Certain eligible loans backed by Fannie Mae will no longer need appraisals after the GSE implemented a technology update [1] over the weekend with the goal of creating more efficiency for lenders, according to an announcement from Fannie Mae [2].
Effective Saturday, December 10, Fannie Mae implemented its property inspection waiver (PIW), offered through its Desktop Underwriter program, for certain refinance loans. The PIW offer, issued through Fannie Mae’s Collateral Underwriter (CU) on loans that are found to have a qualifying risk score, will give lenders more freedom from representations and warranties, according to Fannie Mae.
“With the power of Collateral Underwriter, relief from representations and warranties for appraised property value on many loans now makes the process more efficient for everyone by reducing the need for follow-up with appraisers,” said Carlos Perez, SVP and chief credit officer for single-family at Fannie Mae. “And with the enhanced property inspection waiver, many refinance transactions will not require a new appraisal, potentially shortening the origination process and giving borrowers a significant cost savings.”
According to Fannie Mae, the following transactions can be considered for a PIW offer: one-unit properties (including condominiums); principal residences, second homes, and investment property transactions; limited cash-out refi transactions up to a 90 percent LTV/CLTV for principal residences and second homes and up to 75 percent on investment properties; cash-out refis on up to a 70 percent LTV/CLTV for principal residences and up to 60 percent for second homes and investment properties; and loan casefiles that receive a recommendation of Approve/Eligible.
Fannie Mae told MReport that as many as 10 percent of all Fannie Mae-backed loans or as many as 25 percent of refis will be receiving a PIW.
The new initiative to provide lenders with more freedom from representation and warranties is part of Fannie Mae’s Day 1 Certainty program [3] launched in October with the goal of a faster, more efficient originations process to save lenders and borrowers time and money.
“Ultimately, we want our customers to have the confidence to lend, so that more qualified borrowers have access to affordable mortgage credit,” Fannie Mae CEO Timothy J. Mayopoulos said in late October when Day 1 Certainty was launched. “We will continue to listen to our customers and partner with them to deliver innovative solutions that address the nation’s most important housing challenges.”
Click here [1] to view a fact sheet on Fannie Mae’s Enhanced Property Inspection Waiver.