Freddie Mac Single-Family Seller/Servicer Guide 5603.4 — Unacceptable appraisal practices
Freddie Mac Guide §5603.4 (Unacceptable appraisal practices). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide 5603.4 — Unacceptable appraisal practices — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Single-Family Seller/Servicer Guide 5603.4 — Unacceptable appraisal practices (part 1 of 2)
Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. The following are examples of unacceptable appraisal practices. Evidence of any of the practices listed in this section will be a breach of Seller’s warranty as to the professional quality of the appraisal. 1. Consideration of the race, color, religion, sex, sexual orientation, gender identity, age, marital status, disability, familial status, exercise of any federally protected civil right, receipt of income derived from any public assistance program, birthplaces of residents at the property or in the Neighborhood, national origin of the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property. (See also Section 1301.2 for equal opportunity compliance requirements.) 2. Use of unsupported or subjective terms or statements to assess or rate, such as, but not limited to, “high,” “low,” “good,” “bad,” “fair,” “poor,” “strong,” “weak,” “rapid,” “slow,” “fast” or “average” without providing a foundation for analysis and contextual information 3. Incorporating terminology or veiled language that could indicate underlying bias, including but not limited to, “pride of ownership,” “crime-ridden area,” “desirable neighborhood or location” or “undesirable neighborhood or location,” “gentrified,” “working class,” “inner city,” “preferred community,” “up and coming,” predominantly Hispanic or Black neighborhood, substantial amount of Black or Hispanic residents at the property, diverse school system, amenities specifically geared to a race, ethnic or religious group or using terms such as Millennials, Generation X or Baby Boomers 4. Development of an appraisal using inaccurate or incomplete data about the subject property, the Neighborhood, the Market Area or any comparable property used in the appraisal analysis or report 5. Inclusion of references, statements or comparisons about crime rates or crime statistics, whether objective or subjective, in the appraisal analysis or report 6. Consideration of the age or location of a dwelling, or the age of the Neighborhood or census tract where the dwelling is located, in a manner that has a discriminatory effect 7. Basing the development of an opinion of value on factors that local, State or federal law designates as discriminatory 8. Reliance in the appraisal analysis on comparable properties that were not personally inspected by the appraiser when required by the appraisal’s scope of work. A personal inspection requires at least a visual inspection of the exterior of the comparable property. 9. Reliance in any appraisal analysis on inappropriate comparable properties, or the failure to use comparable properties that are more similar, or nearer, to the subject property without adequate explanation 10. Use of comparable property data provided by any interested party to the transaction without verification by a disinterested party 11. Use of inordinate adjustments for differences between the subject property and the comparable properties that do not reflect the market’s reaction to such differences, or the failure to make proper adjustments when necessary 12. Development of an opinion of value and/or marketability conclusions that is not supported by available market data 13. Breach by the appraiser or supervisory appraiser of a certification or Statement of Assumptions and Limiting Conditions or comparable statements on any Freddie Mac approved appraisal report form or addendum Note: See Section 5606.3 for additional unacceptable appraisal practices related to electronic appraisal reports.
Freddie Mac Single-Family Seller/Servicer Guide 5603.4 — Unacceptable appraisal practices (part 2 of 2)
The following are examples of unacceptable appraisal practices. Evidence of any of the practices listed in this section will be a breach of Seller’s warranty as to the professional quality of the appraisal. 1. Consideration of the race, color, religion, sex, sexual orientation, gender identity, age, marital status, disability, familial status, exercise of any federally protected civil right, receipt of income derived from any public assistance program, birthplaces of residents at the property or in the Neighborhood, national origin of the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property. (See also Section 1301.2 for equal opportunity compliance requirements.) 2. Use of unsupported or subjective terms or statements to assess or rate, such as, but not limited to, “high,” “low,” “good,” “bad,” “fair,” “poor,” “strong,” “weak,” “rapid,” “slow,” “fast” or “average” without providing a foundation for analysis and contextual information 3. Incorporating terminology or veiled language that could indicate underlying bias, including but not limited to, “pride of ownership,” “crime-ridden area,” “desirable neighborhood or location” or “undesirable neighborhood or location,” “gentrified,” “working class,” “inner city,” “preferred community,” “up and coming,” predominantly Hispanic or Black neighborhood, substantial amount of Black or Hispanic residents at the property, diverse school system, amenities specifically geared to a race, ethnic or religious group or using terms such as Millennials, Generation X or Baby Boomers 4. Development of an appraisal using inaccurate or incomplete data about the subject property, the Neighborhood, the Market Area or any comparable property used in the appraisal analysis or report 5. Inclusion of references, statements or comparisons about crime rates or crime statistics, whether objective or subjective, in the appraisal analysis or report 6. Consideration of the age or location of a dwelling, or the age of the Neighborhood or census tract where the dwelling is located, in a manner that has a discriminatory effect 7. Basing the development of an opinion of value on factors that local, State or federal law designates as discriminatory 8. Reliance in the appraisal analysis on comparable properties that were not personally inspected by the appraiser when required by the appraisal’s scope of work. A personal inspection requires at least a visual inspection of the exterior of the comparable property. 9. Reliance in any appraisal analysis on inappropriate comparable properties, or the failure to use comparable properties that are more similar, or nearer, to the subject property without adequate explanation 10. Use of comparable property data provided by any interested party to the transaction without verification by a disinterested party 11. Use of inordinate adjustments for differences between the subject property and the comparable properties that do not reflect the market’s reaction to such differences, or the failure to make proper adjustments when necessary 12. Development of an opinion of value and/or marketability conclusions that is not supported by available market data 13. Breach by the appraiser or supervisory appraiser of a certification or Statement of Assumptions and Limiting Conditions or comparable statements on any Freddie Mac approved appraisal report Note: See Section 5606.3 for additional unacceptable appraisal practices related to electronic appraisal reports.
Operationalizing Freddie Mac Single-Family Seller/Servicer Guide 5603.4 — Unacceptable appraisal practices
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Source of record: https://claudeforcompliance.com/regs/fhlmc-5603-4/
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