New Standardized Property Measuring Guidelines from Fannie Mae

Any mortgage loan planning to be eligible for sale in the secondary market on April 1, 2022, or after to Fannie Mae, must meet new standardized property measuring guidelines set by the American National Standards Institute.

All appraisers will be required to use the square footage method for calculating measuring and reporting gross living area in non-gross living areas of any property-seeking approval for a Fannie Mae-backed mortgage. These measurements will need to be used for appraisals and inspections on all properties seeking a Fannie Mae-backed mortgage.

Why is Fannie Mae requiring this change?

The official evaluation of residential property has a strong correlation with the gross living area where there is no standard and hard rule for consistent measurement and how it is determined by a professional appraiser.

With the adoption of the new standard from the ANSI, American National Standards Institute, Fannie Mae hopes to create alignment across market participants. They also hope that the new standards will provide a professional and defensible method for the appraiser as well as allow transparent “repeatable results for every user of the appraisal report.

What will the ANSI guidelines require?

The new standard for measurements set by the ANSI will require some of the following practices:

Final square footage must be reported to the nearest whole square foot after measurements are taken using the nearest inch or 10^th of a foot.

Staircases will be included in the gross livable area of the floor from where they descend

A basement is considered as any space that is partially or completely below grade level

The gross livable area calculation is not to include openings to the floor below, for example, two-story foyers

For an area to be considered finished it must have a ceiling height of at least 7 feet. If the room has a sloping ceiling at least 50% of the finished square footage of the room needs to have a ceiling height of 7 feet. No portion of the finished area with a ceiling height less than 5 feet can be included in the gross livable area

If there is a finished area in a home that does not make the 50% requirement for a 7-foot ceiling, such as in some models of Cape Cod-style homes, to conform with the new standard an appraiser may put this finish area on a separate line in the sales comparison grid with an appropriate market adjustment. This will make the report compliant with the new standards and also acknowledge the contributing value of the non-gross living area square footage.

What if properties considered as comparable sales have been measured differently?

There may be other homes that have recently sold through the local MLS that have been measured with terms that are not ANSI compliant. An appraiser may not be aware that another method was used to calculate the gross living area of another property. Through research and knowledge of the local market, an appraiser can determine if the gross living area provided through alternate sources on a comparable home should be adjusted. This adjustment process does not however change any requirements to report subject gross living under the new standard.

Are there any exceptions to this new required process?

If an appraiser is unable to complete their job using the new standard the appraiser can provide the code in the additional features field on the required appraisal form and must also supply an explanation why compliance to the new standards is not possible.

Some homes may have construction styles and architecture with square footage that does not meet the new measuring standards. Some berm-style homes have their entire square footage below grade and would be eligible for this exception.

To be eligible for an exception the appraiser must provide justification for seeking one and lenders are responsible for confirming that there is a provided adequate explanation for this exception. Fannie Mae will be monitoring any inappropriate use of exceptions.

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