The Federal Housing Finance Agency (FHFA) is seeking feedback on how best to modernize Fannie Mae and Freddie Mac’s appraisal-related policies.
The pandemic and social distancing mandates have created increased pressure on the industry make greater use automation and data in the appraisal process. That means increased use of AVMs and exploration of contactless alternatives such as allowing homeowner-provided images to be used in appraisals. Automating the appraisal process has been a last bastion to achieving a fully automated – and thus faster – mortgage process.
“Modernizing the appraisal process has the potential to create a more streamlined and accurate collateral valuation process,” says Mark Calabria, director of the FHFA, in a statement. “But if modernization is not properly adopted, it could have negative unintended consequences.”
Calabria says the RFI “will improve FHFA’s understanding of how the enterprises can improve the appraisal process while at the same time ensuring they don’t take on unintended or inappropriate levels of risk.
“The comments we receive will inform how we will modernize appraisals to improve both loan quality and the origination process,” he adds.
The RFI covers the following four areas related to appraisals:
- Appraisal modernization;
- The Uniform Appraisal Dataset (UAD) and the design of appraisal forms;
- Automated Valuation Models (AVMs) and appraisal waivers; and
- Valuation differences by borrower and neighborhood ethnic makeup.
Feedback is due no later than February 26. For more click here.