Freddie Mac Guidelines: Automated Valuation Suspensions in Disaster Areas

What Happens When Disaster Strikes Your Local Market

When natural disasters hit an area, Fannie Mae can temporarily shut down its automated property valuation systems for that region. This means loans in disaster zones lose access to streamlined appraisal alternatives like Automated Collateral Evaluation (ACE) and ACE+ Property Data Report (PDR).

Think of it this way: if a hurricane damages 30% of homes in your county, Fannie Mae's computer models can't reliably estimate property values anymore. The automated systems rely on recent comparable sales and property data that becomes unreliable after a disaster.

Your lender will know immediately when this happens. The Loan Product Advisor and Loan Collateral Advisor systems will stop offering ACE or ACE+ PDR options for properties in the affected zip codes.

How Fannie Mae Decides to Suspend These Tools

Fannie Mae monitors disaster declarations and market disruptions continuously. When they determine that property values in an area have become unpredictable, they issue a Guide Bulletin announcing the suspension.

The decision isn't automatic based on FEMA declarations. Fannie Mae makes its own assessment of whether the disaster significantly impacts the local real estate market. A minor storm might not trigger a suspension, while widespread flooding or wildfire damage almost certainly will.

Say a wildfire burns through parts of three counties in California. Fannie Mae might suspend ACE eligibility for the most affected zip codes while leaving neighboring areas unaffected. The suspension targets specific geographic areas, not entire states.

What This Means for Your Loan Process

During a suspension, your loan will need a traditional appraisal instead of the automated valuation. This adds time and cost to your transaction.

A standard appraisal typically takes 7-10 business days to complete and costs $400-600. ACE and ACE+ PDR options, when available, can provide property valuations within minutes at no additional cost.

Your lender cannot override this suspension. Even if your property wasn't directly damaged, you'll still need the full appraisal if your area is included in the suspension zone.

The appraisal requirement applies to all loan types that would normally be eligible for ACE or ACE+ PDR, including conventional purchase loans, refinances, and cash-out refinances.

Documents You'll Need During Suspension Periods

Since you'll need a traditional appraisal, prepare for the standard appraisal process requirements:

• Property access for the appraiser's inspection
• List of recent improvements or renovations with dates and costs
• HOA information if applicable
• Property tax records
• Utility bills showing the property address

Your lender will order the appraisal directly, but you'll typically pay the appraisal fee upfront or at closing. Make sure the property is accessible and in showing condition when the appraiser visits.

Why Fannie Mae Suspends Automated Valuations

Automated valuation models depend on stable, predictable market conditions. These systems analyze recent comparable sales, property characteristics, and market trends to estimate values.

Disasters disrupt all these data points. Recent sales become irrelevant if comparable properties suffered damage. Market trends shift rapidly as buyers and sellers react to the disaster. Property conditions change overnight.

Consider a coastal area after a major hurricane. Pre-storm comparable sales don't reflect the new reality of flood damage, infrastructure problems, and insurance concerns. The automated systems would produce unreliable valuations that could expose Fannie Mae to significant losses.

Traditional appraisers can assess these changing conditions firsthand. They can evaluate storm damage, consider market disruption, and make adjustments that automated systems cannot.

When Automated Tools Get Reinstated

Fannie Mae doesn't announce reinstatement timelines upfront. They monitor market recovery indicators like sales volume, price stability, and infrastructure repairs.

Reinstatement typically happens gradually. Fannie Mae might restore ACE eligibility for less affected areas first, then expand coverage as markets stabilize. The process can take weeks or months depending on the disaster's scope.

Your lender will receive automatic notification when ACE and ACE+ PDR become available again in your area. However, this won't help loans already in process - you'll still need to complete the traditional appraisal.

Common Complications During Disaster Suspensions

Timing creates the biggest headaches. If your loan was already approved for ACE but the suspension happens before closing, you'll need to pivot to a traditional appraisal. This can delay your closing by 1-2 weeks.

Appraisal capacity becomes strained in disaster areas. Local appraisers may be overwhelmed with insurance claims and mortgage work. Expect longer turnaround times and potentially higher fees.

Property access can be challenging if infrastructure damage affects roads or utilities. Coordinate carefully with your appraiser to ensure they can safely reach and evaluate the property.

Some borrowers assume they can use an appraisal from before the disaster. This won't work - lenders need current valuations that reflect post-disaster market conditions.

Geographic Scope Considerations

Suspensions can affect areas that weren't directly damaged. If a hurricane hits the coast but causes widespread economic disruption inland, Fannie Mae might suspend automated valuations for the entire region.

Border areas present particular challenges. Your property might be just outside the suspension zone, but if most comparable sales come from the affected area, your appraisal could still be complicated.

Military base closures, major employer shutdowns, or other economic disasters can also trigger suspensions even without physical property damage.

References

For the official guidelines, see 4407.2: Representation and warranty relief for automated collateral evaluation (ACE) or ACE+ PDR offers and Loan Collateral Advisor® in the Fannie Mae Selling Guide.