We recently closed a FNMA transaction in which the AUS reflected a PIW. However, our investor is citing that since it's a HPML transaction, that an appraisal has to be completed and cannot be waived. I am unable to find this information under the HPML appraisal rules. Can someone please help and cite if all possible?? Thank you.

Well, Section 1026.35(c)(2) doesn't have an exemption for the loan from the requirements of 1026.35(c)(3), which requires an appraisal with a physical inspection of the interior of the property if the loan is an HPML.

And your investor is generally free to impose requirements above and beyond what the regulation requires.