Fannie Mae is now following suit in the appraisal-free arena by allowing property waiver inspections on some purchase loans.
Last week, Freddie Mac extended its appraisal-free mortgage program to its purchase loans, announcing it will go into effect on September 1, 2017.
Shortly afterward, Fannie issued its announcement: Property Inspection Waivers will be allowed on mortgages with low loan-to-value ratios. The GSE explained the change will allow lenders to offer better efficiency and cost savings.
The CEO Timothy Mayopoulos hinted that changes were coming when he first told HousingWire that Fannie Mae was looking to speed up the appraisal process.
Back in 2016, Fannie began offering appraisal-free mortgages on some of its refinances through its Day 1 Certainty program.
This will reduce the time it takes to close a loan, making it easier for lenders and borrowers alike, Fannie explained. Buyers will still have the option of having an appraisal done, but will not be obligated to do it with a PIW offer.
When Freddie announced its new appraisal-free mortgage, it figured it could save borrowers an estimated $500 in fees and could reduce closing times by as many as 10 days.
But while Freddie announced its appraisal-free product will become available on September 1, 2017, Fannie Mae's product is available immediately.
However, Fannie Mae is not saying goodbye to the appraisal community. It explained the vast majority of purchase mortgages will still require an appraiser.
Collateral Underwriter uses statistical models and algorithms built on a database of over 26 million appraisals to evaluate appraisal quality and drive greater confidence in the valuation of properties securing the loans acquired by Fannie Mae.
Earlier this year, Fannie Mae updated its policy on appraisals this year, and clarified its “existing policy that allows an unlicensed or uncertified appraiser, or an appraiser trainee to complete the property inspection. When the unlicensed or uncertified appraiser or appraiser trainee completes the property inspection, the supervisory appraiser is not required to also inspect the property.”