Desktop Appraisals and ANSI Standards

Desktop Appraisals

What lenders should know about Fannie Mae and Freddie Mac Selling Guide changes.

Fannie Mae and Freddie Mac have followed up on their promise to make one of the appraisal flexibilities introduced during the pandemic a permanent part of their operations.  As part of their adoption of modern appraisal methodologies, the two major government-related mortgage investors will add Desktop Appraisal messaging to their automated underwriting systems in March. Freddie’s system feedback will indicate whether desktop appraisals can be submitted starting on March 6. Fannie plans to roll them out as part of an update to its AUS during the weekend of March 19. 

AppraisalTek is committed to supporting lenders in the adoption of 1004 Desktop appraisals.  

How does the new 1004 Desktop differ from the COVID-19 desktop appraisal?

The 1004 Desktop appraisal guidelines are a bit different than the COVID-19 desktop guidelines. The 1004 Desktop guidelines specify that a purchase transaction must have a loan-to-value ratio less than or equal to 90% and be a one-unit, principal residence. In addition, the 1004 Desktop must take into consideration a detailed floor plan with interior walls and gross living area (GLA) calculations: 

“The minimum scope of work for Form 1004 Desktop does not include an interior and exterior on-site physical inspection of the subject property or comparable sales by the appraiser; instead, the appraiser relies on data obtained from alternative sources to identify property characteristics and condition. Form 1004 Desktop requires the use of a floor plan in addition to other exhibits required for traditional appraisals.” 

What are the benefits? 

The Selling Guide change offers a solution to the concerns the lending industry and consumers raised during the appraisal process. Modern valuation products like the 1004 Desktop appraisals enable an appraisal process that is time-efficient without sacrificing quality or thoroughness.  

Appraisers also benefit from the 1004 Desktop workflow. The pairing of modern technology and a redesigned process enables appraisers to complete 1004 Desktop appraisals without conducting a physical inspection, potentially shortening appraisal turn-times and easing appraiser capacity constraints. Desktop appraisals also provide a great opportunity for appraisers who would rather not or are unable to go into the field.   

AppraisalTek can be trusted to guide lenders in utilizing the 1004 Desktop appraisals.

AppraisalTek has designed, developed, and tested technology in preparation for the efficient processing of the 1004 Desktop. We have the technology and trained network of property data collectors, and experienced appraisers that lenders will need to seamlessly adapt to the change. AppraisalTek can provide floor plans with interior walls and digital GLA calculations that are compliant with ANSI standards and a complete 1004 Desktop appraisal lenders can trust. Interested in learning more? Reach out to us at 877-716-5162.

Sincerely,

Virgil Watson
Vice President of Valuation Strategy

ANSI Standards

As of April 1, 2022, Fannie Mae will require appraisers to measure, calculate and report the gross living area and non-gross living area using ANSI® Z765-2021, which only applies to one- unit properties. According to the Announcement, “Appraisals requiring interior and exterior inspections must follow this standard; appraisals of this type performed without using this standard will not be acceptable.”

Appraisers and lenders can purchase a PDF version of ANSI® Z765-2021 by visiting: https://www.homeinnovation.com/z765

Why the change?

Consistency in reporting. No two appraisers are alike and inconsistencies in reporting gross living area (GLA) abounded. There was no standard for how an appraiser arrived at the GLA despite how extremely important it is in the value of a dwelling. Standardizing the method in which appraisers measure, calculate and report living areas insures a level of certainty.

What about Desktop Appraisals?

According to FNMA, when using sketching or 3D scanning software, the resulting output must also conform to the Square Footage-Method for Calculating: ANSI® Z765-2021 standards.

What else must we know?

Here are some bullet points that can be found on the FNMA website:

• Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area.
• Detached structures with finished square footage must be reported on a different line in the adjustment grid and not included as part of the subject's reported gross living area.
• When the subject property has an area that does not meet the ANSI minimum ceiling height requirements, the additional square footage must be reported on an additional line in the adjustment grid and an appropriate market adjustment applied, if warranted.
• If the appraiser is unable to adhere to the Square Footage-Method for Calculating: ANSI® Z765-2021 standard they must enter "GXX001-" at the beginning of the Additional Features field.

Interested in learning more? Reach out to us at 877-716-5162.