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A growing number of software vendors have won approval from Fannie Mae and Freddie Mac to support new technology that lets many homebuyers get approved for loans without appraisals — a development that could allow more lenders to offer same-day mortgages.
Fannie Mae estimates that it has saved borrowers more than $2.1 billion over the last three years (January 2020 through December 2022) on more than 4 million loans that qualified for an appraisal waiver system called “value acceptance.” That’s based on an estimated average appraisal cost of $500.
In many cases, Fannie Mae will waive an appraisal if it already has an appraisal for a property in its database of more than 61 million appraisal reports. It can then use that appraisal as the basis for an updated valuation using proprietary analytics from its Collateral Underwriter system. Freddie Mac has a similar policy for conducting “automated collateral evaluations.”
Beginning April 15, Fannie Mae will offer a new option for getting a loan approved without an appraisal — “value acceptance + property data” — that requires a full interior and exterior inspection capturing data and images throughout the property.
Fannie Mae says the new option will allow it to sign off on more loans than the original value acceptance program — and that lenders can expect to see a reduction in the number of loans that are approved using the value acceptance program, which in most cases doesn’t require an inspection.
In other words, lenders that want to take advantage of Fannie Mae’s new “value acceptance + property data” program will need to get their systems up to speed, and that means working with an approved software vendor.
Freddie Mac rolled out a similar program, ACE+ property data report (PDR), last year. The program allows lenders to augment automated collateral evaluations with property data reports in lieu of an appraisal. The property data reports are available from a number of approved vendors and don’t have to be completed by an apppraiser.
To date, Fannie Mae has approved six “value acceptance + property data” service providers who offer field data collection, a handheld app, application programming interface (API) integration or hybrid appraisals:
- Class Valuation
- Clear Capital
- Mueller Services
- Accurate Group LLC
- Collateral Analytics (Black Knight)
Fannie Mae is evaluating additional service providers and will provide updates here.
Black Knight said Tuesday that lenders, appraisal management companies (AMCs) and other property data collection companies can use its mobile property inspection app, SCOUT, as part of the value acceptance + property data program.
SCOUT works on any camera or GPS-enabled mobile device and supports multiple valuation types, including appraisals, hybrids and broker price opinions (BPOs).
“We are honored to be one of the small group of providers approved by Fannie Mae for lenders to use for the data collection process as part of the value acceptance plus property data option,” said Black Knight Data and Analytics President Ben Graboske in a statement.
A number of lenders have moved to take advantage of modern valuation techniques, which use technology, data and analytics to make the process more efficient for lenders, borrowers, appraisers and investors who buy mortgage-backed securities that are the ultimate source of funding for most home loans.
After funding $1.1 billion in loans in a 2022 pilot program, Guaranteed Rate this month rolled out its “Same Day Mortgage” program nationwide.
As is the case with Better’s “One Day Mortgage,” announced in January, some fine print can stand in the way of getting a loan approved in 24 hours.
But Guaranteed Rate says homebuyers who qualify for Same Day Mortgage can close in as little as 10 days.
A spokesperson for Rocket Mortgage said the lender introduced a program called “overnight underwrite” in 2021, guaranteeing that eligible borrowers who submit the paperwork for a purchase application by 7 p.m. will receive a fully verified approval by morning.
Looking for other ways to make homeownership more affordable, Fannie and Freddie last year updated their rules allowing lenders to obtain attorney title opinions instead of title insurance policies — a move that’s not sitting well with title insurers.
The American Land Title Association (ALTA) claims expanding the use of alternative title insurance products poses risks to lenders and consumers.
United Wholesale Mortgage, the nation’s largest mortgage lender, has embraced the option of using attorney opinion letters in lieu of traditional title insurance, saying it expects “significant savings” for borrowers thanks to a cheaper title review process.
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