Why Lenders Must Share Information with Appraisers
When you apply for a mortgage, your lender orders an appraisal to determine the property's market value. But the appraiser can't do their job properly without knowing the full picture of your transaction. Fannie Mae requires lenders to disclose all relevant information about the property and purchase terms to ensure the appraisal reflects reality.
This transparency protects everyone involved. The appraiser needs to know if the seller is paying your closing costs, if there's a known foundation issue, or if you're getting below-market financing. These factors can affect the property's true market value and the loan's risk level.
Say you're buying a house for $400,000, but the seller is paying $15,000 of your closing costs and giving you a $5,000 credit for new appliances. Without knowing these concessions, the appraiser might think the property is worth the full $400,000 when the effective price is really $380,000.
What Financial Information Gets Disclosed
The lender must tell the appraiser about all financial aspects of your transaction. This includes obvious items like the purchase price and loan amount, but also extends to any financial concessions or special arrangements.
Required financial disclosures include settlement charges, loan fees, discounts to the sales price, interest rate buydowns, and below-market-rate financing. The appraiser also needs to know about any subordinate financing provided by interested parties, credits or refunds of your expenses, and absorption of monthly payments.
If your employer is providing down payment assistance, that gets disclosed. If the seller is paying points to buy down your interest rate, the appraiser needs to know. If you're getting a family loan at 2% interest when market rates are 7%, that information goes to the appraiser too.
The goal is to give the appraiser a complete picture of the economic terms so they can determine whether the stated purchase price reflects true market value or includes hidden concessions.
Property-Specific Information Requirements
Beyond financial terms, lenders must disclose any property-related information that could affect value or marketability. This includes both positive and negative factors the appraiser might not discover during their property inspection.
Required property disclosures include condo or PUD fees, non-realty items included in the transaction (like that expensive chandelier or built-in sound system), and any environmental hazards in or around the property. The lender must share information about anything affecting the safety, soundness, or structural integrity of the property.
Environmental hazards deserve special attention. If anyone in the transaction knows about lead paint, asbestos, underground storage tanks, or contaminated soil, this information must reach the appraiser. The same applies to natural hazards like flood zones, earthquake faults, or wildfire risks.
For example, if the seller mentions that the basement occasionally floods during heavy rains, or if the listing agent knows the property is near a former gas station, these facts must be disclosed even if they're not obvious during the appraiser's visit.
Required Documentation
The cornerstone document is your complete, ratified sales contract with all addenda. This isn't just the signature page or a summary - the appraiser needs the entire contract including any amendments, addenda, or side agreements.
The contract typically contains most of the required financial information, but lenders must also provide any additional documentation that reveals concessions or special arrangements not captured in the main contract. This might include separate agreements for seller financing, employer assistance programs, or family gifts.
If environmental issues are known, the lender should provide any available reports, disclosures, or documentation. For properties with special assessments or community facilities districts, those details need to be shared as well.
The key is completeness. The appraiser should receive everything needed to understand the true nature of the transaction and any factors that might affect the property's value or marketability.
When Contract Changes Don't Require New Appraisals
Not every contract modification after the appraisal requires starting over. Fannie Mae recognizes that some changes don't affect the property description or the appraiser's analysis.
Changes that don't require appraiser notification or a new appraisal include modifications to the sale price, transaction terms, financing concessions, seller-paid closing costs, names or initials, closing date, and correction of minor clerical errors like misspellings.
Say your contract originally had the seller paying $8,000 in closing costs, but you negotiate this up to $12,000 after the appraisal is complete. Since this doesn't change the property itself, you don't need a new appraisal.
However, if the contract is amended to include or exclude property features - like adding the washer and dryer or removing the storage shed - this could affect the property description and might require appraiser review.
Why These Rules Exist
Fannie Mae's disclosure requirements stem from lessons learned during past housing crises. When appraisers lack complete information, they can't accurately assess market value or identify potential risks.
Hidden concessions can inflate apparent property values. If a $300,000 house comes with $20,000 in undisclosed seller concessions, the effective purchase price is really $280,000. An uninformed appraiser might support the $300,000 value, creating an inflated appraisal that doesn't reflect market reality.
Environmental hazards and property defects affect both value and marketability. A house near a contaminated site might appraise for full value if the appraiser doesn't know about the contamination, but it could be difficult to resell later when the issue becomes known.
The disclosure requirements also protect appraisers from liability. When they have complete information, they can make informed judgments about value and include appropriate comments in their reports.
Common Disclosure Pitfalls
One frequent problem occurs when information gets lost between different parties in the transaction. Your real estate agent might know about a property issue, but if they don't tell your lender, the information never reaches the appraiser.
Another common issue involves seller concessions that get negotiated after the initial contract. If you renegotiate terms based on inspection findings, make sure your lender knows about any changes that affect the financial terms of the deal.
Family transactions often create disclosure challenges. When parents sell to children at below-market prices or with special financing terms, all these arrangements must be disclosed even if they seem like private family matters.
Environmental issues can be particularly tricky. Sometimes sellers or agents have knowledge of past problems that were supposedly remediated. Even if the issue was fixed, the appraiser should know about the history to properly assess any remaining impact on value or marketability.
Working with Your Lender
Make sure your lender has complete information from the start. Don't assume they'll automatically know about side agreements, family assistance, or property issues that came up during your house hunting.
If you discover new information about the property after the appraisal is ordered, tell your lender immediately. It's better to address issues upfront than to have them surface later in the process.
Keep copies of all contract amendments and side agreements. Your lender needs to see the complete picture, not just the main purchase contract.
Be particularly careful with environmental or property condition issues. If your inspection reveals problems, or if you learn about past issues from neighbors or previous owners, share this information with your lender so they can determine what needs to be disclosed to the appraiser.
References
For the official guidelines, see B4-1.1-05: Disclosure of Information to Appraisers in the Fannie Mae Selling Guide.
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Original Fannie Mae Guideline Text
B4-1.1-05, Disclosure of Information to Appraisers (06/04/2025)
Information Disclosed to the Appraiser
Contract Changes After the Appraisal is Completed
Uniform Appraisal Dataset (UAD) 3.6 Policy
Overview
All information about the subject property the lender is aware of must be disclosed to the appraiser and the details provided must comply with B4-1.1-04, Unacceptable Appraisal Practices. The appraiser must determine if the information could affect either the marketability of the property or the opinion of the market value of the property.
Sales Contract Information
All financing data and sales concessions for the subject property that will be or have been granted by anyone associated with the transaction must be disclosed to the appraiser, as appropriate. Typically, this information is provided in the sales contract. Therefore, the lender must provide, or ensure that the appraiser is provided with, a copy of the complete, ratified sales contract and all addenda for the property that is to be appraised.
Financial Information
The list below includes items that must be disclosed to the appraiser on purchase transactions, if applicable:
settlement charges,
loan fees or charges,
discounts to the sales price,
interest rate buydowns,
below-market-rate financing,
terms of any subordinate financing provided by interested parties,
credits or refunds of borrower expenses,
absorption of monthly payments,
assignment of rent payments, and
any other information not listed above that impacts property value.
Property Information
The list below includes items that must be disclosed, if applicable:
condo or PUD fees;
non-realty items included in the transaction;
any environmental hazard in or on the subject property or in the vicinity of the property that the lender is aware of or learns from the borrower, the real estate agent, or any other party to the transaction (see B4-1.4-08, Environmental Hazards Appraisal Requirements); and
any other items that affect the safety, soundness, or structural integrity of a property of which the lender may be aware.
Contract Changes After the Appraisal is Completed
If the contract is amended after the effective date of the appraisal in a way that does not affect the description of the property, then the lender is not required to provide the amended contract to the appraiser nor obtain a revised appraisal. Some examples of amendments that do not require the lender to provide the amended contract nor obtain revisions to the already-completed appraisal report include:
sale price,
transaction terms,
financing concessions,
seller-paid closing costs,
names or initials,
closing date, and
correction of minor clerical errors such as misspellings.
Uniform Appraisal Dataset (UAD) 3.6 Policy
Lenders using UAD 3.6 must follow the requirements in the UAD 3.6 Policy Supplement .
The table below provides references to the Announcements that have been issued that are related to this topic.
