Staying responsive to the needs of borrowers remains a positive and prime focus and is especially warranted during this challenging time.
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 inthose 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 AppraisalThe obvious next question then becomes ..."When does each various type of appraisal become applicable?"
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 characteristics3. 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 inspectionNote: 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:
Mortgage Originator - NMLS #216987
IL Lic. #031.0006220 - WI License #216987
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!