Fannie Mae announced its latest updates regarding Lender Letter LL-2020-04, with additional temporary guidance, including use of virtual inspections for appraisals and renovation loans, and flexibilities for condominium project reviews.
Additionally, Fannie Mae updated information about flexibilities for new construction loans and Homestyle Renovation loans, as well as other temporary appraisal requirement flexibilities, according to Fannie Mae’s release.
Several FAQs were updates with new questions introduced specific to appraisals.
Question: Does an appraisal that includes the revised scope of work, statements of assumptions and limiting conditions, and appraiser’s certifications provided in Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, also need an extraordinary assumption to address when information was provided by a party that may have a financial interest in the transaction?
Answer: No. As stated in Lender Letter LL-2020-04, the appraiser’s certification No. 10 was removed, recognizing that the appraiser may have to rely on information from an interested party to the transaction (borrower, real estate agent, property contact, etc.) and additional verification may not be possible. The removal of this certification acknowledges this could affect the assignment’s results. If adequate information is not available to complete the appraisal, the assignment cannot be completed.
Question: Given the appraisal flexibilities provided in Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, how will Fannie Mae perform post-purchase quality control reviews on the exterior-only inspection appraisal report and desktop appraisal reports?
Answer: When Fannie Mae performs quality control reviews on these appraisal reports, they will be based on the modified scopes of work for the exterior-only inspection appraisal reports and desktop appraisal reports, respectively. The appraiser’s description of the subject property must be complete, and the opinion of the market value of the subject property must be adequately supported. The review will include an assessment of whether there are property deficiencies, including those impacting safety, soundness, or structural integrity, that were reasonably discoverable in the normal course of business as of the effective date of the appraisal.
Question: As a lender, we used the flexibilities in Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, and engaged a desktop appraisal. However, the appraiser expanded the scope of work and viewed the subject and comparable sales from the street. The appraisal report also included interior photos provided by the borrower. What should the appraiser enter into the Map Reference field?
Answer: On a desktop assignment, nothing precludes the appraiser from expanding the scope of work; however, the Map Reference field must reflect “desktop” as it represents the minimum scope of work.
Question: In Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, we stated that when an appraisal is completed “subject to repairs or alterations” a signed letter from the borrower confirming that the work was completed is allowed. Can the requirements of this letter be provided via email?
Answer: The lender is responsible for ensuring this letter and supporting documentation is in the mortgage file. The borrower and lender can use electronic means of communication, for example email, to transmit the signed letter and verification documentation.
Question: Does DU identify Fannie Mae-owned loans?
Answer: Lender Letter LL-2020-04 specified temporary flexibilities that lenders may apply to limited cash-out refinance transactions when the loan being refinanced is owned by us. To assist lenders in applying these flexibilities, beginning April 11, 2020, DU will issue a new message stating that the borrower's existing loan has been identified by DU as a Fannie Mae loan. This message will be issued on limited cash-out refinance loan casefiles when DU finds an active Fannie Mae first mortgage loan for the subject property address, and also confirms that the Social Security number (SSN) of at least one of the borrowers on the loan casefile matches one of the SSNs on the existing loan.
See more FAQs from Fannie Mae with additional temporary guidance, including use of virtual inspections for appraisals and renovation loans, and flexibilities for condominium project reviews.