Appraiser Independence Requirements (AIR) FAQs

 
  © 2023 Fannie Mae    10.16.2023 Page 1 of 5 
 
Appraiser Independence Requirements (AIR) 
FAQs 
Fannie Mae and Freddie Mac (government sponsored enterprises or GSEs) published their Appraiser Independence Requirements 
in October 2010. Updates to AIR and these FAQs were published in August 2023, with additional updates to these FAQs in October 
2023. The requirements provide important protections for mortgage investors, home buyers, and the housing market. The 
updates do not change the intent or principles of the requirements. The removal of previous FAQs does not mean the question 
and answers are no longer applicable or relevant, but rather the FAQs were redundant or the edits to AIR have clarified those 
topics so they would no longer be frequently asked questions. 
These FAQs provide additional information in response to common questions about the Appraiser Independence Requirements. 
The AIR document should always be referenced for clarity as it is our official statement of policy. 
Contents 
Scope of Coverage..................................................................................................................................................................................... 1 
Selection of Appraisers ............................................................................................................................................................................. 2 
In-House Appraisers .................................................................................................................................................................................. 3 
Appraisal Management Companies (AMCs) ............................................................................................................................................. 3 
Restricted Parties ...................................................................................................................................................................................... 3 
Transfer of the Appraisal ........................................................................................................................................................................... 4 
Payment for the Appraisal ........................................................................................................................................................................ 4 
Appraisal Report ........................................................................................................................................................................................ 5 
Appraisal Reviews ..................................................................................................................................................................................... 5 
Compliance ............................................................................................................................................................................................... 5 
 
Scope of Coverage 
Q1.  Does AIR specifically prohibit communication with an appraiser by a real estate agent? 
No. Real estate agents and other third parties can be valuable sources of information. Conversations 
in which real estate agents or other third parties on behalf of the lender attempt to influence the 
development, reporting, result, or review of an appraisal are prohibited. 
Q2.  Does AIR apply to servicing activities, e.g., loss mitigation, MI removal, pre-foreclosure transactions, 
etc.? 
No. AIR is specific to a "mortgage origination transaction,” and servicing or portfolio management 
activities are not "mortgage origination transactions." However, the basic principles should be 
applied to protect the process and mitigate risk. 
   

Q3. How do the GSEs audit compliance with AIR?

Compliance with AIR is part of each GSE’s operational review of the lender. By selling the loan to a

GSE, the lender represents and warrants compliance with that respective GSE’s selling requirements,

including compliance with AIR.

Selection of Appraisers

Q4. When selecting an appraiser, may lenders use a pre-approved appraiser list or panel?

Yes. Lenders may use a pre-approved list or panel to select a residential appraiser, provided that:

(1) any employees of the lender tasked with selecting appraisers for the list are independent of the

loan production staff; and

(2) the loan production staff is not involved in selecting an appraiser off the list for a particular

appraisal assignment. See AIR section IV.D.

Q5. How does AIR section I.B.(9) impact how lenders may remove appraisers from a list of qualified

appraisers?

AIR section I.B. (9) addresses the removal of an appraiser from a list of qualified appraisers in

connection with influencing or attempting to influence the outcome of an appraisal. Also see sections

IV.A.(2), IV.D., and VIII.

Q6. Some lenders have proprietary automated origination systems that include a process for ordering

appraisals. How does AIR impact those systems?

The lender must review its systems to ensure that the appraiser selection process complies with AIR.

Q7. Who should be considered the “restricted parties” for purposes of achieving appraiser independence?

The term “restricted parties” refers to the loan production staff who are responsible for generating

loan volume or approving loans, as well as their subordinates. This would include an employee whose

compensation is based on loan volume or the closing of a loan transaction. Employees responsible for

the credit administration function or credit risk management are not considered loan production

staff. See AIR section IV.A.(1).

Q8. Can a restricted party participate in the onboarding, selection, or offboarding of an Independent Party?

No. Restricted parties cannot participate at any level. These actions have to be completed by parties

that are independent of loan production. See section IV.A.(2).

Q9. Are employees of the lender, such as processors, closers, or underwriters, that do not receive

commissions or incentives for the closing of a loan permitted to order appraisals?

Yes, if their immediate supervisor is not a member of the mortgage production staff or otherwise

participates in the lender’s mortgage production process and is not considered a restricted party. See

AIR sections IV. and VIII.

Q10. May a representative of the lender provide an appraisal management company a list or a panel of

appraisers to use for loans involving a specified mortgage broker, real estate agent, or loan officer?

No. No one is allowed to provide a list or a panel of appraisers to use for loans involving a specified

mortgage broker, real estate agent, or loan officer? See AIR sections I.B.(9) and IV.A.

In-House Appraisers

Q11. Are lenders and correspondent lenders permitted to use in-house appraisers to obtain appraisals?

Yes. In-house appraisers may be used in accordance with AIR, section V.

Appraisal Management Companies (AMCs)

Q12. Is a lender required to use an AMC for ordering appraisals?

No. A lender may order appraisals directly from an individual appraiser, appraisal company, or an AMC.

Q13. May a lender order an appraisal by directing a mortgage broker to select an AMC from among a group of

specifically authorized AMCs, one of which would receive information from the mortgage broker about

the loan application and begin the appraisal process?

No. A mortgage broker may not have any involvement in selecting a protected party. See section

IV.A.(2).

Q14. If a lender has an approved group of AMCs, is it acceptable for a mortgage broker to independently

select from that group if it’s done on an established timetable or eligibility window, and not on an

individual loan basis? For example, every 120 days the mortgage broker has the opportunity to switch

to a different approved AMC.

No. A mortgage broker may not have any involvement in selecting a protected party. See section

IV.A.(2).

Q15. May a lender direct a mortgage broker to use a web portal set up either by the lender, or by the lender’s

authorized agent, through which the mortgage broker inputs a request for an appraisal that triggers the

lender’s system to order an appraisal?

Yes. A lender may direct a mortgage broker to use a web portal in this manner so long as the web

portal does not allow the mortgage broker to have control of picking the AMC as noted in AIR sections

I.B.(10) and IV.A.

Restricted Parties

Q16. What is the difference between requesting an appraisal and ordering an appraisal?

New

Requesting an appraisal is providing the information necessary for the placement of an appraisal

order, i.e., property type, address, and contact information to access the property. Ordering an

appraisal involves the selection and engagement of the Independent Party that will manage the

appraisal process and/or perform the appraisal, which is not allowed.

Q17. Under what circumstances may a Restricted Party request an appraisal order using applicable systems

(e.g. loan origination systems, third party portals)?

New

A Restricted Party may request an appraisal order using applicable systems as long as the Restricted

Party does not have control or input over the selection of the independent party. Providing required

information (e.g. property type, address, and contact information for access to the property) to

facilitate the placement of an appraisal order is acceptable. Refer to Q16 for differences in requesting

an appraisal versus ordering an appraisal.

Q18. May mortgage brokers select a specific AMC if the lender works with more than one AMC?

No. If the lender works with more than one AMC, the lender must select the AMC. The mortgage broker

cannot select from a list of approved AMCs. See section IV.A.(2).

Q19. May a lender accept an appraisal that was ordered by a mortgage broker?

No. AIR does not allow a lender to accept an appraisal that was ordered by a mortgage broker, loan

officer, or real estate agent as noted in AIR section IV.A.(2).

Q20. May a lender accept a mortgage broker’s recommended list of independent parties?

No. The lender may not use a list provided by a mortgage broker or any other restricted party. See

sections I.B.9 and IV.A.(2).

Q21. May a mortgage broker order an appraisal directly from an AMC that was specifically authorized by the

lender?

No. AIR prohibits mortgage brokers from ordering appraisal services. See section IV.A.(2).

Q22. Does AIR permit a mortgage broker to select an appraiser from the lender’s list of approved appraisers if

the lender is responsible for the relationship with the appraiser, including compensation?

No. AIR prohibits lenders from relying on an appraisal if the mortgage broker had a role in selecting,

retaining, or compensating the appraiser. See section IV.A.(2).

Transfer of the Appraisal

Q23. Can a lender use an appraisal that was obtained by another lender in connection with a loan that was

originated and submitted by a mortgage broker when the mortgage broker was not involved in the

ordering of, or managing the process for, the appraisal?

Yes. A lender may accept an appraisal transfer from a different lender in accordance with the

requirements of AIR sections VI. and VIII., all Fannie Mae Selling Guide requirements, and related

documents.

Q24. Lender A (an approved GSE Seller/Servicer) originates and closes a loan in its name but sells it to lender

B (also an approved GSE Seller/Servicer), which in turn sells that loan to that GSE. Is lender B under any

obligation to obtain a new appraisal?

No. Lender B may buy a closed loan from Lender A and sell the loan to the GSE without a new

appraisal if Lender B can represent and warrant that any appraisal conducted in connection with the

loan conforms to AIR sections VI. and VIII., all Fannie Mae Selling Guide requirements, and related

documents.

Payment for the Appraisal

Q25. If the appraisal is ordered by the lender in a manner compliant with AIR, are there any specific

requirements about payments to the appraiser?

Yes. the lender or any third party specifically authorized by the lender shall be responsible for

providing for payment of all compensation to the appraiser. See AIR section IV.B.

Q26. Are borrowers precluded from providing payment for an appraisal to an AMC?

No. AIR does not prohibit a borrower from providing payment to an AMC acting as an agent of the

Seller; however, the borrower may not pay the appraiser directly for an appraisal.

Appraisal Report

Q27. How is “closing” of the loan defined? Is closing the date the documents are executed or the date the

funds are disbursed?

We define “closing” as the date the borrower executes the loan documents.

Appraisal Reviews

Q28. Does AIR prohibit members of a lender’s staff, or the staff of an authorized third party, from

communicating with an appraiser for corrections of factual errors in the appraisal report?

No. Communications with an appraiser regarding corrections of factual errors may be made by

anyone on the staff of the lender, or on the staff of an authorized third party. See AIR, section IV.A.

Q29. Who on the lender's staff, or on the staff of an authorized third party, may have communications with

an appraiser relating to or having an impact on valuation, including ordering, or managing an appraisal

assignment?

Anyone who is not part of loan production staff or who is not compensated on a commission basis

upon successful completion of a loan or anyone who does not report, ultimately, to any officer of the

lender not independent of the loan production staff or process, may have communications with an

appraiser relating to or having an impact on valuation, including ordering or managing an appraisal

assignment. See AIR, section IV.A.(2).(c).

Compliance

Q30. Is a loan eligible for sale to the GSEs if the lender purchased the loan from a correspondent that did not

comply with AIR in originating that loan?

No. It is the lender’s responsibility to ensure that loans it purchases with intent to deliver to the GSEs

comply with AIR and all Fannie Mae Selling Guide requirements.

Q31. Do sellers need to adopt policies to address potential misconduct such as bribery or intimidation of

appraisers?

Yes. A seller must have in place policies and procedures to ensure-compliance with AIR. See AIR

section VIII.

Q32. Is a seller required to establish a process for addressing complaints regarding AIR compliance?

New

Section VIII of AIR requires sellers to adopt written policies, procedures and disciplinary rules and

implement adequate training programs to ensure compliance with AIR. As a best practice, lenders

should include in their policies, procedures, and disciplinary rules a process for addressing AIR

compliance complaints.