Freddie Mac will be adopting the ANSI Z765-2021 (American National Standards Institute) measuring standards as of Nov. 2, following the adoption by Fannie Mae last year.
Appraisers will be required to use ANSI standards for measuring, calculating and reporting square footage of properties that require an interior and exterior inspection on loans sold to Freddie Mac.
“The majority of the time, the appraiser doesn’t know whether the lender is selling the loan to Freddie Mac or to Fannie Mae, so it has been typical practice for appraisers to default to ANSI measuring standards ever since Fannie Mae adopted this requirement in April 2022,” said Michelle Czekalski Bradley, a Pennsylvania certified general appraiser and USPAP instructor. “By defaulting to ANSI standards, our lender client could sell the loan to either of the enterprises and it was simpler for the lenders.”
Bradley noted, “Appraisal management companies have the market share of the appraisal business, and they have typically been requiring appraisers to comply with ANSI ever since Fannie Mae adopted it. So this announcement from Freddie Mac won’t really change things, because we’ve already been using ANSI standards when the lender indicated the appraisal was for secondary market purposes.”
She noted that many in the industry question whether FHA, VA and USDA will adopt mandatory ANSI standards in the future. “There is some thought in the profession that if the government-sponsored enterprises adopt these standards, should appraisers use ANSI for every lending assignment? Currently, these government programs do not prohibit an appraiser from using ANSI, however they do not require it,” she added. “By adopting these standards, there would be a standardization of information and there would be more uniformity in how the square footage of a property is reported. The question is whether it’s time to have a standard of measurement that everyone embraces, both appraisers, real estate agents, tax assessors and everyone in the real estate industry.”
In the past, Bradley has noted that there isn’t one definitive source for determining square footage of a dwelling.
She says there are pros and cons to this. “Some are confused by ANSI standards and don’t understand the ceiling requirements. While I’m used to using ANSI now, I’m not a fan because it adds confusion. Some appraisers are using ANSI measurements for all appraisals — others are doing it only when it’s required. It won’t be true standardization until everyone industry-wide adopts one method of measuring, including real estate agents. Only then would our profession have better data for everyone to use. Anything that can help us with consistency of data is beneficial to the public.”
She added, “In my opinion, everyone using different standards of measurement causes confusion to the consumer. And measuring mistakes are one of the top reasons resulting in lawsuits against appraisers.”
Freddie Mac has published an ANSI FAQ page with more information on its website.