Freddie Mac has issued several appraisal-related updates. (See http://www.freddiemac.com/sell/guide/bulletins/pdf/bll112408.pdf for the full announcement.)

First, effective April 1, 2009, a new form -- 71, Market Conditions Addendum – will be required for all mortgages sold to Freddie Mac with appraisals that have effective dates on or after this date.

The form will be required regardless of property type and inspection type. It is not required for Mortgages with inspection reports, such as mortgages originated with Form 2070, Loan Prospector Condition and Marketability Report, Fannie Mae Form 2075, Desktop Underwriter Property Inspection Report or a Property Inspection Alternative (PIA).

“This new addendum gives direction to appraisers concerning our expected scope of work for appraisals, and provides the Seller with additional details to support the appraiser’s determination of market trends and a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.”

Fannie Mae announced similar updates to its rules recently.

Freddie has also spelled out updates to its appraisal rules for mortgages involving newly constructed homes.

In its Oct. 17 bulletin, Freddie announced that, effective for mortgages for newly constructed homes with settlement dates on or after Jan. 2, 2009, if the effective date of the appraisal was more than 60 days before the delivery date or settlement date, the seller would have to obtain an appraisal update with an effective date no more than 60 days before the settlement or delivery date.

The GSE said it is revising Chapter K33 to require that for mortgages with settlement dates on or after Jan. 2, 2009, if the effective date of the appraisal is more than 120 days before the effective date of the permanent financing, the seller must provide an appraisal update that meets the requirements of Chapter 44 with an effective date no more than 120 days before the effective date of the permanent financing.

Chapter 44 permits sellers to comply with this appraisal update requirement by having an appraiser complete Form 442, Appraisal Update and/or Completion Report. However, Freddie reminded sellers that the Form 442 may only be used if the market value of the property has not declined since the effective date of the appraisal:

“In today’s unstable property value market, the Form 442 may not be applicable in many instances. If there are changes in the market property values since the effective date of the appraisal or the appraiser determines that one or more different comparable sales are more appropriate, the appraiser must report the results of the appraisal update on the Freddie Mac appraisal report form appropriate for the property type and inspection type and may not use Form 442 as described in Chapter 44.”