Fannie Mae released information pertaining to the extension of the effective date surrounding the application dates eligible for temporary flexibilities to appraisal guidelines stemming from COVID-19.

The deadline date has been extended to July 31.

As to virtual inspections for appraisals and renovation loans, appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only appraisal, all traditional appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property.

“A virtual inspection cannot be used as a substitute for the onsite interior and exterior inspection for a traditional appraisal,” Fannie states. “Additionally, an onsite interior and exterior inspection is required for the Appraisal Update and/or Completion Report (Form 1004D) used to confirm completion of renovation for HomeStyle Renovation loans. Virtual inspections using video and photographs provided by the borrower or contractor can be used to evidence renovation progress to disburse additional renovation funds as described below.

“For purchase money transactions when an interior and exterior appraisal is not available, lenders are encouraged to obtain a desktop appraisal rather than an exterior-only appraisal. The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales,” Fannie Mae added. “The appraiser relies on public records, multiple listing service (MLS) information, and other third-party data sources to identify the property characteristics.”

When a desktop appraisal is performed, reported on Form 1004 or Form 1073, and submitted to Fannie Mae through the Uniform Collateral Data Portal (UCDP), the appraisal will be scored by Collateral Underwriter (CU). All loans with a CU risk score of 2.5 or less will receive value representation and warranty relief under Day 1 Certainty. With desktop appraisals, lenders will have the added risk management and efficiency benefit of being able to use CU to aid in the appraisal review process.

An exterior-only inspection appraisal may be obtained in lieu of an interior and exterior inspection appraisal for the following transactions:

• Purchase money loans.
• Limited cash-out refinances where the loan being refinanced is owned by Fannie Mae Lenders will not receive value representation and warranty relief under Day 1 Certainty for loans with exterior-only appraisals.

“Lenders are encouraged to accept appraisal waiver offers when eligible and provided through DU to address concerns around contact between appraisers and homeowners. Lenders are reminded to submit the case to DU to determine whether an appraisal waiver is offered before ordering an appraisal,” Fannie said. “We remind lenders that all Selling Guide requirements pertaining to appraisal waivers apply (see Selling Guide B4-1.4-10, Appraisal Waivers). We are continuing to monitor the impact of COVID-19 and will evaluate additional appraisal waiver flexibilities if the situation warrants such action.”

Fannie Mae also updated its FAQs list. One update reflected whether a desktop or exterior-only inspection appraisal report completed using the appraisal flexibilities offered by Lender Letter LL-2020-04, Impact of COVID-19 on appraisals can include photos or other information provided by the borrower/owner.

“Consistent with USPAP, appraisers are permitted to consider and develop any information deemed credible,” Fannie stated. “It is important to note, certification #10 has been removed in recognition that the appraiser may have relied on information from an interested party to the transaction (borrower, realtor, property contact, etc.) and additional verification may not have been possible.”

Another question raised the issue on whether the appraiser is able to obtain subject photos for a desktop appraisal report.

Fannie said photos can be obtained from sources such as third-party websites, owners, or listing services, etc. Fannie also noted that any use restrictions on photos must be honored.

For more updated questions and answers from Fannie Mae surrounding appraisal concerns go to FAQs.