FHLMC updates appraisal re-use rules

A few years back I wrote a blog explaining the rules that allow a lender to re-use the borrower’s appraisal for an additional transaction. (See the blog here: Recycle Rules For Appraisals).

Looking over that blog I found some interesting comments in 2016 ranging from “you are crazy, that is not possible and a few appraisers stating this was just another way to cut out their profession”.  I was surprised by the feedback for a rule that had been around for years which so many people were unaware.  Regardless of the feedback, for me the bottom line is knowing the little details in the guidelines means better overall customer service  by learning how to best serve our customer.

Both Fannie and Freddie have been reviewing their guidelines looking for ways to improve customer service and lower costs without hurting the quality of the loans in the portfolio.  On this note the announcement release May 1st 2019 (2019-9)

Here is the information from the 2019-9 announcement: 

Appraisal re-use for a subsequent transaction: Previously, an appraisal update was required for a subsequent transaction, regardless of the time elapsed from the effective date of the original appraisal. Based on Seller feedback and to provide efficiency and potential cost savings, we are revising our requirement to state that an appraisal update is not required unless the effective date of the appraisal is more than 120 days prior to the new Note Date for the subsequent “no cash-out” refinance.

As a reminder here are the guidelines that go along with the change above:

FHLMC Section 5601.8 
When an appraisal is required for a subsequent transaction secured by the Mortgaged Premises, the original appraisal report may be re-used if the following requirements are met:

(i) The Borrowers on the new transaction must be the Borrowers on the original transaction. The only exception is in the event of a divorce or legal separation. The Borrower for the new transaction must be one of the Borrowers on the original transaction, and the file must document that the Borrower for the new transaction obtained the property through a divorce or legal separation. 

(ii) Since the effective date of the original appraisal report, the Mortgaged Premises must not have undergone any substantial rehabilitation or renovation or have been affected by disaster to the extent that the improvement or deterioration of the property would affect the value, condition or marketability 

(iii) The new transaction must be a “no cash-out” refinance 

(iv) The appraisal report from the original transaction must meet all of the following requirements: 

  • The effective date of the appraisal report must not be more than 12 months prior to the Note Date of the subsequent transaction. When the effective date of the appraisal is more than 120 days prior to the Note Date of the subsequent transaction, an appraisal update is required. The appraisal update must meet all requirements in Section 5601.8(a) and reflect the Mortgage transaction (e.g., the current Borrowers, the appropriate transaction type, owner of record, lender/client). 
  • The lender/client is the Seller or a third party specifically authorized by the Seller of the original transaction

If you have any questions on the recent change or how re-using the same appraisal can benefit your borrower, feel free to reach out!


By |2019-05-01T21:21:48-04:00May 1st, 2019|Uncategorized|2 Comments

About the Author:

Michael Whitbeck
Michael is a subject matter expert on the process of mortgage underwriting. With 25 years in the mortgage business holding different positions in his career such as loan officer, underwriting manager, auditing supervisor, and chief credit officer. Through those experiences, he continually built content and systems to teach a process to improve people's underwriting skill set. Michael is the co-creator of UberWriter. UberWriter is the only online mortgage calculator that can determine any of the 30+ types of income listed in the agency guidelines. UberWriter has been a huge success in the market and half of the top 10 companies on the Scotsman Guide use UberWriter and produce thousands of income reports per month. Outside of the mortgage world Michael is a recreational pilot, loves Jeep adventures with his wife Jennifer. As a military veteran himself, he helps out with veterans organizations.


  1. Glynnis Barber May 3, 2019 at 9:09 AM - Reply

    Since nearly all institutions run a Fraud report, which has a built in appraisal feature indicating the neighborhood trends, I believes is a reasonable especially in refinance transactions.

    • Michael Whitbeck
      Michael Whitbeck May 8, 2019 at 9:59 AM - Reply

      Thanks Glynnis, the short time frame allowed (1 year maximum) to use the same appraisal should not have a dramatic effect up or down on value. This is another “smart” way to save clients money while not sacrificing quality!

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