Inman News reported this week that the Fannie Mae Single Family "Selling Guide" was released June 30 with new, updated policies.

The Guide puts lenders on official notice to only use appraisers who "have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type," Fannie Mae said.

Although the Uniform Standards of Professional Appraisal Practice (USPAP) spell out procedures that allow appraisers who haven't demonstrated their knowledge and experience to complete assignments, Fannie Mae said it will not allow that flexibility.

Appraisers must have the ability to access the "necessary and appropriate data sources for the area in which the appraisal assignment is located."

Fannie Mae fleshed out previous guidance issued to lenders on the selection and use of comparable sales. Appraisers must consider a "property's condition" when choosing to use foreclosure sales or short sales as comps.

Appraisers will be required to perform a neighborhood analysis in order to identify the area that is subject to the same influences as the property being appraised, based on the actions of typical buyers in the market area.

If an appraiser believes a foreclosure sale or a short sale within that area is an appropriate comp, the appraiser cannot assume it is "equal to the subject property," Fannie Mae said.

Appraisers are required to "identify and consider any differences" from the subject property, such as the condition of the home and whether any stigma has been associated with it.

Lenders are barred from making unilateral changes to the appraised value in an appraisal report. Only the appraiser who completed the original report is authorized to change it.

If lenders can't work out their difference with the appraiser, they can "order a formal review or a new appraisal," Fannie Mae said, but must stick with the new appraisal's findings.

Fannie Mae further clarified their rules emphasizing that Realtors or other authorized third parties can communicate with appraisers to request additional information or explanations to correct factual errors in their reports.

Since the Home Valuation Code of Conduct (HVCC) rules were adopted in May 2009, Realtors have complained that lenders have been relying more on appraisal management companies, AMCs, which produce appraisals more likely to fall short of the contracted sales price.

Paramount Mortgage does not use AMCs. Through internal quality control procedures, Paramount ensures compliance with HVCC mandates and only uses knowledgeable and competent appraisers familiar with local markets.

The HVCC rules, originally implemented to ensure appraisers produce accurate home values without undue influence from agents, lenders or other interested parties, may no longer be in effect after Nov. 1, according to the Federal Housing Administration.

Language in the massive financial reform bill now under consideration in Congress creates a new Consumer Financial Protection Bureau. Within 90 days from the passage of the bill into law, the Bureau would be charged to draft new rules for protecting appraiser independence that would supersede HVCC.