Freddie Mac Single-Family Seller/Servicer Guide §5603.4 — Unacceptable appraisal practices (01/26/26)
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 (01/26/26) — 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 Guide 5603.4
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.
Freddie Mac Guide 5603.4
603-8 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
Freddie Mac Guide 5603.4
603-9 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 Guide 5603.4
Unacceptable appraisal practices (Future effective date 11/02/26) 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
Freddie Mac Guide 5603.4
603-10 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.
Freddie Mac Guide 5603.4
Property Data Collector Independence Requirements and Seller engagement of property data collectors (11/06/24) This section contains requirements related to: ■ Seller responsibilities ■ Separation of functions
Freddie Mac Guide 5603.4
603-11 (a) Seller responsibilities The Seller is responsible for: ■ Complying with the Property Data Collector Independence Requirements ■ Selecting the property data collector ■ Complying with the Uniform Property Dataset Freddie Mac does not select or approve individual property data collectors or property data collector management companies. The Seller, or a third party authorized by the Seller, is responsible for approving and selecting the property data collector. The Seller represents and warrants that the property data collection complies with Exhibit 42, Property Data Collector Independence Requirements, applicable laws and Freddie Mac requirements. (b) Separation of functions The Seller must maintain separation between its sales and Mortgage production functions and its property data collection functions.
Freddie Mac Guide 5603.4
Property data collector qualifications and Seller oversight (11/06/24) This section contains requirements related to: ■ Property data collectors ■ Seller oversight of property data collectors (a) Property data collectors The Seller, or its authorized third party, must ensure the property data collector: ■ Is independent and unbiased and has no present or prospective interest or bias with respect to the transaction, the property or the participants to the transaction ■ Completes training in all aspects of property data collection and the Uniform Property Dataset (UPD) and passes an exam that evidences proficiency in property data collection, and ■ Performs all aspects of a property data collection including, but not limited to:
Freddie Mac Guide 5603.4
603-12 1. Identifying and reporting, with supporting photographs, any: ❑ Property characteristics represented in the UPD; ❑ Design features that impair the use of the subject property and cannot easily be changed (e.g., access to a bedroom only through another bedroom, etc.); and ❑ Factors adjacent to the subject property that are atypical for the location (e.g., power lines, commercial site, industrial site, etc.) 2. Measuring the dwelling unit(s) and any other structures on the subject property to produce building sketches and floorplans in accordance with the exhibit requirements in Section 5604.2(a)(ii) 3. Collecting a comprehensive set of photographs of the subject property, as described in the UPD. (See Section 5604.2(h) for photograph requirements.) (b) Seller oversight of property data collectors The Seller, or its authorized third party, is responsible for the accuracy and reliability of the PDR and of any data provided by the property data collector to the appraiser. The Seller, or its authorized third party, must have in place policies or procedures that: ■ Require property data collectors to undergo periodic background checks that include criminal background checks; ■ Require property data collectors to complete comprehensive training on preparing an accurate and thorough PDR; ■ Require property data collectors to comply with the same customer service standards or code of conduct with which employees and/or contractors of the Seller, or its authorized third party, must comply; ■ Include a process to continuously evaluate property data collectors, including monitoring and documenting performance to identify and remedy any recurring deficiencies and discontinuing the use of chronically underperforming property data collectors; and ■ Include a process for providing continuing education when appropriate (e.g., in the event of significant changes to the UPD, the property data collection process, etc.) The Seller must include a targeted review of PDRs as part of its quality control sampling. Appraisals completed using a hybrid process must also be included in the Seller’s quality control sampling.
Freddie Mac Guide 5603.4
604-1 Chapter 5604: Appraisal Report Forms, Inspection Types, PDRs, Exhibits, Age of Appraisal Reports and PDRs, Appraisal Updates, Appraisal Re-use and Reconciliation of Multiple Opinions of Market Value Chapter 5604: Appraisal Reports and PDRs, Exhibits for Appraisal Reports and PDRs, Age of Appraisal Reports and PDRs, Appraisal Updates, Appraisal Re-use, Reviewing Appraisal Reports, Reconsideration of Value, Subsequent Appraisal Reports and Reconciliation of Multiple Opinions of Market Value (Future effective date 11/02/26)