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  • Writer's pictureQC Verify

Understanding Fannie Mae’s Definition of “Competency”

Does your operations team stay ahead of the curve when it comes to appraisals? With inflated values collapsing under the pressure of an economy on the brink of recession and rising interest rates, appraisal valuation is more critical than ever. Leaning on industry resources, starting with Fannie Mae’s quarterly Appraiser Update, is a great place to start, or enhance, this effort. The most recent edition, published last month, offers a meaningful look at appraiser competency and diversity.

Why competency?

Fannie Mae kicks off this observation by citing the Uniform Standards of Professional Appraisal Practice (USPAP). Pointedly, competency is called out as falling on the shoulders of the appraiser; however, from a realistic perspective it falls on all of us as we complete due diligence throughout the origination and mortgage lifecycle.

Consider how everyone benefits if the appraiser is competent. When the collateral is properly valued, asset protection is provided for delivery and securitization, as well as safeguarding in the event of future default. In today’s environment, a professional appraisal also ensures the validity of the data, especially when completing desktop reviews or hybrid evaluations. Data authenticity further contributes to financial analysis across numerous business sectors spanning the globe. Most importantly, competent appraisal valuation instills consumer trust in the entire mortgage market.

How do you determine if an appraiser is competent?

When initiating an appraisal order, ask yourself if the appraiser can competently perform the assigned appraisal product? Consider the USPAP Competency Rule, which states that all appraisers must perform appraisal duties an

d responsibilities specifically exemplifying:

1. The ability to properly identify the problem to be addressed.

2. The knowledge and experience to complete the assignment competently.

3. Recognition of compliance with laws and regulations that apply to the appraiser or to the assignment.

In addition to the aforementioned requirements, appraisers are strongly encouraged to pursue developing areas of knowledge that encompass investor requirements and regulatory guidance, as well as federal, state and local laws. Given the extreme volatility in appraisal regulation and oversight that has evolved over the past 15 years, appraisers cannot afford to lack competency in these areas, and our industry can’t tolerate the absence of knowledge or professionalism in the valuation process.

What’s the Ap

praiser Diversity Initiative?

A collaboration between the National Urban League and Fannie Mae, the Appraiser Diversity Initiative (ADI) was created in 2018 to introduce new individuals to the appraisal business, while promoting diversity. The program has attracted greater attention since its inception and now includes the Appraisal Institute and Freddie Mac as participating partners in this endeavor.

By utilizing the National Urban Leagues entrepreneurship centers, the program has been able to expand its reach to possi

ble entrants across the country. Dedicated to attracting diverse individuals, the ADI helps aspiring appraisers access education and experience, as well as secure scholarships for eligible training courses. This is a valued initiative, instilling competency in our next generation of appraisers.

Is your appraiser and appraisal oversight competent?

Appraisal guidance should be designed to flush out incompetency before the appraisal is even ordered, necessitating an end-to-end appraisal process that encompasses appraiser selection, appraisal review, and collateral due diligence. As you reassess and enhance your appraiser/appraisal review process use the industry resources at hand. Fannie Mae’s guidance in their quarterly Appraiser Updates and other resources convey sound options for your staff and appraisers to follow; additionally, QC Verify regularly offers

blog posts to help originators quickly catch up on updates from agencies including Fannie Mae.

QC Verify understands the importance of staying ahead of the curve as industry regulation, agency guidance, and investor requirements continue to shift in response to regulatory focus, pandemic impact, and recession worries. The latter is already impacting collateral valuation, making the competency conversation even more relevant. Our emphasis at QC Verify is to assist our clients in not only adhering to ongoing industry requirements, but to ensure our clients understand their options. As a full QC suite

due diligence provider, QC Verify specializes in audit and reporting that meets today’s organizational risk and compliance needs, using sophisticated technology with a human touch.

Visit QC Verify at to find out how our team of dedicated quality control and audit specialists can help you navigate and leverage appraisal competency.

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