Fannie Mae and Freddie Mac have announced the dates when they will deliver on their regulator's promise to make one of the rating flexibilities introduced during the pandemic a permanent part of their operations.
The two major pro-government mortgage investors will add desktop ratings messages to their automated underwriting systems in March. Freddie's system feedback indicates whether or not desktop reviews can be submitted after March 6th. Fannie plans to introduce them as part of an update to his AUS over the weekend of March 19th.
The AUS acceptance of desktop appraisals at both government-sponsored companies is subject to restrictions based on the loan-to-value ratios of the relevant mortgages. Alternatively, Fannie may provide them with credit to purchase individual units with a full address of the item in question if they meet other typical eligibility criteria.
Several types of collateral are not eligible, including second homes, condominiums, co-ops, manufactured homes, and properties that are either used for investment or subject to resale restrictions.
Some mortgage products are also not eligible, including community loan loans such as HomeReady and financing for energy improvements or other types of renovations.
Reviewers have mixed feelings about the wider use of automation, concerned that some forms could potentially result in less accurate reviews.
“Some of the flexibilities offered during COVID, such as B. Desktop valuations have longer-term value, for example typical properties where reliable data [multiple listing services] are available,” said Jody Bishop, the 2022 president of the valuation institute, in an emailed statement.
The GSEs' announcements regarding desktop assessments will help provide new parameters for their use, and "from the reviewer's perspective, the scope of work is unlikely to change significantly," Bishop said.
However, fewer rating alternatives have been used in the shopping marketplace, so it may take time for some stakeholders to adjust to the more programmatic use of desktop ratings.
"It will likely take some time before lenders and appraisers fully adopt Desktops," Bishop said, noting that the institute has offered training on the subject.