Fannie Mae recently released a set of FAQs on waiver eligibility changes. Among the findings is that effective June 22, the borrower name no longer needs to match the name on a prior appraisal for a refinance transaction to be eligible for an appraisal waiver offer.

The following are a few of the questions and answers provided by Fannie to prepare appraisers for those changes now in effect.

Q. How do lenders get access to appraisal waivers?

A. Appraisal waivers are available to all lenders who use DU, including through the Desktop Originator (DO) interface. No registration is needed.

Q. Are appraisal waivers available to correspondent lenders?

A. Yes. A correspondent lender may receive an appraisal waiver offer when submitting a loan casefile to DU. Correspondent lenders should contact their aggregators to discuss aggregator interest in delivering loans with an appraisal waiver to Fannie Mae and to ensure the correspondent is obtaining the appropriate fieldwork to meet aggregator guidelines.

Q. Are there prior appraisal requirements for an appraisal waiver to be considered?

A. For an appraisal waiver to be considered, a prior appraisal must be found for the subject property in Fannie Mae’s CU data. DU will compare the address for the subject property to the property addresses found in CU. When a property address match is found, DU will use the information from the prior appraisal to determine if the loan casefile is eligible for the appraisal waiver. In some cases, the prior appraisal may not be acceptable. For example, if a CU Overvaluation Flag was issued on the prior appraisal or the appraisal could not be scored, that prior appraisal will not be used, and an appraisal waiver will not be offered on the new loan casefile. NOTE: Effective June 22, 2019, a borrower name match with a prior appraisal is not required. Resubmissions of DU casefiles after this update may result in an appraisal waiver offer on a refinance transaction.

Q. Why does Fannie Mae offer appraisal waivers on some purchase transactions?

A. In response to market drivers, we updated appraisal waivers (effective Aug. 19, 2017) to allow our lenders to offer their borrowers a choice for efficiency and cost savings by foregoing an appraisal on some lower-LTV purchase transactions. A small percentage of purchase loans qualify for an appraisal waiver offer, and borrowers always have the choice to obtain an appraisal. Fannie Mae continues to require full appraisals on the vast majority of purchase money mortgages to establish market value of homes and to provide valuable input to our appraisal database.

Q. Why can’t an appraisal waiver be exercised when rental income from the subject is used to qualify for the loan?

A. If the borrower is using rental income to qualify for the mortgage loan, the lender must obtain documentation that is used to calculate the monthly rental income for qualifying purposes. The Selling Guide states that Form 1007 is acceptable documentation for one-unit properties, and must be provided in conjunction with the applicable appraisal report.

Q. Is there a charge associated with the appraisal waiver?

A. No. Effective for loans delivered to Fannie Mae on or after Jan. 1, 2017, there is no fee associated with exercising an appraisal waiver.

Q. Is there any lender-level reporting available for appraisal waiver loan casefiles?

A. Lenders can obtain Day 1 Certainty Pre-Delivery and Post-Delivery reports in Fannie Mae Connect. The reports provide a lender-level and responsible-party dashboard of Day 1 Certainty activity. The Pre-Delivery report provides loan-level detail on eligible refi loan casefiles that have received an offer to waive the appraisal. The Post-Delivery report provides loan-level detail for loans on which the lender received and exercised an appraisal waiver offer. The reports can be found in the Management section of the Report Center in Fannie Mae Connect.

Q. What is the process for exercising the appraisal waiver on a loan casefile that is eligible for an appraisal waiver?

A. To exercise an appraisal waiver on a loan casefile that is eligible for an appraisal waiver, the lender must deliver the loan to Fannie Mae with SFC 801 along with the applicable casefile ID reported on the Loan Schedule or Schedule of Mortgages. Additionally, the appraisal waiver offer may not be more than four months old on the date of the note and the mortgage.

Q. What should the lender do if a disaster is declared after the loan closes with an appraisal waiver but before the loan has been delivered to Fannie Mae?

A. The lender makes property-related representations and warranties as of the time it delivers the loan to Fannie Mae. Before delivery of a mortgage loan to Fannie Mae when the property may have been damaged by a disaster, the lender is expected to take prudent and reasonable actions to determine whether the condition of the property may have materially changed. The lender is responsible for determining if an inspection of the property and/or new appraisal is necessary to support its representations. See Section B2-3-05 for full guidance on properties affected by a disaster.

Q. What qualifies as “taking prudent and reasonable actions” when a lender needs to determine if a property has been damaged by a disaster? Is an inspection required?

A. Fannie Mae is not prescriptive as to what method the lender must use to determine the condition of the property. The lender must do whatever it deems necessary in order to be confident in warranting the condition of the property, and this will vary by circumstance.

Q. How do rural high-needs appraisal waivers work?

A. As part of our FHFA Duty to Serve objectives, we are offering appraisal waivers in designated rural high-needs areas. The rural high-needs appraisal waiver is for low- to moderate-income borrowers purchasing homes in targeted rural areas and is contingent on obtaining a home inspection.

Q. Can a borrower provide the home inspection?

A. In states that regulate inspectors, we require professional inspectors who meet the state license and education requirements. In states that do not have inspector licenses, we require inspectors to be professionally accredited members in good standing of a nationally recognized property inspection organization. The borrower can provide the home inspection; however, the inspector must meet the above requirements, and the home inspection must be sufficient for lenders to determine property.

For the complete list of FAQs, click HERE.