Fannie No Longer Requires Market Conditions Addendum

Written By: Joel Palmer, Op-Ed Writer

Mortgage underwriters and processors have one less form to manage on Fannie Mae loans.

As part of its latest Selling Guide updates, Fannie announced that it is not longer requiring Form 1004MC. This was Fannie’s Marketing Conditions Addendum.

“This will simplify reporting for appraisers and review for lenders,” Fannie stated in the Selling Guide update announcement.

Lenders can take advantage of the change immediately. The form requirement will be removed from Desktop Underwriter in a future release. Until then, lenders have been informed they can disregard the DU message.

Fannie stated that the change is due to having “robust and marketing trend” information available in Collateral Underwriter, “enabling measurement and management of market risks in a more rigorous way.”

The Selling Guide Update noted that “Appraisers remain responsible for analyzing market conditions and accurately reporting them in the neighborhood section of our appraisal forms.”

The one-page Market Conditions Addendum was introduced in response to the 2008 housing crisis. Its purpose was to "provide a standardized mechanism for appraisers to analyze and report changes in market conditions.” 

The responses gave lenders and clients a “clear and accurate understanding of the marketing trends and conditions prevalent in the subject neighborhood,” according to wording on the actual form.

The form included:

•    Inventory analysis, including the number of comparable sales, absorption rate, comparable active listings and months of housing supply

•    Median sales and list price information, including median information on comparable sale prices, comparable days on market, list prices, listing days on market, and median sales prices as a percent of list price.

In both categories, appraisers had to list data for the previous 3 month, 4-6 month and 7-12 month periods. They also had to note trends in their analysis.

Appraisers also had to note trends in seller concessions in the neighborhood of the home being appraised, as well as foreclosure sales.

Appraisers were instructed to use the information on the form as the basis for their conclusions. They also had to provide support for those conclusions regarding housing trends and overall market conditions in the Neighborhood section of the appraisal report form. 

Appraisers were instructed to fill in all the information to the extent it is available and reliable and must provide analysis as indicated below. If any required data was unavailable or considered unreliable, the appraiser had to provide an explanation. They also had to explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.

About the Author

As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.