Is the new Fannie Mae Appraisal Program helping or hurting? What are the basics of the program? Well, the real estate giant is planning to offer mortgage lenders access to proprietary home valuation databases, so that they can use it to assess the “accuracy and risks posed by the reports submitted by appraisers.”
So this system will look closely at the work performed by the appraiser and flag any possible errors. This means the lender can ask for an appraisal to be looked at again, which could in turn lead the lender into reconsidering whether or not to go ahead with the loan.
This new step – to be added from January 26 – will mean the price a home is sold or bought at being determined more thoroughly and will undoubtedly add more time to the closing process and may ramp up the cost of the appraisal fees for doing all that extra work.
So why is this happening now? Well, Fannie Mae wants lenders to make more informed decisions when approving a loan to a home buyer for the mortgage. At present, a buyer will scour the internet and real estate listings and look for their dream home in the area of their choice. Then a buyer finds a home, makes an offer, agrees on a final price and then starts the home buying process.
The price is at the very high end of their budget but that doesn’t matter because this home is in the area they have always wanted to move into, It has a number of A-listed schools nearby, great shopping malls and restaurants at their doorstep and a place where the crime rates are very low – so it’s got to be well worth it! Right?
But from January 26, the lender will submit the appraisal report to the new Fannie Mae Program and they will come back with “lower risks comps” that could value the home at a higher rate. The lender could then ask the appraisal team to look at the loan again and reconsider, adding time and money to the buying process.
The fear of many real estate agents is that if appraisers become concerned they are constantly being told its assessments are inaccurate, they will automatically be more conservative in their assessments, resulting in lower house prices and stalling the housing market growth considerably.
Only time will show the affects of the New Fannie Mae Appraisal Program. Let us know if you see any drastic changes in your transactions and listings.
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Comments
Could be a problem if Fannie's comps trump the appraiser selected comps. Of course the "blind" automated approach to selecting comps and generating valuations is always better then human experience. Not!.