- Fannie Mae and Freddie Mac relaxing employment and appraisal verifications under direction of Federal Housing Finance Agency
- Easing property appraisals and verification of employment part of efforts to “facilitate” liquidity in mortgage markets
Scientific research shows that COVID-19 can live for “several hours to days in aerosols and on surfaces.” Clearly, having appraisers enter and inspect houses to generate appraisals where coronavirus may be present has been a big concern.
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The Federal Housing Finance Agency, as of this last week, has opted to direct Fannie Mae and Freddie Mac to ease standards for both property appraisals and employment verifications to both protect appraisers and to “facilitate liquidity in the mortgage market during the coronavirus national emergency.”
As of now, Fannie and Freddie are using both drive-by and desktop appraisals in appropriate situations. In a statement directed to lenders from Fannie Mae, “Effective immediately, we are allowing temporary flexibilities to our appraisal inspections and reporting requirements.” Primarily, purchase mortgage applicants will use these “flexibilities”.
Second to preferred traditional, interior inspections are desktop appraisals where the appraiser researches public records, MLS information, and other third-party sources to define property characteristics. If either of these options is not possible, the GSE’s will accept exterior-only or drive-by appraisals for purchase applications. Either traditional or exterior-only appraisals are permitted for limited cash-out refinancings and only traditional appraisals are permitted for cash-out refinancings.
The coronavirus has also made employment verification more complicated due to so many businesses having closed or reduced their staffs. The FHFA is now allowing lenders to accept employment verification with these three alternatives:
- an email directly from the employer’s work email address that stipulates the name and title of both the verifier and the borrower and the borrower’s current employment status
- a year-to-year paystub from the borrower that immediately precedes the note date
- a bank statement showing a payroll deposit that immediately precedes the note date
These “flexibilities” relating to appraisal alternatives and employment verifications are currently in effect through May 17, 2020.
Thanks to HousingWire’s Ben Lane for source data and content.