Fannie Mae to Drop 1004MC Requirement

Fannie Mae to Drop 1004MC Requirement

At an industry conference on July 29, 2018, a Fannie Mae spokesperson announced that Fannie would be making revisions to its Selling Guide, effective in August 2018. Perhaps the most significant planned revision will be the elimination of the requirement for appraisers to include the 1004MC addendum form in 1-4 family appraisal reports prepared for Fannie Mae lenders.   

Before appraisers leave their desks and run, en masse, into the streets singing songs of joy, a few words of caution are in order:

  1. The revised Selling Guide has not yet been issued. Only after it is issued (likely within the next two weeks) will Fannie Mae no longer require appraisers to use the 1004MC. 
  2. Appraisers are still obligated to provide support in their reports for their neighborhood conclusions, particularly their conclusion regarding whether values are stable, increasing or declining; their conclusion regarding supply and demand balance, oversupply or undersupply; and their conclusion regarding the neighborhood marketing time. 
  3. Freddie Mac has not yet made an announcement regarding its requirement to use the 1004MC. It is likely (but by no means guaranteed) that Freddie will follow Fannie’s lead and abandon the requirement.
  4. HUD/FHA and VA still require use of the 1004MC, although they could remove this requirement at any time. 
  5. Some individual lenders may still require the use of the 1004MC, even though Fannie Mae might not. Lenders are permitted to establish additional requirements that exceed GSE requirements (these are called overlays).  

Again, the elimination of the 1004MC requirement only applies to Fannie Mae, and only after the revised Selling Guide is published. 

McKissock will keep you informed if and when other entities such as Freddie Mac, HUD/FHA and VA drop their requirements to use the 1004MC as well.  

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