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First for 2017: Fannie Mae refines appraisal policies

But will investors change their policies?

Fannie Mae released its first selling guide updates for 2017, clarifying its rules around property inspections by appraiser trainees.

According to the guide, Fannie Mae clarified its “existing policy that allows an unlicensed or uncertified appraiser, or an appraiser trainee to complete the property inspection. When the unlicensed or uncertified appraiser or appraiser trainee completes the property inspection, the supervisory appraiser is not required to also inspect the property.”

The clarification is effective immediately.

Although the industry welcomes the news, more still needs to be done in order for appraisers to act on the clarification.

Matthew Simmons, managing partner at Maxwell, Hendry & Simmons, a commercial and residential appraisal and consulting firm, explained that from a policy perspective, this is a fantastic clarification.

Simmons added that the trainee system for appraisers is a two-year journey, and being unable to utilize trainees to handle certain appraisal inspections for their entire training period creates a major disincentive for seasoned appraisers to take on trainees.

Keep in mind that this is in an industry that’s already top heavy with a lot of people closer to retirement than what is ideal.

“Training shouldn’t be a pure profit center for supervising appraisers, but it also shouldn’t be regulated to the degree that supervisors can’t make a decision about when a trainee is capable of inspecting a house on their own,” Simmons said.

 “While Fannie has clarified their position, the real test will be if investors change their policies. That’s where the actual policy prohibitions currently reside,” he continued.

To Simmons, the move is Fannie trying to signal to investors that it’s time to modernize their policies.

“We’ve already spoken with several lending clients of our firm and they’re taking a wait-and-see approach to see how their investors react before giving the green light to trainees,” he said.  

And investors aren’t the only factor that appraisers are wary about.

“The other element to consider is how states will react. While this may prompt investor policy changes, many states have more stringent rules relative to trainees.”

Simmons pointed to his time on the Florida Real Estate Appraisal Board, when they enacted rules that prohibit a trainee from inspecting a property without their supervisor present for their first 12 months.

“It will be interesting to see if state licensing boards also react,” he concluded. 

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