18 May Fannie Mae Requirements For Appraisers In 2022

Appraisal changes for measuring, calculating, and reporting gross living area for Fannie Mae loans went into effect on April 1st, 2022. As a national appraisal management company, Arivs is committed to staying up to date on the latest updates and trends, so that we can properly assist our lenders and appraisers. Let’s see what’s in store for appraisers based on the Fannie Mae requirements for 2022.

Breaking Down The Policy Update

Appraisers will be required to use the American National Standards Institute or ANSI measuring standard to measure, calculate, and report gross living area and non-GLA areas of properties requiring interior and exterior inspections on loans sold to Fannie Mae. According to Fannie Mae– “This policy update will standardize the method used to calculate, report, and measure gross living area and non-GLA areas of subject properties.” Valuations on residential property correlate strongly with GLA, yet to date, there is much inconsistency on how appraisers determine it. By adopting the ANSI standard for the above-mentioned reasons, we can expect the following:

• Creating alignment amongst market participants
• Providing a professional and defensible method for the appraiser
• Allowing for transparent and repeatable results for consumers of appraisal reports. 

Preceding this, Fannie Mae’s Selling Guide had not required the use of a specific measurement standard. This change is occurring to standardize the measuring method, however, there is a chance it can cause issues in older homes. Michelle Czekalsi Bradley, a certified general appraiser and USPAP instructor stated that–” This has the potential to cause some difficulty for Pennsylvania in particular, as we have a rather old housing stock. This won’t be an issue where new homes are the predominant market, but areas like Pittsburgh, Harrisburg, and Philadelphia, for example, have older homes that are going to have potential issues.”

Fannie Mae Requirements: The Adoption Of The ANSI Standard

Fannie Mae and our national appraisal management company have seen many appraisers voluntarily adopt the ANSI Z765-2021 (American National Standards Institute) Measuring Standard since it first launched back in April of 1996, with many states requiring appraisers to use it. This includes Alabama, Alaska, Colorado, Kentucky, and North Carolina. The ANSI standard is also being used by the National Association of Home Builders and some tax assessors. There is not one definitive source for determining square footage of gross living area. 

Tax assessors measure or estimate differently, while appraisers have not previously been required to adhere to any laws or regulations for measuring square footage. A variety of lenders will currently utilize online sources to gather data regarding the homes, which include the reported square footage. Because homeowners, tax assessors, and real estate agents will all measure in their own way, the data that is available can confuse some people. As it stands currently, this is only one of Fannie Mae requirements. Freddie Mac, the VA, HUD, and USDA have yet to follow suit. Fannie Mae noted that comparable sales may be measured differently because GLA for properties in the MLS systems and assessor records may not be ANSI-compliant. Based on research and an appraiser’s knowledge of the local market, appraisers will have to determine if the GLA that’s provided through alternate sources needs to be adjusted. 

However, this won’t change the requirement to report subjects above grade and below grade square footage to the ANSI standard. Fannie Mae believes that the new policy will be helpful in providing more clarity for consumers. Adjustments and commentaries found in the report should explain whether the non-GLA areas have less, more, or equal value to the GLA areas that are contingent on market reaction. You can always coordinate with our national appraisal management company if you have any additional questions on how these modifications will affect the entire process.

Additional Elements To Consider When Using The ANSI Standard

For appraisers who are using the ANSI standard, here are some items to consider:

• Measurements should be taken to the nearest inch or tenth of a foot, and the final square footage is reported to the nearest whole square foot
• Staircases are included in the GLA of the floor from which they descend
• Basement in any space that is either partially or completely below grade
• The GLA calculations does not include openings to the floor below
• Finished areas must have a ceiling height of at least 7 feet. In a room with a sloping ceiling, at least 50% of the finished square footage of the room must have a ceiling height of at least 7 feet, and no portion of the finished area that has a ceiling height of less than 5 feet can be included in your GLA.
• If a home has a finished area that does not have a ceiling height of 7 feet for 50% of the finished area in adherence to the ANSI standard, the appraiser may put this area on a separate line in the Sales Comparison Grid, with the necessary market adjustment. The report will be ANSI-compliant and will recognize the contributing value from the non-GLA square footage

Staying Up To Date With A National Appraisal Management Company

From the beginning of the appraisal process to the end, the team of professionals at Arivs will always have your back. To learn more about how the latest policy changes affect our fellow appraisers, lenders, and homeowners, contact us today to gain some valuable insight from a highly-regarded, national appraisal management company!