QUESTION
In a situation where a borrower
switched from Lender A to Lender B and an appraisal was previously performed
for Lender A, can Lender B accept that appraisal? Is Lender A under any
obligation to transfer the appraisal to Lender B?
ANSWER
If the situation involves an
FHA/VA/FHA/Federal Housing Authority loan, Lender A must, at the borrower’s
request, transfer the case to the Lender B. Note that FHA does not require that
the client name on the appraisal be changed when it is transferred to another
lender.
If the situation involves a
conventional loan, Lender A would have to release the appraisal (which it is
under no obligation to do), and certify compliance with the Appraiser
Independence Requirements.
Note that in accordance with
the Uniform Standards of Professional Appraisal Practice (USPAP), a lender is
not permitted to request that the appraiser change the name of the client
within the appraisal report unless it is a new appraisal assignment.
To effect a client name change,
the Lender B and the original appraiser may engage in a new appraisal
assignment wherein the scope of work is limited to the client name change. A
new client name should include the name of the client (lender). As it is a new assignment, the appraiser is
entitled to charge another fee.
Below are some FAQs from Fannie and Freddie on the topic.
Fannie Mae: Appraiser
Independence Requirements Frequently Asked Questions
November 2010 (Reposted April
2017 for formatting)
Transfer of the Appraisal
Q37. May an appraisal be transferred to a lender from a correspondent
lender and, if so, under what circumstances?
Yes. A lender may accept an appraisal from a correspondent lender that complies with AIR.
Q38. A mortgage broker submits a loan to lender A, which orders an
appraisal. The broker later decides to submit the loan to lender B because it
is offering better terms, or for another reason. May the appraisal obtained by
lender A be used by lender B (assuming the mortgage broker has no control over
or involvement in the assignment)?
Yes. A lender may accept an appraisal transfer from a different lender. However, the lender delivering the loan to Fannie Mae makes all representations and warranties that the loan complies with the requirements of the Fannie Mae Selling Guide and related documents. Lender A must be named as client on the appraisal report.
Q39. Lender A (an approved Fannie Mae Seller/Servicer) originates and
closes a loan in its name, but sells it to lender B (another Fannie Mae
approved Seller/Servicer), which in turn sells that loan to Fannie Mae. Is
lender B under any obligation to obtain a new appraisal?
No. Lender B may buy a closed loan from Lender A and sell the loan to Fannie Mae without a new appraisal if Lender B can represent and warrant that any appraisal conducted in connection with the loan conforms to AIR.
Freddie Mac: Appraiser Independence Requirements FAQs
November 2010
27. Can lenders accept appraisals transferred from another lender?
A lender may accept an appraisal from a different lender if the appraisal is obtained in a manner consistent with AIR, and the lender receiving the transferred appraisal determines that the appraisal conforms to its own requirements and is otherwise acceptable.
28. Can lenders accept an appraisal from an AMC specifically authorized
by a different lender to act on its behalf?
Yes. If the lender receiving the transferred appraisal determines the appraisal was obtained in a manner consistent with AIR that the appraisal conforms to the lender's requirements and is otherwise acceptable.
29. May an appraiser update an appraisal for another lender?
Yes. An appraiser is permitted to perform an update of an appraisal for another lender.
30. What documentation is required during an appraisal transfer to
demonstrate that the lender transferring the appraisal is complying with
AIR?
Each lender must develop its own documentation requirements to ensure compliance with AIR, based on its business model and processes.
31. AIR allows Lender B to originate a loan using an appraisal
transferred by Lender A if Lender B determines that the appraisal with written
assurances that the appraisal was obtained in a manner consistent with AIR,
conforms to Lender B's requirements for appraisals and is otherwise acceptable.
Will Freddie Mac hold Lender B liable for remedies if it is discovered after
the transfer that Lender A did not obtain the appraisal in a manner consistent
with AIR?
Yes. As with all other representation and warranties under the Guide, Freddie Mac will hold Lender B, the lender who sold the loan to Freddie Mac, fully responsible for any violations of AIR and our Guide requirements.
Joyce Wilkins Pollison
Director/Legal & Regulatory Compliance
Lenders Compliance Group
