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No Appraisals?

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Pat57

Sophomore Member
Joined
Sep 24, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
Just read this on facebook, does this mean the death of us...thoughts?

So this afternoon I listened to the Fannie Mae webinar regarding their new Day 1 Certainty program. The new program kicks off 10/10/16 and part of it to allow for some refinance transactions to have appraisal waivers. While there wasn’t a ton of super detailed information provided here’s a few items I learned.

They have offered limited appraisal waivers for 15 years but those old waivers were based on the borrower’s credit, not property value. The new program is based on property value using the 20 million appraisals we have all submitted to CU with standardized data and incorporates analytics to determine value. They were clear that is the first phase which makes everyone to believe that there will be other phases.

Their reason for rolling this out is it saves the lender time and reduces loan and borrower costs by waiving the appraisal requirement. The CU value is free starting 01/01/17. If the lender gets the approval to waive the appraisal they are released of any future value liability if they use the CU value.

Right now the appraisal waiver only applies to refi’s of normal homes and condos under $1M. These homes can be a primary residence, second home, or investment homes. They are not for purchases, new construction, construction loans, or multi-family homes. They are also not for leasehold, land trusts, or other properties with resale restrictions. Keep in mind, this is phase 1 so who knows what will be included in future phases.

If an appraisal is ordered and completed and a waiver is also issued the lender has to use the appraisal. If the lender orders an appraisal and gets a waiver before the appraisal is completed they can cancel the appraisal. So, for those that pre-write reports, be careful if you are doing that for refi’s…you might get stuck doing work for free.

It looks like with the new program we might see less CU feedback unless there is a discrepancy in subject data. If there isn’t any subject data questions and the CU score is 2.5+ they can ignore the other CU findings.

That was it in a nutshell. Keep in mind that Freddie Mac is rolling out a similar appraisal waiver program in the spring.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I believe the Day One Fannie program the property has to have had an appraisal done within 4.5 years?

It certainly is not a good trend sign, even if it's a smaller percent, any percent of less appraisals ordered is not good. On the other hand, supposedly there is a need for cheap evaluation work that pays around $60 (though I've yet to see evidence of it in any volume)
 

miktay

Senior Member
Joined
Jul 3, 2007
Professional Status
Certified Residential Appraiser
State
Texas
Over the years I've seen these programs come and go. Sounds scary at the time, but year-after-year, plenty of work seems to make its way to my computer.
I'd bet a blank check that it won't be "the death of us".
 

ucbruin

Elite Member
Joined
Mar 11, 2014
Professional Status
Certified Residential Appraiser
State
Massachusetts
"Their reason for rolling this out is it saves the lender time and reduces loan and borrower costs by waiving the appraisal requirement. The CU value is free starting 01/01/17. If the lender gets the approval to waive the appraisal they are released of any future value liability if they use the CU value."

Don't you hate it when it's our "Ox" being gored!!!! :)
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
So Fannie wags FHFA? We just got a Sec of Treasury who wants to get rid of Fannie/Freddie, so I'd wait for the dust to settle. If lobbyists, like Joan Tice and AMCs are able to bend elbows with Congress, then they'll get what they want, but "drain the swamp" might put the kabash on lobbyists dreams.
 

Ken B

Elite Member
Joined
Feb 18, 2004
Professional Status
Certified General Appraiser
State
Florida
Find someone who is a business analyst at your favorite residential lender and ask them what the timeline is to phase out both appraisers and mortgage processors. Basic data input? Done online by the borrower. Everything else will be automated. And it isn't that far off. Will they be completely gone? Probably not. Only 90% - 95% of them.
 

Eli

Elite Member
Joined
May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
Fannie and others providing them both residential and commercial will be regulated to handle lawsuits/complaints which will be out the ying yang.
 

Eli

Elite Member
Joined
May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
I can see the commercial side of appraisal disappearing before the residential side based on technology....easily due to being so heavily reliant on the income capitalization approach.
 
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