Real estate appraisals carried out without the physical presence of an appraiser will be permanently authorized on loans bought back by Fannie Mae and Freddie Mac, from the start of 2022.
Sandra Thompson, acting director of the Federal Housing Finance Agency, announced the change on Monday as part of an effort to allow banks and mortgage lenders to use desktop appraisals instead of appraisals. homes in person.
The change makes permanent an interim measure that Fannie and Freddie instituted during the pandemic.
“What was one of the temporary flexibilities will now become an established option for providing business loans,” Thompson said to thunderous applause at a Mortgage Bankers Association conference in San Diego. “Both companies will incorporate desktop assessments into their [selling] guides for many new purchasing models from 2022.
In-person appraisals have long been considered an integral part of the home buying process, comprising both on-site inspections and comparable sales analysis on similar properties in a neighborhood. The aging workforce of appraisers and regulations after the financial crisis that led to an increase in appraisal management companies have emptied the industry, reducing appraiser fees overall.
As part of the Biden administration’s efforts to make housing more affordable, Thompson also announced that government-sponsored companies will expand the eligibility criteria for Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible.
The GSEs first announced the programs earlier this year to help low and moderate income borrowers access refinancing.
The FHFA aims to “dramatically increase the population of eligible borrowers,” said Thompson, by expanding the income threshold to include moderate-income borrowers whose income is at or below 100% of the region’s median, against 80% previously.
The agency is also amending other requirements to resolve “operational friction” for lenders participating in both programs, she said.
“By taking advantage of lower interest rates, borrowers can reduce the amount of their income they have to spend on housing costs,” said Thompson.
Refinancing low- and moderate-income borrowers “should be an urgent priority,” Thompson said, as many minority borrowers have interest rates of 6% or more, having missed the refi boom.
“We are seeing a significant number of low income and minority borrowers stranded at rates 30 to 60% above the current average,” she said.
The FHFA is removing some restrictions on funding programs and closing costs and removing a previous cap on loans over 10 years, she said.
In addition, the FHFA is delaying changes to its minimum financial eligibility requirements for vendor-repairers Fannie and Freddie until next year, Thompson said.
Last year, former FHFA director Mark Calabria proposed new minimum financial standards for mortgage lenders. The changes have been postponed due to the pandemic and are further delayed by the need for providers to focus on helping borrowers coming out of forbearance plans.
“Eligibility for 2.0 services will not be released this year,” she said.
Rather, the FHFA wants services to focus on helping borrowers who chose to take out forbearance plans during the pandemic and now need loan modifications.
“We need service agents to focus all of their attention on helping distressed borrowers move from Covid opt-out programs to long-term retention solutions that keep borrowers at home. “