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Freddie Mac Reinforces Its Commitment to Rural Housing in Guide Bulletin 2014-5

April 1, 2014

In response to a directive issued by the Federal Housing Finance Agency, we are publishing Seller/Servicer Guide (Guide) Bulletin 2014-5 which provides certain clarifications and additional guidance on our appraisal and eligibility requirements for properties located in rural areas.

This Bulletin also reinforces our commitment to serve the housing needs of all market areas: rural, urban and suburban, and to provide you with greater confidence that the mortgages you deliver meet our requirements.

The Bulletin addresses certain misconceptions related to:

  • Appraiser selection. Freddie Mac does not require the use of third-party vendors such as Appraisal Management Companies (AMC) to order appraisals or to achieve the required separation between the mortgage production function and the appraisal ordering and quality assurance functions. Also Guide Exhibit 35, Appraisal Independence Requirements, provides an exception in cases where a Seller’s small size and limited staff do not allow for a distinct separation between these functions.
  • Property eligibility and unique properties. If a market area contains properties or land uses that are non-residential in nature, such as agricultural properties, underdeveloped land and land development properties, this does not necessarily make a residential property in this market area ineligible to secure a mortgage for sale to Freddie Mac. In addition, Freddie Mac purchases mortgages secured by properties that are unique or may not conform to its neighborhood in terms of type, design, age or materials and techniques used in construction. But appraisers must be able to evaluate and report on how the characteristics of the market area and unique property features affect the value and the marketability of the subject property. 
  • Selection of comparable sales and analysis. In areas with less real estate activity such as rural market areas, appraisers may use comparable sales that are older than 12 months. They may also use comparable sales that are a considerable distance from the subject property, or not similar to the subject property. Appraisers must support and justify using these comparable sales in the appraisal report.

Guide Chapter 44, Property and Appraisal Requirements, has been updated to provide these clarifications and additional guidance for evaluating properties in rural markets.  

Get More Information

We encourage you to take advantage of the following resources so you can be familiar with our property and appraisal requirements.  

  • Guide Bulletin 2014-5.
  • Our webinars Reviewing Residential Properties and Collateral Assessment.
  • The Learning Center for educational resources on our collateral and appraisal requirements.
  • Guide Chapter 44.

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