It’s been a more than a year and a half of technological innovation in real estate in response to the COVID-19 pandemic, and the Federal Housing Finance Agency has decided to make one tool — desktop appraisals — permanent.
The decision was made official in mid-October, when Sandra Thompson, acting director of FHFA, announced the change at the Mortgage Bankers Association Annual Convention and Expo in San Diego.
Thompson said in her speech that the agency already was discussing potential changes to the appraisal process when the country went into lockdown in 2020 and appraisers were prevented from entering most homes.
“The housing market is always changing, and we need to ensure that our structures and systems grow and evolve with it by fully using all the appropriate tools and available information,” she said, according to a published copy of her speech. “With desktop appraisals, an appraiser brings their valuation expertise to information that has already been made available to them, such as through listings. This can help each appraiser complete more loans in a day, and it can also help rural communities more readily obtain a necessary appraisal when the borrower is purchasing a property.”
Making desktop appraisals permanent is a much-needed change, according to Joel Schaub, vice president of mortgage lending at Guaranteed Rate, who tells Chicago Agent magazine that they can shave up to 10 days off the transaction time and drive down costs for borrowers. “It’s a big win for home sellers and homebuyers,” he said.
The wait time on the typical appraisal process can be significantly longer in rural communities because of a shortage of appraisers in those areas. Schaub noted that in Chicago, he can usually get an appraisal done in four or five days. “I had a deal in Iowa this year that took 27 days to get an appraisal,” he added.
FHFA noted in a press release that the decision to make desktop appraisals permanent “is the result of a thorough review of data collected from use of the loan flexibilities, as well as input received from the Request for Input (RFI) and public listening session on appraisal-related policies, practices and processes.”
Schaub said that the change is not a return to the subprime days of 2007, when homebuyers could get a loan with no documents or proof of income or appraisals. “This is not a return to risky lending,” Schaub said.
He added that desktop appraisals use millions of data points derived from county data, online listings and other data sources to paint an accurate picture of the home’s worth. “There’s so much data out there to make a sound decision,” he said.
Thompson also announced at the MBA convention that FHFA is expanding Fannie Mae and Freddie Mac refi programs, so more homeowners can take advantage of low interest rates.
RefiNow and Refi Possible, which were originally open to borrowers at or below 80% of the area median income, were expanded to those at or below 100% of AMI.
“Expanding eligibility for low- and moderate-income families to refinance their mortgage and lower their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps towards overcoming barriers to affordable and sustainable homeownership,” she said in a press release.