Fannie Creates Appraiser Blacklist in Effort to Flag Problem Loans

January 28, 2014
American Banker 
mortgage lending news
As it continues to seek ways to identify bad loans before they default, Fannie Mae is essentially "blacklisting" appraisers with poor performance records.

Before purchasing mortgages from lenders, Fannie Mae will devote extra scrutiny to all loans that had work done by appraisers on its list of sketchy providers. It also is warning banks and mortgage lenders about doing business with those individuals -- who have been flagged for habitually inflating home valuations, misstating the characteristics of a property, failing to apply the best comparable sales of similar homes, or committing other egregious violations.

Fannie's "appraisal quality monitoring" list, published on Jan. 6, is available on a monthly basis to lenders only and so far includes only four names -- although the number is likely to climb as Fannie Mae reviews its appraisal database for repeat offenders.

Inflated appraisals were an instrumental part of the housing crisis, but Fannie hopes its new crackdown on appraisers will not only lead to the collection of consistent data to ensure the accuracy of home values but also ensure that borrowers are able to repay their mortgages over the long term without going into default.

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