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Desktop appraisals will become an option for some agency-backed loans submitted after March 19.<\/p>\n
To be eligible for a desktop appraisal, according to Fannie Mae<\/a><\/strong>, the loan must be a purchase transaction, secured by a one-unit principal residence and have a loan-to-value ratio of no more than 90%. The option is not available for second homes, investment properties, cash-out refinances, construction loans, multi-unit properties, renovation loans, condos, co-ops or manufactured homes.<\/p>\n In addition to those specific exclusions, a desktop appraisal may not be used if Fannie Mae\u2019s automated underwriting system, Desktop Underwriter, flags it as \u201cineligible.\u201d<\/p>\n The mortgage industry has been awaiting the official start date for desktop appraisals since Federal Housing Finance Agency<\/strong> Acting Director Sandra Thompson announced plans to allow them at an industry conference in October<\/a>.<\/p>\n Desktop appraisals \u2014 which rely on property tax records and past sales, without a physical inspection \u2014 were one among a series of flexibilities the FHFA introduced in March 2020 to keep the housing market humming despite social distancing measures and lockdowns.<\/p>\n Lenders leapt at the opportunity to conduct appraisals remotely, especially in the northeastern part of the country. By April, more than 15% of loans sold to the government-sponsored enterprises used desktop appraisals. That share diminished over time, and the flexibilities finally lapsed in May 2021.<\/p>\n But in December 2020, after nearly a year of allowing appraisal flexibilities, FHFA pointed out the potential benefits to allowing appraisal flexibilities on a permanent basis in a request for information<\/a>.<\/p>\n Hybrid appraisals, where one person inspects the property, collects data and reports it to the lender, could address \u201cpain points such as appraiser shortages in rural and high-volume areas,\u201d the agency wrote<\/a>. FHFA suggested that hybrid appraisals could also speed up the appraisal process and reduce costs.<\/p>\n Mortgage lenders have also tried to find ways to speed the appraisal process. Last year, wholesale lender United Wholesale Mortgag<\/strong>e said it would not require its brokers to go through an appraisal management company.<\/p>\n In addition to making appraisals more efficient, the FHFA also said that separating the inspection process from the valuation process could \u201creduce appraisal bias resulting from omission errors.\u201d<\/p>\n Addressing appraisal bias<\/a> is a top priority of the Biden administration, which last year directed a multi-agency task force<\/a> to tackle the issue. The task force is expected to issue its policy recommendations early this year.<\/p>\n The post Desktop appraisal option to start in March<\/a> appeared first on HousingWire<\/a>.<\/p>\n