Despite what rumors you may have heard, Fannie Mae is not coming out with any new appraisal forms. Of course, I am playing with you a bit; they are coming out with a new portal of course – just not new forms.
If you have not heard yet, FNMA is in the process (some say it is mostly finished) of developing a whole new way to complete Section 2 of USPAP – the reporting side. The way we as valuation professionals collect and analyze markets and data is not changing, but the old days of the 1004 may soon be in the past.
Some of my colleagues have asked me, “What will the new forms look like?” Again, and I know it is a bit nit-picky, but there are no new forms. Rather, the GSEs are developing a cloud-based electronic container that will be used to report our findings rather than filling out a form and sending it in. Weird, I know, but it has its positives.
Currently, an appraiser needs to determine the proper scope of work to know which form is best for the situation. If it is a condo, it is likely a 1073. Single family residence, a 1004 or 2055. Small income? Well, a 1025 will probably do the trick. The new system will be a one-stop shop for all residential appraisal needs. Rather than choosing the form and filling it out, you will start putting data in the system and it will open up the needed sections for you. If there is no need for a full cost approach, for example, that section will not be shown. No basement? No basement questions (such as percentage finish) will be seen. The subject has an ADU? Great, the ADU questions will be asked and answered. Think of it kind of like Turbo Tax for appraisers. You will answer a series of questions and the system will give the appropriate additional sections based on your answers.
What will this do to form-filling software companies? Word on the street is, not much. They will still be around assisting appraisers to use the new system more efficiently. I am told major appraisal software companies are scrambling and retooling for this change. Besides, private appraisals are not going away. There will still be a need there.
How will we handle narrative and reconciliation? I am told there will still be space to explain why we did what we did. That is not going away. We are not just clicking boxes and filling out small capacity fields. Your expert opinions are still needed. As far as your workfile goes, you will be able to “print and save” your work into your digital workfile for safe keeping.
Is this change a good thing? It probably depends on your point of view. I always believe change can be hard, but brings opportunity. I assume most of us will adapt, and some will decide this is the straw that broke the proverbial camel’s back and decide it is time to retire. I have seen the new system (at least a beginning prototype) and it is pretty amazing. Different for sure.