In February, 2022, Freddie Mac released an FAQ for their new Desktop Appraisal policy.

What is a desktop appraisal?
Desktop appraisals are an alternative to traditional interior and exterior inspection appraisals (Form 70). The appraiser relies on property tax records, multiple listing service information, past sales, prior appraisals, and other data to complete the appraisal report.

Which Freddie Mac form will appraisers use when completing a desktop appraisal?
Appraisers must use Freddie Mac Form 70DThis links to a pdf file when reporting a desktop appraisal. Upon completion, the desktop appraisal must be submitted to the Uniform Collateral Data Portal (UCDP).

The desktop appraisal (Form 70D) requires the appraiser to include a floor plan. Is the floor plan different than a building sketch?
Yes, the floor plan is different than the building sketch. A building sketch is an exterior perimeter drawing of the dwelling, reflecting the outline of the property. The floor plan is an interior detail of the dwelling’s layout. By including interior walls, the floor plan shows the relationship between rooms and reflects interior flow. Windows, doors, bath fixtures, appliances, and the like do not need to be included on the floor plan, unless their location affects the appeal, marketability, or value of the property.

If the appraiser receives a floor plan from a third-party, can it also be used to fulfill the requirement to provide a building sketch?
Yes, provided it includes exterior dimensions that the appraiser can use to verify the gross living area (GLA) of the subject property.

Does Freddie Mac have specific qualifications for appraisers who complete desktop appraisal assignments?
No. Freddie Mac requires the appraiser to be licensed or certified in the state in which the subject property is located. The appraiser must have the knowledge and experience appraising the property type in the market area and have access to applicable data sources. It is up to the appraiser to determine, prior to agreeing to accept an assignment, that they can perform the assignment competently. When the appraiser signs the appraisal report they attest, as evidenced by Certification #11, that they have the knowledge and experience in appraising the type of property in the market area.

If a Seller obtains a desktop appraisal for a purchase transaction loan with a 90% loan-to-value (LTV) ration based on the sales price, but the appraised value from the desktop appraisal is below the sale price, is the desktop appraisal still acceptable?
Yes. If the desktop appraisal results in an appraised value less than the sales price causing the LTV ratio to be greater than 90%, the Seller is permitted to deliver the loan with the desktop appraisal and is not required to upgrade to an interior and exterior inspection appraisal (Form 70) based on the higher LTV ratio. However, if the LTV ratio increases for any other reason (e.g., a loan amount increase) and is greater than 90%, the Seller must upgrade to an interior and exterior inspection appraisal (Form 70).

Since the appraiser did not complete a personal inspection of the subject property it may be more difficult to obtain information about it. Can an appraiser rely on information obtained from technology platforms?
Consistent with Uniform Standards of Professional Appraisal Practice (USPAP), appraisers are permitted to consider and develop any information deemed credible. The appraiser may obtain information from sources that include private third-party websites, remote mapping and floor plan technologies, or public record providers.

Appraiser's Certification #10 was removed as part of COVID-19 appraisal flexibilities, but it is included in Form 70D. What is different?
For the COVID-19 appraisal flexibilities, Appraiser’s Certification #10 was removed to recognize the mitigating circumstances associated with the pandemic and acknowledge that the appraiser might only be able to rely on information from an interested party to the transaction (for example, the homeowner) and verification might not be possible. Because Form 70D includes Certification #10, the appraiser must verify, from a disinterested source, all information in the report that was provided by parties who have a financial interest in the sale or financing of the subject property.

May an appraiser make assumptions regarding characteristics of the property such as condition, quality, room count, amenities, finished basement, etc.
It is unacceptable for the appraiser to assume the condition of the property is “average” or “similar to the exterior of the home”. If adequate and verifiable information about the subject property is not available from credible sources, then the desktop appraisal is not acceptable. Appraisers must have data and verification sources they consider reliable. There will be instances where it is not appropriate for the appraiser to perform the desktop appraisal and the Seller must obtain an interior and exterior inspection appraisal (Form 70).

When completing a desktop appraisal, should the appraiser use the GLA reported by public records if the building sketch provided by a third-party reflects a significantly different GLA?
When analyzing comparable sales data, it is not uncommon for varying sources to report different data for features, including the GLA. The same will likely be true when analyzing subject property data for a desktop appraisal assignment. In all cases, the appraiser must analyze and reconcile the data and decide which data is most reliable. If credible subject property data is not available, then the assignment must be upgraded to an interior and exterior inspection appraisal (Form 70).

Can an appraiser complete a desktop appraisal if they are aware of the existence of minor repairs, deficiencies, or deferred maintenance?
Yes. Freddie Mac allows an appraisal to be completed “as is” for an existing property when there are minor repairs or deficiencies, or deferred maintenance. The appraiser must make appropriate and supported adjustments for these conditions in the appraisal report, when necessary. However, it is up to the appraiser to determine whether additional information, that may include the appraiser’s personal inspection of the subject property, is necessary to assess the impact of the conditions.

Statement of Assumptions and Limiting Conditions #2 requires the appraiser to include a floor plan that shows the approximate dimensions of the improvements. Where would an appraiser obtain this information?
The appraiser may have this information in their files. Many appraisers collect builder floor plans in the market areas where they work. Prior appraisals, listing packages or public records may also be sources for floor plans. Appraisers may also obtain a floor plan produced by available scanning applications or other technology that may require the participation of parties such as real estate professionals or homeowners

Does the appraisal need to include specific photos or a minimum number of photos?
Yes. At a minimum, the desktop appraisal must include photographs of the front, rear, and street scene in addition to the kitchen, all bathrooms, and the main living area of the subject property.

Can an appraiser complete a desktop appraisal in a market area where they have not provided prior appraisal services?Certification #11 on Form 70D states that the appraiser has knowledge and experience in appraising the specified property type in the specified market. If the appraiser has not performed prior appraisal services in the area in which the subject property is located, the appraiser may not complete the assignment. This requirement applies to all appraisals performed on loans sold to Freddie Mac.

There are four fields at the top of the Additional Comments Sections of Form 70D. What are the purposes of the requirements for these fields?
These fields should not be confused with the Assignment Type fields on Page 1 of the appraisal report. We are requiring Form 70D to include specific information in the four fields located at the top of the Additional Comments Section on Page 3 of the appraisal report to ensure accurate delivery and monitoring of desktop appraisal reports. The following table identifies the specific fields and the information that each field must contain. The appraisal will reflect the appropriate selection based on whether the appraiser has performed a prior appraisal on the subject property and is using that information to complete the current desktop assignment or has not completed a prior appraisal on the subject property and is relying on information from other sources (e.g., tax data, MLS, data cooperatives, etc.).