AIR Appraisal Guidelines – What to Know

The Appraisal Independence Requirements (AIR) were developed by Fannie Mae, the Federal Housing Finance Agency (FHFA), Freddie Mac, and key industry participants to replace the Home Valuation Code of Conduct (HVCC). They were implemented on October 15, 2010. The purpose of AIR is to provide important protections for mortgage investors, home buyers, and the housing market.

Compliance with AIR is crucial because it maintains the integrity of the appraisal process by ensuring that appraisals are conducted independently and free from influence by any parties with a vested interest in the transaction. This helps to ensure fair and unbiased property valuations, which is critical for the stability of the housing market and the protection of both home buyers and mortgage investors.

We have distilled what we believe to be key information to help ensure you remain compliant with AIR. As always, we recommend all mortgage bankers refer to the most recent Fannie Mae guidelines but here are a few key things we think you need to know:

Scope of Coverage

  • AIR applies to all loans of one to four unit properties, except government-insured loans
  • An appraiser must be licensed or certified by the state in which the property to be appraised is located
  • An appraiser can update an appraisal for another lender
  • Only Fannie Mae and Freddie Mac have agreed to adopt AIR

Selection of an Appraiser

  • A lender may direct a mortgage broker to a specifically authorized AMC that will receive information from the broker about the loan application and begin the appraisal process
  • A lender cannot order an appraisal by directing a broker to select an AMC from among a group of specifically authorized AMCs
  • A lender can direct a broker to use a web portal set up either by the lender, or by the lender’s authorized agent, through which the broker inputs a request for an appraisal and then triggers the lender’s system to order an appraisal
  • An employee of the Seller or an appraisal company or AMC tasked with selecting appraisers for an approved panel or substantive appraisal review must be appropriately trained and qualified in the area of real estate appraisals and wholly independent of the Mortgage production staff and process

Mortgage Brokers

  • Brokers cannot select a specific AMC if the lender works with more than one AMC
  • A lender cannot accept an appraisal prepared by an appraiser that was ordered by a mortgage broker
  • A mortgage broker cannot provide the lender with an approved appraiser list for the lender to use when ordering appraisals for that particular broker
  • Brokers may initiate the appraisal process on a lender’s behalf in accordance with arrangements made by the lender

Transfer of the Appraisal

  • A Seller may deliver a conventional loan to Fannie Mae with an appraisal prepared by an appraiser selected by another lender, including where a Mortgage Broker has facilitated the Mortgage application (but not ordered the appraisal). The Seller delivering the loan to Fannie Mae makes all representations and warranties to Fannie Mae regarding the appraisal set forth in the Mortgage Selling and Servicing Contract, the Selling Guide and related documents

Payment for the Appraisal

  • The Seller or any third party specifically authorized by the Seller (including, but not limited to, appraisal companies, appraisal management companies, and Correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser

Appraisal Report Copies

  • A borrower must be provided a copy of the appraisal no less than three business days prior to the closing of the loan
  • The lender is responsible for ensuring that the borrower receives a copy of the appraisal
  • The Seller shall ensure that the Borrower is provided a copy of any appraisal report concerning the Borrower’s subject property promptly upon completion at no additional cost to the Borrower, and in any event no less than three days prior to the closing of the Mortgage. The Borrower may waive this three-day requirement if such waiver is obtained at least three days prior to the closing of the Mortgage

Appraisal Reviews

  • Communications with an appraiser regarding the corrections of objective factual errors in an appraisal report may be made by anyone on the staff of the lender, or on the staff of an authorized third party
  • AIR does not prohibit the appraiser from talking with the real estate agent. In many cases, real estate agents can be a source of data in the market in which the subject property is located

Quality Control

  • If a lender has reason to believe an appraiser is violating applicable laws or otherwise engaging in unethical conduct, they shall promptly refer the matter to the applicable board or agency


  • It is the lender’s responsibility to ensure that loans it purchases with intent to deliver to Fannie Mae comply with AIR and all of Fannie Mae Selling Guide requirements
  • The seller is required under AIR to adopt written policies and procedures ensuring disciplinary rules on appraiser independence. The seller also must ensure that any third parties are in compliance with AIR
  • Sellers must adopt written policies and procedures implementing these Appraiser Independence Requirements, including, but not limited to, adequate training and disciplinary rules on appraiser independence. Additionally, Sellers must ensure that any third parties, such as appraisal management companies or Correspondent lenders, used in conjunction with the sale and delivery of a Mortgage to Fannie Mae are also in compliance with these Appraiser Independence Requirements

Need a little more help? Get in touch and we would be glad to discuss your needs. We provide comprehensive risk management and internal audit services to ensure you remain compliant with Fannie Mae requirements.