A2-2-06, Representations and Warranties on Property Value (06/04/2025)

In addition to the limited waiver of underwriting representations and warranties available for certain DU loans, loans may also benefit from enforcement relief of certain representations and warranties related to the appraisal and value of the subject property (without regard to underwriting method). To be eligible for relief:

• the loan must be secured by a one-unit detached, attached, or condo property (manufactured homes are not eligible); and

• the appraisal must receive a CU risk score of 2.5 or below.

Note: See  B4-1.1-04, Unacceptable Appraisal PracticesB4-1.1-04, Unacceptable Appraisal Practices for examples of unacceptable practices.

When this criteria is met, the lender is not responsible for the following requirements described in this Guide:

• underwriting the appraisal report to determine whether the subject property presents adequate collateral for the mortgage;

• ensuring the appraisal accurately reflects the market value of the property;

• ensuring the appraiser used sound reasoning and provided evidence to support the methodology chosen to develop the opinion of value; and

• analyzing the comparable sales used in the appraisal report, including the description, selection, adjustments, and reconciliation of the comparables.

The lender remains responsible for the description of the property, adherence to fair lending, local, state, and federal laws and the accuracy and completeness of all data on the appraisal that pertains to the property and project (if applicable). This includes the property’s condition and quality ratings. The lender is also responsible for ensuring the property meets the property eligibility requirements in this Guide. Lastly, the lender remains responsible for any life-of-loan representations and warranties that may apply to the property or the appraisal.

In addition to the limited waiver of underwriting representations and warranties available for certain DU loans, when a loan casefile is eligible for value acceptance (appraisal waiver), value acceptance + property data, or rural high-needs value acceptance (appraisal waiver), and is exercised by the lender, Fannie Mae accepts the value estimate submitted by the lender as the value for the subject property. The estimated property value the lender enters in DU must be:

• based on the lender’s or borrower's estimate of value for a refinance transaction, or
• the same amount as the Sales Contract Price for a purchase transaction.

For all value acceptance offers that are exercised, the lender remains responsible for the accuracy and completeness of all data that pertains to the property and project (if applicable) that is submitted to DU (other than the property value) and must warrant that the property is adequately insured.

The following table describes the representations and warranties the lender must make ("Yes") if they exercise a value acceptance (appraisal waiver), value acceptance + property data, or rural-high needs value acceptance (appraisal waiver) offer. The table also identifies the representations and warranties the lender is not responsible for ("No").

*Includes warranty that the property is safe, sound, and structurally secure.

Fannie Mae does not warrant that the estimated value provided by the lender is the actual value of the subject property. The lender may not make any statements to any third party (including the borrower) that Fannie Mae performed any kind of appraisal or valuation of the property.

Note: See B2-3-01, General Property EligibilityB2-3-01, General Property Eligibility for property eligibility requirements and  B2-3-05, Properties Affected by a DisasterB2-3-05, Properties Affected by a Disaster for requirements on recent disaster.