Why Appraisal Quality Controls Exist
Fannie Mae requires strict appraisal oversight because the property value drives every aspect of your loan approval. An inflated appraisal can lead to a loan amount that exceeds what the property is actually worth, creating risk for both you and the lender.
Say you're buying a home for $400,000 and the appraisal comes in at $420,000. That extra $20,000 in appraised value might seem like good news, but if the appraiser made errors or used poor comparable sales, you could end up owing more than your home is worth from day one.
Lenders must pay extra attention when appraised values seem excessive or when a property has appreciated rapidly since its last sale. These situations trigger additional due diligence requirements.
When Lenders Must Question an Appraisal
Your lender cannot simply accept any appraisal that supports your loan amount. They must review every report for completeness and accuracy. If they spot problems that raise questions about the reliability of the market value opinion, they must act.
The lender's first step is contacting the original appraiser to resolve concerns. This might involve asking for clarification on comparable sales selections, requesting additional market data, or questioning specific adjustments the appraiser made.
If the appraiser cannot adequately address the lender's concerns, the lender must obtain either a desk review, field review, or entirely new appraisal before approving your loan. The key rule: lenders cannot request value changes solely because the current appraisal doesn't support the loan amount they want to make.
Your Right to Challenge an Appraisal
You have the right to request a reconsideration of value if you believe the appraisal contains errors or unsupported conclusions. This process, called an ROV, gives you one opportunity per appraisal to present evidence that the value should be higher.
Your lender must provide you with written disclosure of the ROV process when they deliver your appraisal report. This disclosure explains how to submit your request and what information you need to provide.
To initiate an ROV, you must identify specific problems in the appraisal report and provide supporting evidence. You can submit up to five additional comparable properties with their data sources, such as MLS listing numbers, along with an explanation of why this new information supports a higher value.
What Documents Support Your ROV Request
Your ROV submission must include specific documentation to be considered valid:
- Written identification of unsupported, inaccurate, or deficient areas in the appraisal
- Additional comparable sales data (maximum five properties)
- Data sources for each comparable (MLS numbers, public records, etc.)
- Clear explanation of how the new data supports your position
For example, if the appraiser used a comparable sale from six months ago but ignored a more recent sale of a similar home that sold for $15,000 more, you would document this oversight and explain why the newer sale better reflects current market conditions.
How Lenders Process ROV Requests
Your lender must complete their own appraisal review before starting the ROV process. They cannot simply forward your request to the appraiser without first validating that it contains sufficient detail and supporting information.
An underwriter or appraisal expert at the lender reviews your ROV request first. If your submission lacks clarity or needs additional information, they must contact you to obtain what's missing before sending anything to the appraiser.
The lender then sends standardized communication to the appraiser that includes your concerns and supporting documentation. All ROV-related documents must be retained in your loan file regardless of the outcome.
Remember: you can only submit one ROV request per appraisal, and this right expires once your loan closes.
When Appraisers Don't Cooperate
If an appraiser refuses to address material deficiencies identified in their report, or if there's evidence of unacceptable appraisal practices, your lender must report the appraiser to the appropriate state licensing board.
Unacceptable practices include using inappropriate comparable sales, making unsupported adjustments, or failing to properly analyze market conditions. More serious violations, such as suspected discrimination, must be reported to federal agencies.
When these situations arise, your lender may order a second appraisal. However, they must document the specific deficiencies that justified the new appraisal and select the most reliable report rather than simply choosing the one with the highest value.
Fannie Mae's Quality Control Role
Fannie Mae conducts its own quality control reviews and may refer problematic appraisals to state licensing boards for investigation. Their goal is maintaining appraisal quality across the industry, not just protecting their own interests.
In extreme cases, Fannie Mae may refuse to accept appraisals from specific appraisers. When this happens, lenders receive notice and must immediately stop using that appraiser for loans they plan to sell to Fannie Mae.
This quality control system helps ensure that appraisers maintain professional standards and that property values accurately reflect market conditions.
Common Situations That Trigger Extra Scrutiny
Certain scenarios automatically trigger additional lender review requirements. Properties that have appreciated significantly since their last sale face extra scrutiny, especially if the appreciation seems inconsistent with broader market trends.
New construction or recently renovated properties also receive closer examination, as do properties in markets experiencing rapid price changes. Lenders must verify that appraised values align with actual market conditions rather than inflated expectations.
If you're buying in a hot market where prices are rising quickly, expect your lender to pay extra attention to comparable sales dates and market trend analysis in the appraisal report.
References
For the official guidelines, see B4-1.3-12: Appraisal Quality Matters in the Fannie Mae Selling Guide.
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Original Fannie Mae Guideline Text
B4-1.3-12, Appraisal Quality Matters (09/03/2025)
Changes to the Appraised Value
Guidance on Addressing Appraisal Deficiencies
Lender Requirements
Fannie Mae’s Referrals to State Appraiser Boards
Refusal to Accept Appraisals from Specific Appraisers
Uniform Appraisal Dataset (UAD) 3.6 Policy
Changes to the Appraised Value
The lender is responsible for confirming that appraisal reports are complete and that any changes to the reports are made by the appraiser that originally completed the report. If the lender has concerns with any aspect of the appraisal that result in questions about the reliability of the opinion of market value, the lender must attempt to resolve its concerns with the appraiser that originally prepared the report. If the lender is unable to resolve its concerns with the appraiser, the lender must obtain a replacement report prior to making a final underwriting decision on the loan. Any request for a change in the opinion of market value must be based on material and substantive issues and must not be made solely on the basis that the opinion of market value as indicated in the appraisal report does not support the proposed loan amount. For information concerning the process lenders must follow to address a change of the opinion of market value, see Guidance on Addressing Appraisal Deficiencies in this topic.
Lenders must pay particular attention and institute extra due diligence for those loans in which the appraised value is believed to be excessive or when the value of the property has experienced significant appreciation in a short time period since the prior sale. Fannie Mae believes that one of the best ways lenders can reduce the risk associated with excessive values or rapid appreciation is by receiving accurate appraisals from knowledgeable, experienced appraisers.
Guidance on Addressing Appraisal Deficiencies
If the lender considers an appraisal deficient, it has the following options for addressing the deficiencies:
contacting the appraiser to address deficiencies contained in the appraisal report,
obtaining a desk review or a field review of the original appraisal, or
obtaining a new appraisal of the subject property.
The lender can return the appraisal report to the appraiser that completed the assignment, identify the deficiencies found, and provide justification for requesting correction of the deficiencies the lender believes make the report unreliable.
If the lender is unable to obtain a revised appraisal that adequately addresses its concerns, a desk or field review of the report may be obtained. The review must be completed in accordance with the USPAP. Because the Scope of Work for either type of review allows for a change of the opinion of market value for something other than a mathematical error, the appraiser completing the appraisal review must
be licensed or certified in the state in which the property is located,
have access to the appropriate data sources, and
possess the knowledge and experience to appraise the subject property with respect to both the specific property type and geographical location.
The lender may forego either type of review and obtain a new appraisal. When a new appraisal is obtained, the lender must document the deficiencies that are the basis for ordering the new appraisal and adhere to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value. The lender must either document in the loan file the resolution of the noted deficiencies in the original appraisal or detail the reasons for relying on a second opinion of market value.
Lender Requirements
A lender must continually evaluate the quality of the appraiser’s work through the normal review process of all appraisal reports, as well as through the spot-check field review or desk review of appraisals as part of its quality assurance system.
Reconsideration of Value
For loans requiring an appraisal report, the lender must have policies and procedures in place for a borrower-initiated reconsideration of value (ROV). At a minimum, the ROV process must meet Fannie Mae requirements and adhere to all applicable local, state, and federal laws.
The ROV process must include a review and resolution procedure for the ROV request, and steps for the borrower(s) to appeal an appraisal when it is believed the opinion of value
is unsupported,
may be deficient due to unacceptable appraisal practices, or
reflects prohibited discriminatory practices.
Regardless of the outcome of the ROV, the lender is responsible for ensuring the appraisal report and opinion of market value are reliable and adequately supported.
The lender must provide a disclosure to the borrower outlining the ROV process when the appraisal report is provided to the borrower. The disclosure must make it clear that only one borrower-initiated ROV is permitted per appraisal. The following table describes the information required to initiate the ROV process.
✓
The borrower-initiated ROV must include...
Identification and description of unsupported, inaccurate, or deficient areas in the appraisal report.
Additional data, information, or comparable properties (not to exceed five), and the related data sources (for example, the MLS listing number).
An explanation of why the new data supports the ROV.
In addition to the borrower ROV submission requirements, the lender's ROV policies and procedures must include instructions on required information for a borrower-submitted ROV and standardized communication to the appraiser. The following table describes additional lender requirements.
✓
The lender must...
complete its appraisal review before initiating the ROV process.
designate an underwriter or other appraisal subject matter expert to review the ROV request.
validate the request from the borrower contains sufficient details prior to sending to the appraiser.
obtain the necessary information from the borrower if the ROV request is unclear or needs more information.
align its ROV policies and procedures with Appraiser Independence Requirements (AIR).
standardize communication to the appraiser, that contains the following:
ensure documentation related to the outcome of the ROV is retained in the loan file.
If material deficiencies identified in the appraisal report are not corrected or addressed by the appraiser upon request, or if there is evidence of any unacceptable appraisal practices detailed in B4-1.1-04, Unacceptable Appraisal Practices, the lender must forward the appraisal report and summary of findings to the appropriate appraisal licensing agency or regulatory board. The lender must also report suspected overt violations of anti-discrimination laws to the proper local, state, or federal agency. In the event of these occurrences, the lender may obtain a second or subsequent appraisal report.
Note: After a loan has closed, an ROV request is no longer allowed to be submitted by the borrower.
Fannie Mae’s Referrals to State Appraiser Boards
Fannie Mae conducts different levels of due diligence for quality control purposes and may refer unacceptable appraisal reports to state appraiser licensing or regulatory boards for investigation.
Fannie Mae’s objectives in referring appraisal reports to state appraiser licensing or regulatory boards are
to emphasize continuing efforts to maintain the quality of appraisals,
to protect Fannie Mae’s interest,
to improve the quality of mortgages delivered to Fannie Mae by identifying appraisers that have performed appraisals of a sufficiently poor quality as to impair the security interests,
to help the industry enhance the quality of appraisals by identifying and referring appraisals that are not adequately supported or credible, and
to help enforce professional standards.
Note: Fannie Mae’s decision to make such referrals does not affect the lender’s responsibility for managing the property valuation and appraisal review process.
Refusal to Accept Appraisals from Specific Appraisers
Fannie Mae may refuse to accept appraisals prepared by specific appraisers, or Fannie Mae may notify a lender that appraisals prepared by a given appraiser are no longer accepted. When a lender is notified that appraisals from specific appraisers are no longer accepted, the lender is prohibited from delivering mortgages to Fannie Mae secured by properties appraised by that individual immediately following its receipt of Fannie Mae’s notice.
Uniform Appraisal Dataset (UAD) 3.6 Policy
Lenders using UAD 3.6 must follow the requirements in the UAD 3.6 Policy Supplement.
