Written by Sarah Wheeler
Fannie Mae updated its Selling Guide on Wednesday to include more options for property valuations, saying that they are “moving away from implying that an appraisal is a default requirement.” Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals.
“We are on a journey of continuous improvement to make the home valuation process more efficient and accurate. As such, we are transitioning to a range of options to establish a property’s market value, with the option matching the risk of the collateral and the loan transaction,” Fannie Mae states in its release. “The spectrum balances traditional appraisals with appraisal alternatives.”
Importantly, both the value acceptance (appraisal waiver) and the value acceptance plus property data receive “automatic value certainty with rep and warrant relief.” A traditional appraisal, hybrid and desktop options get value certainty and rep and warrant relief based on a Collateral Underwriter Score of 2.5 or lower.
Key to the new options are Fannie Mae’s Property Data API, by which Fannie “has established a property data standard and API to collect data and images consistently,” according to its website. “The process encourages the use of emerging technologies to capture property information, imagery, and floor plans.”
For the new value acceptance plus property data option, third parties are authorized to do that collection at the property site as long as lenders verify that they have a background check, have been “professionally trained” and are competent to do that collection. This data can only be submitted through the Property Data API.
Kenon Chen, executive vice president of strategy and growth at Clear Capital, said it is exciting for the industry to have the new option of value acceptance plus property data, because “this is a standardized data collection done at the property, which brings objective, transparent data into the whole process. I think that not only drives this program, but paves the way for a better appraisal process when an appraisal is needed.”
