5601.4: Unacceptable appraisal practices (03/02/16)

© Freddie Mac Single-Family Seller Servicer Guide

Unacceptable appraisal practices

The following are examples of unacceptable appraisal practices. Evidence of any of the practices listed in this section will be a breach of Seller's warranty as to the professional quality of the appraisal.

1. Inclusion of inaccurate or incomplete data about the subject property, the neighborhood or any comparable sale used in the appraisal analysis
2. Failure to report and/or consider any apparent factor that has an adverse effect on the value and/or marketability of the subject property
3. Consideration of the age or location of a dwelling or the age of the neighborhood or census tract where the dwelling is located in a manner that has a discriminatory effect
4. Reliance in the appraisal analysis on comparable sales that were not personally inspected by the appraiser. A personal inspection requires at least a visual inspection of the exterior of the comparable property.
5. Reliance in any appraisal analysis on inappropriate comparable sales, or the failure to use comparable sales that are more similar to or nearer to the subject property without adequate explanation
6. Use of comparable sales data provided by interested parties to the transaction without verification by a disinterested party
7. The use of inordinate adjustments for differences between the subject property and the comparable sales that do not reflect the market's reaction to such differences, or the failure to make proper adjustments when they are clearly necessary
8. Consideration of the race, color, religion, sex, age, marital status, handicap, familial status or national origin of the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property (see also Section 1301.2 for equal opportunity compliance requirements, and Section 5601.12(c) for prohibition against discrimination in appraising)
9. Development of value and/or marketability conclusions that are not supported by available market data
10. The appraiser's or supervisory appraiser's breach of a certification or Statement of Assumptions and Limiting Conditions or comparable statements as found on any Freddie Mac approved appraisal report form or addendum.

See Section 5601.15 for unacceptable appraisal and inspection practices when using Electronic Signatures and using and maintaining Electronic Records.