New Fannie Mae Appraisal Guideline is Old News to Appraisers

I had several emails arrive in my inbox yesterday to announce Fannie Mae’s “new” requirements for appraisers beginning September 1, 2010. In short, one of the things they are cracking down on is that appraisers must have knowledge of the local market as well as data sources for the market. Here is a snippet from Inman News:

“Fannie Mae has put lenders on official notice that they can only use appraisers who are knowledgeable about the area in which they are being asked to value property, and who have the ability to access records on recent sales in those markets.”

I don’t want to be the bearer of bad news, but this is nothing new for appraisers. We are supposed to be “geographically competent” already (know the local market) and it’s unthinkable that an appraiser would attempt to do an appraisal on a property when he/she does not even have data sources. In short, I understand the need for Fannie Mae to step forward here in light of some of the horror stories from HVCC, but this isn’t an earth-shattering revelation for appraisers because USPAP (our rules) already mandates us to know the local market. However, depending on how this rule plays out, that could be the interesting part.  

My big question is how will it be determined that an appraiser is “knowledgeable about the area” where he/she is appraising? Will there be an essay test, quiz, series of questions to answer, or will it be based on the appraiser’s proximity to the property (say, the appraiser has to live nearby)?

What do you think about this new rule? How do you see it impacting the real estate market? Do you think it will increase the quality of real estate appraisals? What are the positives, negatives and potential consequences?