Paving the Way for Hybrids

Recent Policy Changes Make Room for Bifurcated Appraisals

…since we know retail mortgage lenders, they will demand appraisers take their own photos but accept MLS or no photos in bifurcated “appraisals.”

An appraiser shared these modifications with me:

Exterior photographs Clear, descriptive photographs showing the front, back, and a street scene of the subject property and the front of each comparable. The subject and all comparables must be appropriately identified. Acceptable photographs include original images from photographs or electronic images, copies of photographs from a multiple listing service, or copies from the appraiser’s files.

Photographs of comparable rentals utilized in the Small Income Residential Appraisal Report (Form 1025) are not required.

Freddie Mac Exhitibts for Appraisal 2020
Fannie Mae Exhitibts for Appraisal 2021

It now looks like Fannie and Freddie no longer require original comp photos. This appears to be paving the way for greater reliance on bifurcated/hybrid reports which don’t require original comp photos already.

This change makes sense since 70% of refi mortgages used AVMs instead of appraisals. This reduction in resistance will be applied for hybrids despite being more expensive, slower and less reliable but more easily automated.

But since we know retail mortgage lenders, they will demand appraisers take their own photos but accept MLS or no photos in bifurcated “appraisals.”

This is also the same logic we have observed since the financial crisis – GSEs are fine with trainees for appraisal inspections but lenders are not fine with trainees.


Jonathan Miller
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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12 Responses

  1. Avatar B says:

    Not sure this is actually something new. Maybe tweaked a bit but not new.

    FNMA did not require original photos and did not require disclosure.

    Freddie did not and does not require original but required disclosure and a good reason for including photos other than those taken by the Appraiser until recently (3-4 years now).

    Please correct me and cite a reference if I am mistaken.

  2. Avatar Diana N says:

    I have found over the 50 yrs I have been appraising that sometimes you have no choice but to use MLS photos, they represent what the comparable actually looked like when sold, and in some cases the comp has been razed for new construction.

  3. Avatar KRG says:

    Fannie and Freddie have allowed use of MLS pics for years. Why is this presented as something new?

    • Avatar Diana N says:

      KRG Its’the reviewers for the AMC that are the ones insisting on original photos I have read that floor plans aren’t required either unless it is unusual and a detriment to the improvement, but they insist on floor plans also including the basement if finished.

  4. Avatar Xpert says:

    FNMA updated its appraisal requirements to allow MLS photos for comparables back in 2010 and Freddie Mac in 2017.

    I believe Jonathan may have missed this because he only does commercial appraisals.

    I still continue to take photos of comparable sales unless it is not possible.

  5. Avatar Scott says:

    Old news. And difficult to read/understand. Sorry…..just being honest.

  6. Avatar Long time appraiser says:

    Fannie Mae allows the use of mls photos however Appraisers are still required to complete exterior inspections of the comparable sales which is not required in hybrid/bifurcated appraisals. Pretty sure that is the point of the article. Thanks Jonathan for your support of this completely misunderstood industry.

  7. Avatar Coach says:

    What’s really disturbing in this article is the fact that 70% of GSE residential mortgages are done with AVMs.

    A couple of years ago, Phil Crawford in his 2019 DC appraiser’s week show said that he was hearing that 70% of loans will get appraisal waivers and only 30% of all loans will have an appraisal done same time next year (meaning by end 2020). And here we are today with 70% of loans done with avms!

    Start at 13:14

  8. Avatar TBG says:

    Coach Said: What’s really disturbing in this article is the fact that 70% of GSE residential mortgages are done with AVMs.

    The headline blurb does not match the actual text of the story (or the facts as supported by data). Note that the story says 70% of refis, while the “sub headline” says 70% of all loans.

    • Avatar Xpert says:

      Correct. 40 to 50% of all loans had a waiver and about 70% of refis had one.

      “Appraisal waivers have really exploded in recent years – especially during the pandemic. But how many are there exactly? Let’s look at actual numbers to walk away with some perspective. These stats are from January 2021 from AEI.


      47.4% of all Freddie Mac loans had a waiver
      44.5% of all Fannie Mae loans had a waiver
      Waivers are far more common during refinances
      Only 10-12% of purchases had an appraisal waiver in January
      Non cash-out refinances have the most waivers (67-69%)
      The higher your loan-to-value, the lower your chance of a waiver
      Waivers have seen a dramatic increase during the pandemic”

  9. Avatar LaydeeTee says:

    Remember; FNMA/Freddie Requirements are one thing; Individual Lender requirements are a separate thing; Your Engagement Letter is also a completely separate thing; AND what you state you did in the Certification Pages of the Appraisal Forms is altogether different. As long as we clearly state what we DID or DID NOT do in our reports, and it is not in conflict with any or all of the above….we are good to go. 🙂
    (but you can’t state you observed the comps from the street if you didn’t)

  10. Baggins Baggins says:

    Listing photos can be deceiving, fish eye views, color and lighting manipulation, even photo shopping. I pulled up to a comp and it had an old water solar system still on the roof, yet the active listing did not portray that. After reading, ‘has non functional solar and it’s easy to remove.’ This other one had digital staging, meaning they brushed up scuffs, shined counters, put furniture in, photos on the wall, even some fresh paints. It was remarkably skilled photo manipulation and reminded me of something like scanner darkly, unusually realistic surreal imagery, colors jumped off the page. I’ll take mine with better landscaping, a pool, metal windows, hardwoods, custom paints. Sure was more cost effective to hire the photo guy rather than the contractors.

    Technology does not evolve in a bottle, the more advanced digital manipulation potential becomes, the greater the need for robust checks and balances, aka the human appraiser on site. Think of all the fraud potential if the day comes when borrowers can predict with certainty, nobody will actually verify the legitimacy of the digital inspection photos. Who’s going to know, and who’s going to care, it’s all insured anyways. Lenders are on board, it’s government money lent through a fractional system, then insured by the same government. The people whom stand to take actual losses, aside from the collective taxpayer base, are the individuals in origination.

    Whatever the allowances may be, take care before taking advantage. The simple base work which built up the current appraiser base is almost gone. If you get a full request, the borrower or lending situation already sparked a manual underwriting scenario. Automating that for maximized volume, taking advantage of all sow allowances, risky business. I miss 2075’s and drive by’s.


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Paving the Way for Hybrids

by Jonathan Miller time to read: 1 min