Freddie and Fannie’s appraisal-free mortgages to slash closing times

Mortgage guarantor's use of AVMs will be boon to buyers, gut-punch to appraisers

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Hank Miller When real estate broker Hank Miller explains the mortgage process to buyers, he gives it to them straight. "It's going to be the biggest pain in the ass that you've been through," he says. Freddie Mac and Fannie Mae, government-owned entities that buy a large share of U.S. mortgages from lenders, are taking a big step toward alleviating this pain by eliminating the need for lenders to use a traditional appraisal when underwriting certain purchase mortgages. This could slash closing timelines, but not without potentially putting many appraisers out of work and midwifing some ill-advised loans, some observers say, "If you remove this big hurdle, you're going to streamline everything, and it probably would make it less cumbersome and sales less intimidating for a buyer," said Miller, who is a broker at Atlanta, Georgia-based Harry Norman Realtors, as well as a licensed appraiser. But, he adds, "we've eliminated another hurdle for people who probably shouldn...