Appraisal Process Flexibility

June 16, 2020
Home Appraisal 2
Desktop appraisals or exterior-only inspection appraisals are now accepted in lieu of traditional appraisals.


Recognizing the impracticality of requiring appraisers to conduct home inspections under the current guidelines, Fannie Mae, acting under the guidance of the FHFA and in concert with Freddie Mac, issued a Lender Letter on March 23, stating: “Effective immediately, we are allowing temporary flexibilities to our appraisal inspection and reporting requirements. We will accept an alternative to the traditional appraisal required under Selling Guide Chapter B4-1, Appraisal Requirements, when an interior inspection is not feasible because of COVID-19 concerns. We will allow either a desktop appraisal or an exterior-only inspection appraisal in lieu of the interior and exterior inspection appraisal (i.e., traditional appraisal).” According to Bob Murphy, Founder of Collateral Advisors, LLC, and former Director of Property Valuation and Eligibility at Fannie Mae, “These are temporary solutions to a temporary problem. At the same time, this might provide some good data to analyze the effectiveness, good or bad, of using third-party data for subject property information in lieu of an inspection by the appraiser for certain loans.” Murphy added that, currently, “there is no standardized uniform desktop appraisal report.” Many have chimed in on the obvious shift in the way Americans are doing business in the face of this pandemic, and the probability that some changes will be permanent. In an article that appeared in the Washington Post on March 21, Erik Brynjolfsson, Director of the MIT Initiative on the Digital Economy, was quoted as saying, “There’s a lot of things where people are just slowly shifting, and this will accelerate that. It’s amazing how slowly habits change, where people get stuck in the ruts of doing things, and then you have a shock like this that can change everything. It forces people to overcome the switching costs, figure out something new and say, ‘Hey, this is way better.’”

Source: MReport