as of the effective date of the appraisal. If the Seller cannot make this warranty, the Mortgage is eligible for sale only through a negotiated sales transaction through our bulk sales unit.

(b) Age of the automated collateral evaluation offer

(i) Acceptable age of the automated collateral evaluation offer

A Loan Product Advisor® Feedback Certificate message that offers the Seller an appraisal waiver is valid for 120 days. If the offer is more than 120 days old on the Note Date, a resubmission to Loan Product Advisor is required to determine ongoing appraisal waiver eligibility.Note: If the Seller changes key loan data (address of the property, loan amount, purchase price, estimate of value, loan type, property type, occupancy of the property) in a subsequent submission, the original offer will be invalidated and Loan Product Advisor may provide a different appraisal waiver eligibility determination.

(ii) Automated collateral evaluation requirements for Settlement Dates more than 120 days after the Note Date

If the Settlement Date is more than 120 days after the Note Date, the Seller must warrant the value of the subject property at the time of the Settlement Date is not less than the estimated value or sales price used to underwrite the Mortgage in Loan Product Advisor. If the Seller cannot make this warranty, the Mortgage is eligible for sale only through a negotiated sales transaction through our bulk sales unit.

(c) Re-use of an appraisal report for a subsequent transaction

When an appraisal is required for a subsequent transaction secured by the Mortgaged Premises, the prior appraisal report may be re-used if an appraisal update is obtained and the following requirements are met:

(i) The Borrowers on the new transaction must be the Borrowers on the prior transaction. The only exception is in the event of a divorce or legal separation. The Borrower for the new transaction must be one of the Borrowers on the prior transaction, and the file must document that the Borrower for the new transaction obtained the property through a divorce or legal separation.

(ii) Since the effective date of the prior appraisal report, the Mortgaged Premises must not have undergone any substantial rehabilitation or renovation or have been affected by disaster to the extent that the improvement or deterioration of the property would affect marketability or market value

(iii) The new transaction may not be a purchase transaction, a cash-out refinancing, or a payoff of secondary financing.

(iv) The appraisal report from the prior transaction must meet all the following requirements:
The effective date of the appraisal report from the prior transaction must not be more than 12 months prior to the Note Date of the subsequent transaction
The lender/client is the Seller or a third party specifically authorized by the Seller
The appraisal update must meet all requirements in Chapter 5601 and reflect the Mortgage transaction (e.g., the current Borrowers, the appropriate transaction type, owner of record, lender/client)