The form has been a key requirement for appraisers since 2009, having been created in direct response to the housing crisis. The form was designed to “provide a standardized mechanism for appraisers to analyze and report changes in market conditions,” according to Fannie Mae. “This enables lenders to make prudent lending decisions in appreciating, stable, or declining markets.”
The removal of the requirement was announced July 31, 2018, at an annual Appraisal Institute event, and the official announcement from Fannie Mae came recently.
Fannie Mae said the change takes place immediately.
The reason for abandoning Form 1004MC, according to the GSE, is that its “Collateral Underwriter (CU) now provides robust market trend information for lenders and Fannie Mae, enabling measurement and management of market risks in a more rigorous way.”
The change in requirement will take place in both Collateral Underwriter and Desktop Underwriter, although the form will still be present in the Desktop Underwriter system until “a future release,” Fannie Mae said. “Until that time, lenders may disregard the DU message.”
The Selling Guide made a point to note though that “Appraisers remain responsible for analyzing market conditions and accurately reporting them in the Neighborhood section of our appraisal forms.”
Also, it is important to note that thus far Freddie Mac and the Federal Housing Administration have not made similar announcements regarding the market conditions form. For the moment, they still require it.
However, according to a recent blog written by Erik Wind and first published in the GeoData Plus Blog, “Freddie Mac did imply that such a move would be likely.” The blog also noted that individual lenders may choose to continue requiring 1004MC.