During the height of the COVID-19 pandemic in 2020, and due to the record-breaking volume of refinances, the Federal Housing Finance Agency (FHFA) temporarily allowed some loans to close with desktop appraisals. As we wrote this time last year, desktop appraisals allow the appraiser to do an analysis of a property, as well as properties with comparable value, without actually visiting the property. They use standard UAD forms, and may include viewing exterior and interior photos, or seeing the property via video conference.
This temporary flexibility with appraisals expired earlier this year. That said, at the Mortgage Bankers Association Annual Convention and Expo last month, FHFA acting director Sandra Thompson announced both Fannie Mae and Freddie Mac will allow desktop appraisals starting in early 2022.
What’s the impact of bringing back desktop appraisals?
In theory, this flexibility could help address the problem of slow appraisal turn-times. After all, appraisers driving to visit multiple properties in a day can only handle around three appraisals a day. Presumably, if they’re not having to drive to a property – particularly in a rural area where homes may be disbursed over a wide area – they should be able to do more in a day.
At Triserv, we supply desktop appraisals when they’re requested, as well as a wide variety of other types of valuations. We had expected a lot of buzz about this recent change, but to date, we’ve only received a handful of inquiries. It may be that lenders still prefer traditional appraisals, or it could be we’ll be talking more about desktop appraisals early next year when they’re allowed again.
Lenders should rest assured that desktop appraisals still need to go through the Uniform Collateral Data Portal (UCDP), so they’ll still be subject to the Collateral Underwriter® risk score, so the quality will be assessed. If the risk score isn’t low enough, the appraiser may have to make a trip to the property after all, which could incur a trip fee.
Desktop appraisals may or may not become popular – we’ll have to see – but it’s another tool lenders can choose to use when it’s appropriate. When that time comes, we’ll be here.
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