In-House Post-Closing QC for Appraisal Review FAQ

We believe it is a reasonable and prudent change to strengthen the reliability and effectiveness of the Seller’s quality control program while also reducing the expense to the Seller.

Note: Option 1 is also being eliminated, which required 1 of 10 mortgages selected for Seller’s in-house quality control review have a field review with the remaining 9 having a desk review. The new requirement does not specify a minimum number of field reviews. The Seller must perform a desk review. If the desk review is insufficient to determine the accuracy of the appraisal or the adequacy of the collateral, then the Seller is required to obtain a field review.

Yes. You are still required to perform a desk review even if a field review was obtained during origination.

No. A desk review is required for mortgages selected for a post-closing quality control review that were originated with an appraisal. However, a more limited review is required for mortgages that received a Loan Collateral Advisor^® risk score less than or equal to 2.5, as noted in Guide Section 3402.5(e)(i)(B). If the mortgage was originated with an ACE appraisal waiver, a desk review is not required but the Seller must meet the requirements in Guide Section 3402.5(e)(ii).

If an appraisal report was obtained, the Seller must follow the Guide requirements for mortgages originated with appraisals (see Guide Section 3402.5(e)(i)).

Yes. Besides ensuring the appraisal report accurately reflects the market value, Sellers are also required to ensure condition and marketability of the subject property are acceptable and that the mortgaged premises is adequate collateral for the mortgage, as noted in Guide Section 3402.5(e)(i).

No. Another option would be a desk review by a licensed appraiser. However, if the appraiser’s desk review is still insufficient to determine the accuracy of the appraisal or the adequacy of the collateral, then a field review performed by an appraiser would be required.

The Seller’s review process should take steps to address the data quality, condition or marketability concerns. If these concerns cannot be reconciled and it is determined that Guide Section 3402.10 reporting requirements apply, the loan should be reported to Freddie Mac Quality Control (QC) at [email protected].

When an appraiser performs a desk review to satisfy the Seller’s QC reverification requirements in Guide Section 3402.5(e), we recommend that a Form 1033 be used, however Form 1033 is not required. Freddie Mac does not prescribe a particular form/format that must be used to evidence that a desk review was completed.

The checklist may be used as an outline for a desk review, providing recommended areas of focus for completing the review. However, the checklist IS NOT a substitute for the requirements in the Guide.

Freddie Mac does not prescribe the composition of the Seller’s discretionary sample. The Seller must determine its sampling methodology and sample size depending upon its unique circumstances and population size. Sellers are encouraged to consider Loan Collateral Advisor risk scores above 2.5 as an opportunity to identify potential higher-risk collateral.

Loan Collateral Advisor can help you more easily analyze appraisal reports for a more thorough view into their valuation risk. It can also help you streamline QC efforts with greater insight into an appraisal’s eligibility for appraised value representation and warranty relief. Mortgages receiving appraised value representation and warranty relief (i.e., with appraisals receiving a Loan Collateral Advisor risk score less than or equal to 2.5) require a reduced scope of review, creating efficiency and potentially reducing cost. To learn more about appraised value representation and warranty relief using Loan Collateral Advisor, please review this fact sheet.

Unlike many of the other temporary flexibilities, those for reverifications of property value were not extended past June 30, 2020.