Client Update 

As you may have been made aware, Fannie Mae has made several changes to the appraisal forms currently being used in the industry. Some forms have been removed completely, (i.e., Satisfactory Completion Certificate for final inspections) while other forms have been revised or replaced. The new forms go into effect as of November 1, 2005. 

1. All appraisals completed for a sale of a property will require a complete and signed contract to be reviewed and analyzed by the appraiser.  There is a new section on the 1^st page for the appraiser to address questions.
2. New construction loans and properties under 5 years now require land sales to be provided and the cost approach to be completed and documented from a cost service (Marshall & Swift).
3. The new forms require three (3) new pages of certifications by the appraiser.  The appraiser must certify if there are any adverse conditions that effect the subject's livability, soundness or structural integrity.
4. FNMA as of November 1, 2005, will no longer accept interior 2055 appraisals.  FNMA will now only accept 2055 exterior or full appraisals (1004).
5. Although the client may disclose and distribute the appraisal to a third party, the appraiser is still bound by USPAP regulations.  Name changes are still not permitted.
6. As of January 1, 2006, HUD will not be requiring VC sheets, and instead will be utilizing the new forms.  HUD will still require all FHA appraisals to meet (GAC) general acceptance criteria.  All required repairs and conditions to meet HUD standards are still required and still must be noted in the appraisal report.

The new FNMA form changes have resulted in the following effects to our appraisal process:

•  Increased data sources

• Software upgrades

• Increased E&O Policy premiums

• Increased certification by the appraiser

• Increased liability

I hope you can understand that as we have always tried to be as competitive as possible with our fees, the above-mentioned material changes and increase in our expenses leave us with no option but to increase our fees. The new fee schedule will be in effect on November 1, 2005.  Please call for an updated fee schedule. 

If you would like to discuss this in more detail, please feel free to contact me at (516) 797-6900 ext 138. We would like to thank you for your business and look forward in continuing our professional relationship.

Eric T. Reeps, SRA
President