Fannie Mae Announces Changes to Appraisal Alternatives Requirements

Rhea-AI Summary

Fannie Mae (FNMA) announced changes to eligibility requirements for its appraisal alternatives, Value Acceptance and Value Acceptance + Property Data, effective Q1 2025. For purchase loans on primary residences and second homes, the eligible loan-to-value (LTV) ratios will increase from 80% to 90% for Value Acceptance and from 80% to program limits for Value Acceptance + Property Data. Since early 2020, these appraisal alternatives have saved mortgage borrowers over $2.5 billion. The changes aim to make home valuation more efficient while maintaining safety standards.

Positive

• Increased LTV ratios expand lending accessibility for homebuyers
• Documented $2.5 billion in borrower cost savings since 2020
• Modernization of valuation process potentially reducing operational costs

Negative

• Higher LTV ratios may increase risk exposure for the company

WASHINGTON, Oct. 28, 2024 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) today announced changes to the eligibility requirements for Value Acceptance (previously known as appraisal waivers) and Value Acceptance + Property Data (also known as inspection-based appraisal waivers), two key components of the company's valuation modernization options. The changes are part of Fannie Mae's ongoing efforts to offer a balance of traditional appraisals and appraisal alternatives to confirm a property's value in order to meet the needs of the market.  

Beginning in Q1 2025, for purchase loans for primary residences and second homes, the eligible loan-to-value (LTV) ratios for Value Acceptance will increase from 80% to 90% and Value Acceptance + Property Data will increase from 80% to the program limits. Both options are designed to match the risk of the collateral and the loan transaction.

"Fannie Mae is on a journey of continuous improvement to make the home valuation process more effective, efficient, and impartial for lenders, appraisers, and secondary mortgage market participants while maintaining Fannie Mae's safety and soundness," said Jake Williamson, Senior Vice President of Single-Family Collateral & Quality Risk Management, Fannie Mae. "Responsibly increasing the eligibility for valuation options that leverage data- and technology-driven approaches can also help reduce costs for borrowers."

Since early 2020, Fannie Mae estimates the use of appraisal alternatives such as Value Acceptance and Value Acceptance + Property Data on loans Fannie Mae has acquired saved mortgage borrowers more than $2.5 billion.

Value Acceptance leverages a robust data and modeling framework to confirm the validity of a property's value and sale price. Alternatively, Value Acceptance + Property Data utilizes trained and vetted third-party property data collectors, such as appraisers, real estate agents, and insurance inspectors, who conduct interior and exterior data collection on the subject property. Lenders are notified of transactions that are eligible for Value Acceptance or Value Acceptance + Property Data via Fannie Mae's Desktop Underwriter^®.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
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SOURCE Fannie Mae

FAQ

What changes did Fannie Mae (FNMA) announce to its appraisal alternatives in October 2024?

Fannie Mae announced increased LTV ratios for Value Acceptance (from 80% to 90%) and Value Acceptance + Property Data (from 80% to program limits) for primary residences and second homes, effective Q1 2025.

How much have Fannie Mae's (FNMA) appraisal alternatives saved borrowers since 2020?

Fannie Mae estimates that its appraisal alternatives have saved mortgage borrowers more than $2.5 billion since early 2020.

When will Fannie Mae's (FNMA) new appraisal alternative requirements take effect?

The new requirements for Value Acceptance and Value Acceptance + Property Data will take effect in Q1 2025.