The federal mortgage servicers recently joined Fannie Mae and Freddie Mac in offering alternatives to traditional appraisals and employment verifications.

Late on Friday, the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) announced they will allow home appraisal and employment verification alternatives in light of the severity of the spreading coronavirus pandemic.

The move by the FHA and the VA follows similar announcements made by Fannie Mae and Freddie Mac on March 23.

“Loan Guaranty is committed to protecting veterans, appraisers and industry stakeholders while continuing to execute our mission of delivering VA home loan benefits,” the VA said in a statement.

Citing the risk of the spread of Covid-19, the FHA and VA said that appraisers would be allowed to conduct exterior-only appraisals and in special cases, desktop appraisals, depending on the purchase transaction type. Similarly, if a lender is unable to conduct a traditional employment verification, they may do so through third-party services, old pay stubs or evidence of direct deposit from an employer.

“Considering the health and safety of veterans and VA Appraiser Fee Panel members during this national emergency, valuations may come in a form of an exterior-only appraisal with enhanced assignment conditions or in limited instances, a desktop appraisal,” the VA said in a statement.

“Many employers have suspended non-essential operations in compliance with state and local government directives,” the FHA said in a statement. “This has hampered the ability of mortgagees to fully comply with FHA requirements for reverification of employment, either verbal or electronic, to be completed within 10 days prior of the date of the note.”

While both servicers are offering more leniency during this time, some restrictions may apply depending on the servicer and the loan type, so borrowers should check the FHA and VA websites for information about their specific situation. For instance, for FHA forward purchase transactions, the lender must also provide proof of a borrower’s cash reserves equaling a minimum of two months of principal, interest, taxes and insurance.

Email Lillian Dickerson

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