As part of Fannie Mae’s efforts to promote quality in the loan origination process, Appraiser Quality Monitoring (AQM) was developed to provide appraisers and industry partners with actionable feedback to improve consistency, manage risk, and increase confidence in the appraisal process. Fannie Mae recently released some frequently asked questions pertaining to AQM.

Q. What is the goal of AQM?

A. The goal of AQM is to improve appraisal quality and strengthen the appraisal profession by identifying patterns of quality issues in appraisal reports and providing feedback directly to individual appraisers.

Q. What types of monitoring does AQM conduct?

A. The AQM process identifies appraisers whose appraisal reports exhibit a pattern of inconsistencies, inaccuracies or data anomalies. The intent and expectation of communicating these issues to appraisers is for training and educational purposes, and to provide them with an opportunity to improve their work. Future appraisal reports from those appraisers are then monitored to assess improvement. The AQM process can also identify appraisers whose appraisal reports exhibit a pattern of more egregious issues. In those cases, Fannie Mae will contact the appraiser and our lending partners informing them that either 100 percent of the loans submitted with appraisals from the identified appraiser will be reviewed in the post-acquisition file review process, or that Fannie Mae will no longer accept loans with appraisals completed by the specific appraiser.

Q. Does AQM report appraisal findings to state regulatory agencies?

A. In cases when a loan is repurchased by a lender due to an appraisal-related issue that appraisal may be referred to the relevant state regulatory agency. Also, state referrals may be made for cases such as fraud or improbable volume.

Q. Are Collateral Underwriter (CU) risk scores and Appraiser Quality Monitoring the same thing? 

A. No. Although information from CU’s analysis of appraisals is one tool that Fannie Mae uses in the AQM process, there is no direct connection between the CU risk score and AQM. High CU risk scores do not automatically trigger AQM reviews, or state referrals. AQM identifies appraisers whose appraisal reports exhibit patterns of appraisal quality issues for the purposes of training and education. AQM Letters

Q. Why does AQM correspond directly with appraisers without notifying lenders?

A. The primary AQM objective is to improve the quality of appraisal data submissions. Training and educating the appraiser through targeted correspondence has proven to be an effective way to improve data quality.

Q. What should an appraiser do after receiving an AQM letter?

A. Initial communications are intended to be instructional, except in cases where egregious issues were identified. An appraiser who receives an AQM letter should review the information provided in the letter, consult the Fannie Mae Selling Guide for additional information if needed, and make appropriate changes to avoid making similar mistakes in future assignments.

Q. Do appraisers have the opportunity to appeal or offer a rebuttal to an AQM letter?

A. Yes. Since the letters sent to appraisers for reports that exhibit a pattern of inconsistencies, inaccuracies, or data anomalies are intended for educational purposes, there is not a formal rebuttal process, but letter recipients may choose to respond if they disagree with the findings outlined in the letter. Fannie Mae offers a formal rebuttal process for appraisers whose work has been identified as requiring 100 percent post-acquisition review or whose work product is no longer acceptable to Fannie Mae. Rebuttals should address the issues cited in the letter and may include documentation to support the rebuttal.

Q. What should an appraiser do if he or she believes that the rebuttal would violate the Confidentiality section of the Ethics Rule as set forth in the Uniform Standards of Professional Appraisal Practice (USPAP)?

A. Fannie Mae expects that appraisers will be able to respond to most, if not all, AQM correspondence using publicly available information. Moreover, USPAP specifically authorizes an appraiser to disclose confidential information to “persons specifically authorized by the client [the lender].” Fannie Mae’s Selling Guide, which forms part of a lender’s contract with Fannie Mae, states: “All records related to loans (including all data and materials representing, based on, or compiled from such records) sold to or serviced for Fannie Mae are Fannie Mae’s property and any other owner of a participation interest in the loan regardless of their physical form or characteristics or whether they are developed or originated by the loan seller, servicer, or others.” (See the Ownership of the Loan File section of Selling Guide A2-4.1-02, Ownership and Retention of Loan Files and Records). The property appraisal is included as a loan-related record. AQM List

Q. What is the AQM list?

A. The AQM list, accessible to approved Fannie Mae sellers and servicers, includes appraisers whose work is subject to 100 percent post-acquisition review or is no longer accepted by Fannie Mae.

Q. What are the implications of using an appraiser on the no longer accepted list?

A. If a lender submits an appraisal report prepared by an appraiser from whom Fannie Mae will not accept appraisals, the lender will receive a message in the Uniform Collateral Data Portal (UCDP) stating “Fannie Mae will not accept appraisals from this appraiser.” and the loan will not be deliverable to Fannie Mae with that appraisal. As provided in the Selling Guide B4-1.3-12, Quality Assurance, “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.” Fannie Mae retains its ability to seek appropriate remedies, including repurchase, in the event Fannie Mae does acquire the loan.

Q. Are all appraisers who receive an AQM letter placed on the AQM list?

A. No. Because the purpose of AQM is to improve appraisal quality through training and education, appraisers receiving AQM letters for issues involving data integrity or that receive an initial notification involving more severe issues such as unacceptable appraisal practices, are not placed on the AQM list (either 100 percent post-acquisition review list or the no longer accepted list). If the quality of the appraiser’s work continues to exhibit significant deficiencies without improvement, Fannie Mae may consider adding the appraiser to the AQM list, notifying lenders, and/or reporting to the appropriate state regulatory agencies.

Q. How does an appraiser know if they are on the AQM list?

A. AQM letters include statements indicating they are for feedback/educational purposes and/or provide the appraiser an opportunity to improve their work. If the quality of the work does not improve and Fannie Mae deems the pattern of appraisal quality issues to be egregious enough that 100% post-acquisition review is warranted, the appraiser will be notified of this decision via certified letter and given the opportunity to respond. Fannie Mae may consider removing an appraiser from the 100% post-acquisition review list if they can demonstrate a significant improvement in appraisal quality. Appraisers who are added to the no longer accepted list are also notified via certified letter and given the opportunity to respond.