B4-1.2-02: Appraisal Age and Use Requirements (06/05/2018)

© Fannie Mae Single Family Selling Guide

Age of Appraisal and Appraisal Update Requirements

When an appraisal is obtained, the property must be appraised within the 12 months that precede the date of the note and mortgage.

When an appraisal report will be more than four months old on the date of the note and mortgage, regardless of whether the property was appraised as proposed or existing construction, the appraiser must inspect the exterior of the property and review current market data to determine whether the property has declined in value since the date of the original appraisal. This inspection and results of the analysis must be reported on the Appraisal Update and/or Completion Report (Form 1004D).

• If the appraiser indicates on the Form 1004D that the property value has declined, then the lender must obtain a new appraisal for the property.
• If the appraiser indicates on the Form 1004D that the property value has not declined, then the lender may proceed with the loan in process without requiring any additional fieldwork.

Note: The appraisal update must occur within the four months that precede the date of the note and mortgage.

The original appraiser should complete the appraisal update; however, lenders may use substitute appraisers. When updates are completed by substitute appraisers, the substitute appraiser must review the original appraisal and express an opinion about whether the original appraiser’s opinion of market value was reasonable on the date of the original appraisal report. The lender must note in the file why the original appraiser was not used. 

See B4-1.3-12, Quality Assurance (01/30/2018), for information concerning changes to the appraised value. See B2-1.4-02, Mortgage Loan Eligibility (12/19/2017), for information regarding property valuation requirements for mortgage loans sold to Fannie Mae more than four months from the note date.

Multiple Appraisals of the Subject Property

If the lender obtains more than one appraisal for a loan due to applicable law, regulation, lender policy, or otherwise, the lender must

• adhere to a policy of selecting the most reliable appraisal rather than the appraisal that states the highest value,
• document the reasons for relying on the appraisal, and
• submit the appraisal selected by the lender through the UCDP prior to delivery.

These requirements also apply if the lender considers an appraisal to be deficient (see B4-1.3-12, Quality Assurance (01/30/2018)).

Use of an Appraisal for a Subsequent Transaction

Fannie Mae will allow the use of an origination appraisal for a subsequent transaction if the following requirements are met:

• The subsequent transaction may only be a Limited Cash-Out Refinance.
• The appraisal report must not be more than 12 months old on the note date of the subsequent transaction. If the appraisal report is greater than 4 months old on the date of the note and mortgage, then an appraisal update is required. See preceding section, Age of Appraisal and Appraisal Update Requirements, for requirements for completing an appraisal update.
• The lender must ensure that the property has not undergone any significant remodeling, renovation, or deterioration to the extent that the improvement or deterioration of the property would materially affect the market value of the subject property.
• The borrower and the lender/client must be the same on the original and subsequent transaction.

Note: The appraisal must comply with all other requirements in the Underwriting Property section of the Selling Guide.