FHFA: Desktop Appraisals to Become a Permanent Option

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The Federal Housing Finance Agency will accept appraisals conducted remotely—without the physical presence of an appraiser—starting in early 2022 for qualifying Fannie Mae– or Freddie Mac–backed mortgages. The government-sponsored enterprises will use public records, including listings and tax appraisals, to process desktop appraisals for purchase loans.

Sandra Thompson, acting director of the FHFA, made the announcement on Monday during the Mortgage Banker Association’s annual conference in San Diego.

The change will allow banks and mortgage lenders to use desktop appraisals in place of traditional ones. Desktop appraisals had first been announced as a temporary option at the start of the pandemic.

“What was one of the temporary flexibilities will now become an established option for originating enterprise loans,” Thompson announced at the MBA conference. “Both enterprises will incorporate desktop appraisals into their [selling] guides for many new purchase models starting in 2022.”

The appraisal industry has faced high demand and a shortage of appraisers during the hot housing market. Desktop appraisals have been one method the industry has turned to in keeping transactions on track.

Thompson also announced on Monday that the FHFA would expand eligibility requirements for its RefiNow and Refi Possible refinance programs, which are aimed at helping low-income borrowers refinance into lower mortgage rates. It would also remove some restrictions for financing and closing costs.

“Expanding eligibility for low- and moderate-income families to refinance their mortgage and lower their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps toward overcoming barriers to affordable and sustainable homeownership,” Thompson said in a statement. “FHFA will continue to act purposefully in dialogue with its stakeholders to minimize market disruption and ensure its regulated entities operate in a safe and sound manner.”