Fannie Mae Waiving Appraisals
Property Inspection Waiver, getting back to the old days of fogging a mirror…
Effective 12/10/16, FNMA will have a new program in place which will allow LENDERS to waive appraisals on certain refi’s, if it is offered through the automated Desktop Underwriter (DU) loan documentation process.
See the attached PDF.
Key points from the PDF (emphasis mine):
Property inspection waiver (PIW) is an offer to waive the appraisal for certain refinance transactions. Property Inspection Waiver offers are issued through Desktop Underwriter® (DU®) using Fannie Mae’s database of more than 20 million appraisal reports in combination with proprietary analytics from Collateral Underwriter® (CU™) to determine the minimum level of property valuation required for loans delivered to Fannie Mae. Effective December 10, 2016, an enhanced PIW offering will be available to all lenders via DU.
The PIW offer will be considered on the transactions below:
- One-unit properties, including condominiums
- Principal residence, second home, and investment property transactions
- Limited cash-out refinance transactions up to a 90% LTV/CLTV for principal residences and second homes; up to 75% LTV/CLTV for investment properties
- Cash-out refinance transactions up to a 70% LTV/CLTV for principal residences; up to a 60% LTV/CLTV for second homes and investment properties
- Loan case files that receive an Approve/Eligible recommendation
In the real world, this means FNMA is becoming an ‘enabler’, relying on only their in-house collection of prior appraisal data and the CU process to rank those properties, so as to arrive at a “presumed” value of a property where the owners are requesting a refinance. This refinance loan has to rely on a prior appraisal of that property, coupled with a data base of similar properties, the CU, and market trends.
The problem with this is that the actual current status of exterior and interior quality and condition of the refied property is unknown, and may be quite different from what is presumed by the reliance on electronic data, and whatever lies the borrower tells the lender.
We’re getting back to the good old days (not so long ago) of fogging a mirror, to get a loan. Not quite as bad as the old liar and no-doc loans, but almost.
I guess no one at FNMA learned anything in 2008, 2009.