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Compliance Blog

Notes from Regulatory Road: Fannie Mae Abolishes the Market Conditions Addendum

Jeff Dickstein, SVI’s Chief Compliance Officer, is responsible for SVI’s adherence to all state, federal and industry regulations. With Notes from the Regulatory Road, Jeff provides timely commentary on what is happening in the industry.  

To kick off the month of August, Fannie Mae announced six updates to their Selling Guide. The announcement that caught our attention involves the Market Conditions Addendum (Form 1004MC) and is effective immediately.

Fannie’s abolishment of the Market Conditions Addendum has lifted the requirement for Form 1004MC from their underwriter programs. Their program, Collateral Underwriter® (CU™) has been working in place of Form 1004MC and provides “robust market trend information for lenders and Fannie Mae, enabling measurement and management of market risks in a more rigorous way.” However, Fannie Mae will still require appraisers to do their own analysis of market conditions and report their findings in the Neighborhood section of their appraisal forms.

Form 1004MC was created in response to the housing crisis in the mid- to late-2000s and was designed to provide a standardized mechanism for appraisers to analyze and report changes in market conditions. Standardization of the appraisal structure helped lenders to make intelligent lending decisions in all markets — appreciating, stable or declining.

Other Notable Updates

In their August Selling Guide update, Fannie Mae also announced updates to the following:

  • High Loan-to-Value Refinance Option: updated the Selling Guide to include all of the details that were previously communicated in LL-2017-05, High Loan-to-Value Refinance Option and LL-2018-02, High Loan-to-Value Refinance Option Update. They have also added a new page to the Eligibility Matrix for these transactions.
  • Disbursement of HomeStyle® Renovation Funds: clarified policies related to the process of disbursing renovation funds.
  • Consolidation of Data Quality and Integrity and Mortgage Fraud: simplifying Selling Guide content related to data quality and integrity and the prevention, detection and reporting of mortgage fraud.
  • First Payment Date: for both MBS and whole loans, the maximum amount of time permitted to occur between the final disbursement date and the first payment date is two months.

You can read the full Fannie Mae Selling Guide here.

Jeff Dickstein, SVI’s Chief Compliance Officer, is responsible for SVI’s adherence to all state, federal and industry regulations. He’s active with a number of industry boards and is currently Chairman of The Appraisal Foundation’s Industry Advisory Council.

Jeff has been in the mortgage industry for 36 years, with more than 29 years of experience as an appraiser (he is a Certified Residential Appraiser in 17 states).