Appraisers - FHFA Slows Bifurcated Appraisals



FHFA Slows Bifurcated Appraisals

by Isaac Peck, Editor

Many appraisers took Fannie Mae’s new Value Verify pilot program, featuring bifurcated appraisals, as the beginning of the end of the profession. Now Working RE has learned that part of the Value Verify process has been put on hold.

Fannie Mae, which is still in conservatorship, is currently regulated by the Federal Housing Finance Agency (FHFA). Starting in 2017, FHFA tasked Fannie Mae with “Modernizing the Appraisal Process.” The result is Fannie’s bifurcated appraisal pilot program, which it calls Value Verify. Over the last few months, rumors circulated that Value Verify was “dead.” Well, not exactly, as Working RE (WRE) learned, but the news does indi-cate there is a watchdog in place.

Fannie Mae tells WRE: “In early 2020, at the instruction of FHFA, we will adjust the Value Verify process to pause the Data and Done option (our bifurcated valuation process that does not ultimately result in the delivery of an appraisal). We will continue to offer the Data & Appraisal option within Value Verify on a limited pilot basis as a means to evaluate possible improvements to our collateral risk management and create a more efficient appraisal process.”

FHFA confirmed that it asked Fannie Mae to pause any bifurcated valuation process that doesn’t result in an appraisal, telling WRE: “While FHFA continues its review of Enterprise pilots, including those related to the appraisal process, the Agency is directing the Enterprises to focus on activities necessary to sup-port their core guaranty business mission, enhance safety and soundness and facilitate ending the conservatorships. Accordingly, the Enterprises have been asked to redirect their efforts and pause testing any bifurcated valuation process that does not ultimately result in the delivery of an appraisal.”

In other words, Fannie’s Value Verify program of testing bifurcated appraisals is continuing but in a modified, more prudent fashion. WRE reached out to FHFA for clarification and elaboration on future plans for the program and for appraisers, but at press time, no response has been received.

To understand what has changed, we first have to understand Fannie’s Value Verify initiative. Under Fannie Mae’s initiative, a property data collector, not necessarily a licensed appraiser, would inspect a home and report back on the condition of the property (For more, visit; search Bifurcated Appraisals).

Based on the characteristics of the property indicated by the Property Data Collection (PDC), Fannie’s Value Verify initiative offers the lender (and the borrower) one of two options:
• Data and Done (an appraisal waiver based on PDC data).
• A desktop appraisal (Fannie’s new 1004P).

So while Fannie’s Value Verify pilot continues, beginning in early 2020, FHFA instructed Fannie to pause the “Data and Done” option, that completely waives the 1004P desktop appraisal and allows loan approval based only on data collection.

Lyle Radke, Director of Collateral Policy and Strategy at Fannie Mae, presented the Proposed Solution Framework slide (Figure 1) in his presentations at various appraiser conferences through-out 2019. FHFA is essentially halting Option #1: Data and Done, while allowing Fannie to continue with its bifurcated pilot model #2: Data & Appraisal.

Appraisers believe this is good news for consumers because the non-biased eyes of a professionally trained and licensed appraiser will continue to be part of the process.

Proposed Solution Framework

About the Author

Isaac Peck is the Editor of Working RE magazine and the Vice President of Marketing and Operations at, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 50 states. He received his master’s degree in accounting at San Diego State University. He can be contacted at or (888) 347-5273.

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Comments (5)

  1. Appraiser’s should not earn less with the new process, because we still have to take the time reviewing all of the work and documents, which more than likely will take more time. If anything, Appraiser’s should earn more with the amount of education and time it takes to become Certified and remained certified. There has not been COLA adjustments or inflation adjustments within our industry, like the built-in adjustments realtors have with the increase of housing costs. It takes years to become an appraiser, which equates to the same time it takes to get your Masters, and that should be rewarded and recognized. We are truly the only unbiased party to the transactions and should be held in a position of respect because we protect the integrity of the real estate transaction process.

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  2. What do you think will happen when Fannie Mae disagrees with the comparables selected by the data collector? That process will be pressured by selecting their own comparables from Collateral Underwriter. Is anyone naive enough to think that splitting up the process among additional people promotes efficiency? It promotes corruption. Fannie Mae has attempted to undermine the independent appraisal process for decades and even caused a global recession. The best technology is useless when it is not administered by a disinterested party. This very concept of valuation should keep Fannie Mae in receivership or disbanded and reorganized altogether.

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  3. Appraiser’s determine the scope of the assignment not the GSE’s and not this clown Radke.  Bifurcation is a money making scam! This is what happens when you allow a bunch of non-appraiser and appraiser’s who have no real world appraisal experience determine how to manage risk. There is no shortage of appraiser’s just a shortage of appraiser’s willing to be scammed out of their fees. This bifurcation process is just an other attempt for the lender and AMC to retain as much of the appraisal fee as possible while paying the appraiser below market rates. Consumers, investors and tax payers beware this process will undermine the entire Real Estate industry and the entire hosing market. Is this Radke clown willing to go to prison once the housing market fails? The GSE’s, AMCs and lenders continue to dumb down the entire appraisal process in an attempt to secure more loans and retain as much of the appraisal fee as possible. This is all drive by greed! The government needs to step in and put an end to this. There is not 1 single reason an appraiser should not complete the entire appraisal process from start to finish. Like I said Bifurcation is a money making scam which only benefits the AMC, lender and GSE. Nobody else benefits from bifurcation. The public trust is being significantly harmed. Appraiser’s are sounding the alarm yet the government fails to step in and put an end to this scam, lies and deception! It is time to practice basic common sense in the lending world!  Bifurcation is a money making scam dont be fooled! Appraiser’s stand up to these clowns! Radke is not the spokes person for the appraisal profession. He is a corporate clown pushing false data purely based on corporate greed! Biforcation needs to go and common sense needs to return! Good bye bifurcation!

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  4. More than enough has been written by informed expert practitioners of real estate appraisal to refute the validity and ethical, if not legal propriety of performing so-called third part (bifurcated) appraisals.

    FNMA (once they are released from government oversight) can generally do what they want in terms of undermining investor confidence in the security of investments sold by them. They do not have the right to undermine an entire profession simply because they drank the technology kool-aid.

    The American Guild of Appraisers urges their members not to perform either hybrid inspections or appraisals. The best possible outcome is that they undermine their own profession.

    A more probable outcome is that on top of the best-case scenario, they also lose their licenses, incur heavy fines, and suffer diminished reputations professionally among their peers.

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