Get the Facts on Fannie Mae’s Announced Temporary Flexibilities to Their Appraisal Requirements
On March 31, Fannie Mae responded to the increasing difficulty lenders are having to get property inspections as many states adopt shelter-in-place strategies. They offered temporary flexibility in appraisal requirements. They addressed concerns over two main types of loans: new construction loans and Homestyle Renovation Loans. Learn about the changes and contact ECL Software at 800-625-5972 for help with fund control options.
Flexible Requirements for New Construction Loans
FNMA has offered guidance on the allowance of desktop appraisals. They have revised the scope of work, limiting conditions, certifications, and statements of assumptions that must come along with loan documents. They also have noted that they will accept a Completion of Construction Certification if the lender cannot get an Appraisal Update or Completion Report.
Flexible Requirements for Homestyle Renovation Loans
FNMA is offering flexible requirements for Homestyle Renovation Loans too. They will accept a Completion of Construction Certification letter as long as it is also supported by evidence. They may accept a variety of documents as evidence, including photos, site videos, or paid invoices. The evidence is required to be good enough to show that the work was completed as it was outlined within the contract.
Options for Loan Extensions and Final Inspection Requirements
FNMA recommends that lenders contact them if they cannot complete a renovation within a timeframe. FNMA say they will respond to cases on a case by case basis. Additionally, they still require an Appraisal Update and/or Complete Report once the work is done. Recourse will not be removed absent a 1004D certification of completion.
What Lenders Need to Take into Account
As always, lenders need to be vigilant re: risk mitigation during both the construction and renovation processes. The more flexible requirements do allow for alternative evidence, and that’s good news for lenders, but it is also new territory and there could be risks that have not yet been uncovered.
Note that photos taken by the homeowner will not be accepted as a reliable way of verifying the location – even if geolocation metadata is used. Why? Because it is relatively easy to amend metadata with programs like Photoshop.
ECL Software is Here to Help
We know that these are complicated times and that it can be difficult to know the best way forward. At ECL Software we offer software solutions for lenders and others in this industry. You can reach us at 800-625-5972 or firstname.lastname@example.org to request a free demo and to learn more about how we can help you.