Capture More Business in Rural Areas with Easier to Follow Requirements
August 6, 2014
If you're looking for ways to tap into more business, consider opportunities in residential properties in rural market areas, a traditionally underserved sector of the market.
Nearly 20 percent of the U.S. population lives in rural America and buyers in these areas are looking for quality, affordable mortgage financing. To help you capture more business, Freddie Mac recently clarified our rules and provided guidance on our appraisal and property eligibility requirements for residential properties in rural areas.
Here's a summary:
Freddie Mac purchases mortgages secured by residential properties in all markets, including rural locations, as long as the subject property is adequate collateral for the mortgage transaction based on the value, condition, and marketability of the property. (Guide Section 44.2)
We do not require the use of an appraisal management company (AMC) or any other third-party vendor to order appraisals. Single Family Seller Servicer Guide Exhibit 35, Appraiser Independence Requirements (AIR), allows Sellers to use staff (or in-house) appraisers to obtain and prepare appraisal reports. We require Sellers to obtain appraisals in a manner consistent with the AIR. (Guide Section 44.3)
The AIR does not require the use of an AMC or any third-party vendor to achieve the required separation between the mortgage production function and appraisal ordering and quality assurance functions. (Guide Section 44.3)
Smaller Sellers may not be able to separate the mortgage production functions from appraisal ordering and appraisal report review functions due to limited staff. In such situations, the Seller must demonstrate that safeguards are in place to isolate its collateral evaluation process from influence or interference from the mortgage production process. (Guide Section 44.3)
Freddie Mac allows appraisers to use comparable sales that are older than 12 months, as long as the appraiser can justify and support the use of older comparable sales in the appraisal report. (Guide Section 44.15 (f))
- Appraisers can use comparable sales that are far from the subject property and not similar to the subject property as long as they can justify and support the use of such comparable sales in the appraisal report. (Guide Section 44.15 (c))
We understand the unique challenges you face as a Community Lender striving to make mortgage credit available and affordable to residents living in rural areas. Through Freddie Mac you have access to a variety of mortgage solutions to help you choose the right product for your customer and the right execution for your business.
For More Information
Take advantage of the following resources which provide more details on our residential properties in rural areas and appraisal requirements.