Appraisal Waivers: What are They? Who's Eligible?

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
https://activerain.com/droplet/5nh6

 

Appraisal Waivers:

What are They? Who's Eligible?

 

Many changes surrounding residential appraisals have occurred recently.  Some have come as a response to the challenges presented by Covid-19.  Others were put into place prior to our facing current viral challenges.

 

In this article, I address only those changes made to appraisal requirements and options for Conforming Conventional Loans.  The following are what "Appraisal Options" can mean in
those specific cases.
 

First, it should be pointed out before proceeding: No two loans (or borrower(s) are the same, so no blanket-statement can be made or cover every situation or appraisal requirements required in every transaction. Each scenario must be considered singularly and upon its own merit.

 
So to simplify things a bit, moving forward I will reference only those conventional loans being placed, sold, and guaranteed by Fannie Mae or Freddie Mac
(Originally these guidelines were good on loan applications through May 17, 2020, but just recently they were extended to June 30, 2020.

Certain conventional loans can receive an "Appraisal Waiver" ... when either the Property Price (for purchases) or Estimated Value (for Refinances) ... is found to be acceptable, and in the Range of Values within the massive databases, for that property.  

The notations received in Automated Underwriting can allow for a loan to be approved and successfully Closed without an appraisal being performed.  Please note, however, that only a small percentage of Loans with less than 20% down receive this "Waiver of Appraisal".
 
Transactions that do not receive an Appraisal Waiver from the automated underwriting systems, require some sort of physical appraisal to be made.  
 
Those appraisals can be:

  • A Desktop Review (No Inspection)
  • Exterior Appraisal Only (No need to enter the home)
  • A traditional Appraisal 

The obvious next question then becomes ... 
 
"When does each various type of appraisal become applicable?"     

 

     A.  Purchase Transactions - Principal Residence up to 97% Loan-To-Value, allows the following:
           
     1.  Traditional Appraisal - (Full Report, Appraiser, Inspections)
     2.  Desktop Appraisal - Appraiser does NOT inspect the interior.  The Appraiser completes a Standard Appraisal Form with the benefit of public records, multiple listing service (MLS) information, and on-line/third-party sources to help identify the property characteristics
     3.  Exterior Only Appraisal - The name pretty much speaks for itself.  It's the least invasive form of appraisal report performed without an Appraiser's personal inspection
 
   Note: Mortgage Lenders can be exposed to scrutiny when accepting "less than" a full traditional Appraisal Report when selling the loan in the secondary market. So expect Lenders to remain cautious in this regard.
 
     B.  Refinance Transactions - Principal Residence, allows the following:
 
     1.  Either an Appraisal Waiver (None Required) or a Traditional Appraisal is required ... in most cases.
 
The following property types are eligible for Appraisal Waiver use:
 

 

  • Single-Family Units, whether they be detached single-family residences, attached townhomes, or condominiums, are the primary properties eligible for Appraisal Waivers
  • Investment Properties (meeting the above criteria) can also receive Appraisal Waivers at lower Loan-To-Value percentages
  • Second Homes are also eligible for Appraisal Waivers if they meet the above-mentioned criteria 

 

Once again, the above are only guidelines, and individual Mortgage Lenders may institute or remain cautious regarding their own requirements on appraisals.  

However, the overriding message is ... the mortgage industry is trying hard to provide some flexibility and relief during the uncertain times we are currently facing. Staying responsive to the needs of borrowers remains a positive and prime focus and is especially warranted during this challenging time.
 
 
 
* Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicago - Chicagoland - IL/WI? 

Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf.

I'm easily found at:
 
 
Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI License #216987
 
American Portfolio Mortgage Corp
NMLS #175656
 
 
Direct: 815.524.2280
Cell: 708.921.6331
eFax: 815.524.2281
 
 
 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Raymond Henson, SRES, GRI 05/15/2020 07:35 AM
  2. Roy Kelley 05/21/2020 06:05 AM
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox
Groups:
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Chicago Area Real Estate BUZZ!
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WillCounty
Tags:
home appraisals
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appraisal waivers
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appraisal waivers on conventional loans

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Show All Comments
Ambassador
4,205,531
Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Great information, Gene! I just had a buyer receive an appraisal waiver earlier this month. That's a first!

May 14, 2020 08:38 PM #4
Rainmaker
672,276
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Our lenders have mentioned this but we haven't seen one yet darn it!

Would certainly speed things up!!

May 15, 2020 01:17 AM #5
Rainmaker
3,921,596
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

Excellent post! Congratulations on the featured post. I'm seeing more Appraisal waivers. On my last two listings the buyers received  an Appraisal Waiver which we were very thankful for!

May 15, 2020 04:05 AM #6
Rainmaker
1,557,436
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Excellent overview of the appraisal waivers! 

Enjoy your day!

May 15, 2020 05:26 AM #7
Rainmaker
3,445,068
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Fantastic information, Gene... then again... your posts are always spot on with information we need to know and pass on to our clients. Thank you.

May 15, 2020 06:30 AM #8
Rainmaker
2,880,936
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I have had a couple of transactions where an appraisal waiver has been used.  One transaction was for buyer clients of mine and I was actually anxious to negotiate a lower price for them after the appraisal, but alas I did not get to do so, haha.

May 15, 2020 06:31 AM #9
Rainmaker
680,935
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

Fantastic Information Gene.  I can speak from personal experience as we are waiting to close on a refinance of our home on June 1.  15 year Loan at 2.75% is fantastic... which kicks the crap out of our previous Great loan of 4% over 30 years.

We are one of those who do not have to have an appraisal...but I did have to close...temporarily at least...an Equiline Credit account to avoid the appraisal.

No problem there. That could be an issue for some however.

You made one statement that is perfect.   Actually many of your statements were spot on!  I really enjoyed this one: "No two loans (or borrower(s) are the same, so no blanket-statement can be made or cover every situation or appraisal requirements required in every transaction."

Thank you for sharing your knowledge!!

May 15, 2020 06:44 AM #10
Rainmaker
573,334
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
SVP of Mortgage Lending, Marin County

Appraisal waivers on a purchase loan are interesting and we've had some clients embrace them and others turn them down.  I guess the case for a physical inspection is to hope(?) that the property doesn't appraise and that maybe that can be used for negotiating the price down?  Still, I tell clients that removing the appraisal removes a variable.  It's one less thing that could add complexity and one more thing to lessen it.  Personally, I love the waiver option and we attempt to determine eligibility on every file that applies.

May 15, 2020 06:57 AM #11
Rainmaker
1,076,796
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

For the first time in several years I have an offer that need an loan appraisal. The buyer agent assured me they can put more down if needed. In CA we have a no loan contingency check some better neighborhoods sellers want to see that one check off to consider an acceptance.  Once the buyers have viewed and read inspection report they are expected to release the inspection.

May 15, 2020 07:14 AM #12
Rainmaker
188,735
Raymond Henson, SRES, GRI
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

A couple years ago, we were buying a house in Reno.  The market was hot and when the lender tried to schedule an appraiser, the first day an appraiser could be at the property was 30 days out, a problem because we had a 30 day escrow.  My local lender advised me to ask if a waiver was possible.  I asked the Reno lender about a waiver.  Let's just say there was a bit of laughter.  I said please check.  A few minutes later, I received a call back.  Right in their paperwork, appraisal waived.  It saved me heartache and a few bucks.  It never hurts to ask.  I have personally received two appraisal waivers.

May 15, 2020 07:28 AM #13
Rainmaker
856,036
Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Great post Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi I have bookmarked it for further reference. 

May 15, 2020 07:41 AM #14
Rainmaker
3,620,060
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Gene - some excellent points made and that's not a "blanket statement" either.  

May 15, 2020 07:49 AM #15
Rainmaker
5,331,027
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi we haven't run into this yet.... probably won't....

May 15, 2020 08:10 AM #16
Ambassador
3,978,824
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene I have only seen a few appraisal waivers on my loans, but it is great when I get one.  It lowers the closing cost and speeds up the approval process.

May 15, 2020 10:27 AM #17
Rainer
497,515
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Very informative and interesting illustrations of the various types of appraisals and their applications. Great post.

May 15, 2020 07:35 PM #18
Rainer
4,795
Aqila Bond
Wainwright Real Estate - Virginia Beach, VA

I was told by the sellers agent that an Exterior Appraisal Only was done on a short sale in Feb. This appraisal came back way to high and they will not do another appraisal until 6 months from the last appraisal. Now my buyer has to walk away. The inside definitely needs work. Has anyone run into this?
The sellers agent in my opinion needs to provide comps and photos to the sellers bank.

May 15, 2020 09:55 PM #19
Rainmaker
70,318
Cathy Starkweather
La Rosa Realty, LLC. - Celebration, FL

Great information here, thank you for sharing!

May 16, 2020 07:12 AM #20
Rainmaker
338,531
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Great post Gene.

Very informative.

May 16, 2020 11:17 AM #21
Rainmaker
1,907,276
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

With no appraisal needed would there be no appraisal fee forthe buyers, closing cost wise

May 17, 2020 08:59 AM #22
Rainer
134,511
Anthony Kirlew
Group 46:10 Network @ eXp Realty - Gilbert, AZ
Helping You Make Fiscally Sound Choices

Thanks for the primer!

May 17, 2020 01:58 PM #23
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Rainmaker
1,268,093

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

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