Fannie Mae, one of the largest sources of mortgage financing in the United States, has announced significant changes to its property valuation options. In an effort to improve efficiency and accuracy in the home valuation process, Fannie Mae is moving away from the default requirement of a traditional appraisal and offering more alternatives. The new options include value acceptance (formerly known as appraisal waivers), value acceptance plus property data, and hybrid appraisals. These changes have far-reaching implications for lenders and appraisal industry professionals. In this blog post, we will explore the details of Fannie Mae's updated Selling Guide, the benefits of the new valuation options, and what lenders and appraisal industry professionals need to know to prepare for the upcoming changes.
Fannie Mae's updated Selling Guide includes a new option called Value Acceptance, formerly known as appraisal waivers. With this option, Fannie Mae will use its proprietary algorithms and data to determine the value of the property. Lenders will be able to accept this value without requiring an appraisal. The benefit of this option is that it reduces the time and cost associated with getting an appraisal, and it streamlines the loan origination process. However, it should be noted that not all loans will qualify for Value Acceptance.
Fannie Mae's new Value Acceptance Plus Property Data option allows lenders to obtain a property value estimate without a traditional appraisal. This option requires third-party property data collectors to capture standardized property data, including images and floor plans, using Fannie Mae's Property Data API. Lenders will be able to use this data to determine the value of the property. The benefit of this option is that it can reduce cycle times and borrower costs, while also providing operational simplicity and certainty at the time of loan application. However, lenders are responsible for verifying the competency of third-party data collectors, and there are some potential risks associated with this option. Working with Asteroom and AMC’s using Asteroom will help reduce any risk associated with inaccurate data due to our robust service with industry-leading accuracy.
Fannie Mae's updated Selling Guide has significant implications for lenders and appraisal industry professionals. Lenders will need to familiarize themselves with the new options and determine which ones are appropriate for their loans. They will also need to ensure that they are verifying the competency of third-party data collectors for the Value Acceptance Plus Property Data option. Appraisal industry professionals will need to adapt to the changing landscape of property valuation and potentially develop new skills and expertise. It is important for both lenders and appraisal industry professionals to stay informed and up-to-date on these changes in order to provide the best possible service to their clients.
With the introduction of these new options for property valuations, lenders and borrowers can expect a more efficient and accurate appraisal process. The new options for property valuations, including value acceptance (appraisal waivers), value acceptance plus property data, and hybrid appraisals, allow for a range of options to establish a property's market value, matching the risk of the collateral and loan transaction.
One of the key benefits of these new options is the reduction in cycle times and borrower costs. The value acceptance plus property data option, which allows for standardized data collection done at the property, can provide value certainty upfront and reduce the need for traditional appraisals. This can save borrowers time and money in the loan application process.
For lenders, the new options can reduce the need for manual processes and increase operational simplicity and certainty at the time of loan application. By reducing the time and resources needed for traditional appraisals, lenders can streamline their processes and better serve their customers.
However, it's important to note that these new options may not be suitable for all properties or loan transactions. Lenders will need to carefully evaluate the risk of the collateral and loan transaction to determine which valuation option is appropriate. Appraisers may also need to adapt to the new standards and technologies required for the standardized data collection process, working with companies like Asteroom or implementing new technology with their existing panel team members.
Overall, these new options for property valuations represent a significant step forward in the appraisal industry. While there may be some adjustments needed, the benefits of increased efficiency, accuracy, and cost savings are likely to outweigh any challenges. Fannie Mae's Desktop Underwriter will be updated on April 15th to support the new valuation options. Reach out to Asteroom if you’re interested in learning more about our offerings for Fannie Mae Value Acceptance + Property Data at sales@asteroom.com.
