Fannie Mae recently announced in their Selling Guide (SEL-2023-02) update that “as part of the valuation modernization” they are transitioning to a “range of options to establish a property’s market value”.
Click on this link to view the actual document as released by Fannie Mae on March 1, 2023 https://singlefamily.fanniemae.com/news-events/announcement-sel-2023-02-selling-guide-updates
They have changed the term “Appraisal Waiver” to “Value Acceptance”. According to FNME, this is being changed to “better reflect the actual process of using data and technology to accept the lender-provided value”. Wait a minute… read that again!!! Yes- you read it correctly- “Lender-provided”. This can’t have the possibility of ever going wrong.
In FNME’s release they describe the valuation modernization process as a way to enhance the management of collateral risk, making the process more efficient for lenders, borrowers, appraisers and secondary-market investors. They also stated that it benefits consumers via greater accuracy, lower costs and increased speed. Here is another “wait-a-minute-moment”! I was told long ago “You can have it fast, you can have it good, you can have it cheap: pick two”. This is a long standing principle that applies to just about every service you pay for. Fannie Mae is saying that, for once, there is a way you can have ALL THREE!
Then there is the option of Value Acceptance plus Property Data. This is a combination of the “lender-provided data” plus a “new option that utilizes property data collection by a third party who conducts interior and exterior data collection on the subject property.” It is then the lender who confirms based on this information if the property is eligible and an appraisal is not required. Again, the lender decides this.
Lets add another layer to these already troubling changes. FNME will now allow a borrower to provide an attestation letter to verify repairs were made if they were required or for a builder to provide an attestation letter to verify a new construction is 100% complete. How could this go wrong? There have been plenty of times I have showed up to complete a repair inspection or final inspection on a new construction and it was not completed.
The Appraiser Blogs that I follow published a letter that was written by the Massachusetts Board of Real Estate Appraisers that points out the issues regarding this and the question of consumer protection. This letter was written to the Consumer Finance Protection Bureau and asks them to consider the answers to some very important questions. Value acceptance does not offer the consumer protection that they seem to elude to as part of the FNME modernization process. Please read through their letter because it asks some very important questions and asks the CFPB to consider making Consumer Protection more important than the speed and cost of an appraisal. You can read the full letter and blog post at https://appraisersblogs.com/fannie-mae-appraisal-waiver-option-is-eroding-consumer-protection