The global spread of COVID-19 has affected every industry, including real estate valuation. In many cases, an appraisal based on a full interior and exterior inspection of the property has been unobtainable.
In response, Fannie Mae and Freddie Mac, under the guidance of the Federal Housing Finance Agency (FHFA), set forth temporary flexibilities to appraisal requirements. These temporary flexibilities have been extended until June 30, 2020 and allow desktop and exterior-only appraisals in certain situations, outlined in more detail below.
Fannie Mae’s appraisal flexibility guidelines:
Freddie Mac’s appraisal flexibility guidelines:
No assumptions allowed
n a recent appraiser update email, Fannie Mae wrote:
“…one issue we’ve observed is that some appraisals rely on assumptions about the subject property condition. Whether completing an exterior-only or a desktop appraisal, the appraiser must have a data source for all the relevant characteristics including interior condition. Obtaining that information, whether it be from homeowners or other sources, is not only encouraged, but is required.
When using the temporary flexibilities, we encourage appraisers to communicate with homeowners or agents to fill any gaps in the descriptive information needed to perform the appraisal. The appraiser cannot assume that the condition is ‘average’ or ‘similar to the exterior of the home,’ for example.”
This recent guidance — that assumptions (including extraordinary assumptions) are not allowed — is a change to a longstanding practice.
That said, obtaining the needed descriptive information can create more busy work like back-and-forth emails and calls to explain what information the appraiser needs. Video walkthroughs using FaceTime or Skype can be frustrating and still require scheduling.
As a real estate valuation technology company, we knew we could make the process easier on appraisers and homeowners. So we built a free tool called OwnerInsight™, designed to hand flexibility back to the appraiser and enable mortgage processes to move forward in a compliant way while limiting in-person interaction.