Desktop appraisals will become an option for some agency-backed loans submitted after March 19.
To be eligible for a desktop appraisal, according to Fannie Mae, 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.
In addition to those specific exclusions, a desktop appraisal may not be used if Fannie Mae’s automated underwriting system, Desktop Underwriter, flags it as “ineligible.”
The mortgage industry has been awaiting the official start date for desktop appraisals since Federal Housing Finance Agency Acting Director Sandra Thompson announced plans to allow them at an industry conference in October.
Desktop appraisals — which rely on property tax records and past sales, without a physical inspection — 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.
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.
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.
Hybrid appraisals, where one person inspects the property, collects data and reports it to the lender, could address “pain points such as appraiser shortages in rural and high-volume areas,” the agency wrote. FHFA suggested that hybrid appraisals could also speed up the appraisal process and reduce costs.
Mortgage lenders have also tried to find ways to speed the appraisal process. Last year, wholesale lender United Wholesale Mortgage said it would not require its brokers to go through an appraisal management company.
In addition to making appraisals more efficient, the FHFA also said that separating the inspection process from the valuation process could “reduce appraisal bias resulting from omission errors.”
Addressing appraisal bias is a top priority of the Biden administration, which last year directed a multi-agency task force to tackle the issue. The task force is expected to issue its policy recommendations early this year.
While this is an interesting piece of information, I don’t necessarily agree with the actual plan. As an active Realtor for over 36 years, the availability of appraisers to meet me at a property and scope both the interior and exterior features, while being supplied with comparables of similar properties in the area has always been considered an asset to the selling process for all concerned.
It was interesting to note the suggestion that the process of desktop appraisals became more popular during the Covid restrictions, since we know more people were working from home. And then once again the idea of prejudicial, appraisal bias treatment comes into the conversation. Really?
There is something to be said for field on site and hands on work. Are we to assume the Covid environment is a permanent way of life, or has it become more convenient for owners of companies and workers to just study charts and stats in a closed. private environ? Realtors can list, put signs on properties, hire professional photographers to go directly to a propery and do their art, while we plan and host open houses, meet directly with home inspectors, termite and tank techs, and have no problem with doing the field work. But permanent desktop appraisals will take the place of actually seeing the properties already in the process of sale…I say, no way! One aspect of appraising I would like to see ended are drive-bys. The hired person who does a BPO doesn’t need be efficient in appraising and oftentimes misses key elements of the property…like an additional garage, a stone fireplace, state of the art bathrooms, and new kitchen. as one did in a condo complex, where the owner was seeking a Home Equity Loan. This way of doing business put the client at odds with the lender who ordered such an appraisal.
There are too many areas of living that have become to relaxed in the past year all in the name of Covid, as though it is a permanet way of life. While we ceratinly sympathize with those who have been touched by the pandemic, a Realtor’s work in the marketplace continues regardless, as was proved by the extreme selling and purchasing frenzy of the past year. Nothing takes the place of meeting others in the the field, connecting, and doing a work that speaks of integrity and trust. Dare we do less for both our sellers and buyers. Appraisers hopefully will continue to do the same…but not as permanent desktop techs.
The CEO of Accurate Group should be fired. This is going to be a huge failure. Appraisers are going to not do them. The state of Georgia is already going to hold the AMC and lenders accountable for any information that is not accurate. The appraiser is going to assume and ensure they have no liability for the data. How is an appraiser supposed to do an interior sketch with walls when they don’t inspect. Appraisers are not going to do these. The Desktops during the pandemic were a nightmare with bad information. I had one agent/ owner give me photos for a different house.