FHA Adopts GSE Appraisal Forms for Declining Markets

The Federal Housing Administration is adopting Fannie Mae and Freddie Mac forms for appraisers to use in collecting more information about property values in declining markets. Starting April 1, appraisals for FHA loans must include the Fannie and Freddie addendum for market conditions in declining markets. In those markets, FHA wants appraisals to include at least two comparable sales that closed within 90 days. "As home prices continue to decline in many housing markets throughout the country due to job losses and increased foreclosed, FHA finds it necessary and prudent to set additional guidance for collateral assessment practices for properties located in a declining market," FHA commissioner Brian Montgomery, a holdover from the Bush administration awaiting Senate confirmation of his replacement, says in the letter to lenders and appraisers.