Wednesday, February 11, 2009


Yep.......I know I try not to post political stuff. Particularly political stuff related to appraising. But this is just too darn important NOT to post!!! With unemployment lines and foreclosure lists lengthening daily.....the last thing that should be happening is a removal of safeguards. That's all I'm going to say. Read the article below and make up your own mind.

Fannie Mae Eases Appraisal Requirements; Too Early to Assess Impact
Starting April 4, Fannie Mae will no longer require appraisals or property inspections from some borrowers who are refinancing mortgages. Instead, Fannie Mae’s Desktop Underwriter system will validate property values through automated valuation models. The new requirements most typically apply to existing appraisals on file and for loans that already contain risk for Fannie Mae.

Under the new guidelines, lenders will be required to enter an estimated value of the house, which would then be compared with an estimate from an automated valuation model. If the two values are comparable, Fannie Mae will grant the borrower an appraisal waiver. If the two are not comparable, it will trigger an appraisal requirement.

Fannie Mae also reduced some eligibility requirements for its Desktop Underwriter Refi Plus program. Borrowers with loan-to-value ratios of 80 percent or less will no longer be subject to a minimum credit score of 580 and adjustable-rate mortgage holders with loan-to-value ratios of 80 percent or less will no longer be subject to a minimum credit score of 680.

Fannie Mae representative Brian Faith said the changes would let “potentially millions of current mortgage holders” take advantage of low interest rates currently available. However, Derek Chen, an analyst at Barclays Capital Inc., believes the changes will have a minimal impact, only amounting to the automation of existing underwriting standards. According to Carla Bandy, a senior underwriter at Everett Financial, it is too early to determine the impact the changes will have. “If you have a Fannie loan and are trying to refinance, there’s probably a comfort level because they already have you in a loan and you’ve made your payments,” said Bandy. “I don’t know if our investors will go along with that because they often put on their own overlays [in addition to what Fannie Mae requires].”

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