The Fannie Mae Selling Guide is a comprehensive guide for lenders who sell loans to Fannie Mae. Although the Guide is targeted toward lenders, it also contains information that applies to appraisers. After all, the appraisal is an important part of the loan documentation. Many people consider the Selling Guide to be guidelines; the word “guide” is in the title. But it actually sets forth both requirements and guidelines. As an appraiser, it’s important you understand the difference between the two.
Fannie Mae requirements
For appraisers, one of the most important parts of the Selling Guide is Part B4-1: General Appraisal Requirements. Requirements are mandatory. For example, in the Selling Guide, Fannie Mae requires appraisers to at minimum conform to the scope of work requirements in the URAR form and the other forms. There is no deviation from that; it is the minimum scope of work that the appraiser must complete. You can go beyond that scope of work but cannot do anything less than that. It’s a requirement—there is no getting around it or getting out of it.
Fannie Mae guidelines
Guidelines in the Selling Guide are indicative of conduct that is suggested and preferred but can be deviated from with the proper explanation. For example, Fannie Mae guidelines indicate when a lender may rely on an exterior-only inspection appraisal without impacting property eligibility. For appraisers, there are guidelines on comp selection, and despite what some lenders will tell you, if you deviate from or exceed appraisal guidelines—again, guidelines and not requirements—the mortgage can still be sold to Fannie Mae as long as the deviation from the guidelines is properly explained.
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Can lenders add additional requirements or guidelines?
Yes. The Fannie Mae guidelines and requirements set forth in the Selling Guide are minimums. Lenders are always free to employ underwriting standards or establish their own requirements that are more stringent than what appears in the Guide. These additional lender requirements are often called “overlays.”
For example, the Selling Guide says that when you do a certification of completion for repairs, you don’t need to include photographs of the subject property, unless the original photos are no longer representative of the property. However, most lenders require photographs of completion; their internal requirements typically specify that a completion certificate must include photographs. And again, that’s fine—lenders may establish requirements that are more stringent than what Fannie Mae requires. But they may not establish lesser requirements.
For more in-depth information on the Fannie Mae Selling Guide and how it applies to you, check out our course, Fannie Mae Appraisal Guidelines: Debunking the Myths.