Starting from March 19th, 2022, Fannie Mae will begin to accept desktop appraisals. Last year, the FHFA announced desktop appraisals to become a norm in 2022. The news was welcomed by mortgage lenders who continue to face challenges due to the appraisal choke point in the mortgage process. Appraisers, however, have been more skeptical about the announcement with concerns about rendering an opinion of value, without seeing the property in person.
Desktop Appraisals were initially introduced at the time of COVID. The policy intended to expedite the appraisal process for Lenders and Appraisers to eradicate the hurdles faced by Lenders upon turnaround times and Appraisers upon traveling and coordinating with the property owners.
The upcoming changes will give a licensed appraiser the leverage to complete an appraisal report right from their desk. The appraiser can fetch the data from third-party sources e.g., homeowner, realtors, builders, MLS, etc.
While opting for a desktop appraisal there are a few things that the industry professionals should be aware of.
Fannie Mae recently released their fact sheet that provides a brief explanation and guidelines on how desktop appraisals would work. With respect to the released guide, there are still a few things that require clarity, below we have explained how the new policy will work.
Who can qualify for a Desktop Appraisal?
Unfortunately, not everyone qualifies for a desktop appraisal. The option will only be available for a purchase transaction, one-unit principal residence, and have a loan-to-value (LTV) of no more than 90% and the loan file must be approved by Fannie Mae’s Desktop Underwriter® (DU®).
The option will not be available for second homes, investment properties, cash-out refinances, construction loans, multi-unit properties, renovation loans, condos, co-ops, or manufactured homes.
What is a floor plan and how does it work for desktop appraisals?
Floor plans are scale drawings that show the relationship between rooms, spaces, and physical features viewed from above. A floor plan is required for every desktop appraisal order and the provided floor plan should display the interior walls of the property.
In some cases, a floor doesn’t exist subject to the location of the property, in such a case an onsite physical inspection will be required. The inspection can be done by someone other than the appraiser as well such as a third-party representative, homeowner, builder, etc.
What authorities will the appraiser have in case of insufficient information?
Either it is a desktop appraisal report or a physical appraisal report, there should be sufficient information in a report and should comply with all regulations. The appraiser has all the authority to reject the desktop appraisal order if they are not provided with enough information or even if they are not able to find any records or co-ops in the public data.
Therefore, the data provided to the appraisers should be of high quality, accurate, and should display all characteristics of the property.
How can the appraiser verify the provided data?
It is mandatory for the appraiser to verify all the data provided by anybody who has a monetary interest in the property, whether it be the homeowner, builder, realtor, etc. The data must be verified by a neutral source, this could include maps, assessors’ data, virtual inspection tools.
Is it mandatory to apply for a desktop appraisal if eligible?
Ordering a desktop appraisal is optional; lenders can always opt to order a traditional appraisal. Even if eligible the Lenders or the borrower will always have the option to opt for a traditional appraisal, regardless of the desktop appraisal flexibility offered.
How can ValueLink help you complete desktop appraisal orders? ValueLink offers open APIs which enable inspection companies to link up their own custom solutions to the ValueLink platform and submit their property data collection reports to appraisers in a seamless manner for the completion of desktop appraisals.