This guide covers the home appraisal process timeline during the mortgage process. Gustan Cho Associates will update you on the appraisal process timeline during these tough times. The post-coronavirus ERA, times of soaring rates, out-of-control inflation, and a shortage of home inventory has affected every industry, including the real estate and mortgage sectors. In times like these, major agencies must develop a plan to succeed. We are seeing this in the appraisal process timeline for real estate transactions. Recently, FANNIE MAE sent an approved appraisal process timeline solution for these dark times. This blog will detail the temporary changes in the appraisal process timeline.  In this article, we will be discussing the appraisal process timeline.

Fannie Mae Appraisal Process Timeline

Fannie Mae made an appraisal announcement to help borrowers with the appraisal process timeline issues. They have announced temporary flexibility to the appraisal process timeline effective immediately for all mortgages on her before May 17, 2020. Fannie Mae is temporarily allowing appraisal inspection and reporting requirements to be lowered.

Fannie Mae will now accept alternatives to the “traditional appraisal” required under selling guide Chapter B4-1. This is the Appraisal requirement when an interior inspection is not feasible.

This is due to skyrocketing rates, out-of-control inflation numbers, housing inventory shortages, and home prices post-COVID-19 ERA.  Fannie Mae will accept either a “desktop appraisal” or an “exterior only” Inspection report in place of the interior and exterior inspection appraisal typically required per Fannie Mae’s selling guide.

Fannie Mae Alternative Appraisal Process Timeline

More stated, if a traditional appraisal may not be obtained, an appraiser may complete a desktop or exterior-only appraisal instead of the traditional appraisal report. Many American citizens do not want random people in their houses in these dark times, such as an appraiser. Completing a desktop or exterior appraisal does not require someone to enter your dwelling. Physically. This new process is putting many at ease during these confusing times. The real estate sector of our economy is massive, and any efforts to keep it afloat will go a long way!

Types of Appraisals Allowed

At this time, for all primary residence purchase transactions, any appraisal report can be used. This includes your traditional appraisal, a desktop appraisal, or an exterior-only appraisal. The same is true for a second home and investment property if the loan-to-value is less than 85%. Meaning you must put down at least 15%.  A formal appraisal report will be required if you buy a second home with less than a 15% down payment.

Appraisal Process Timeline

Are the requirements the same for a refinance transaction? During these tough times, a mini refinance boom is happening in the mortgage industry. With the announcements of the FEDERAL RESERVE cutting interest rates, many Americans reached out to refinance their current mortgage. If you are completing a rate and term refinance, and your loan is currently owned by Fannie Mae, a traditional or exterior-only appraisal may be used. You will need a formal appraisal report if your home loan is not under the Fannie Mae umbrella. For any cash-out refinance transactions, a formal appraisal report will be required. This holds true regardless of whether Fannie Mae services your current mortgage.

Desktop Home Appraisal

What is a desktop appraisal? A desktop appraisal is the next best option for a lender compared to a traditional appraisal. The desktop appraisal will provide more information than an exterior-only appraisal. A desktop appraisal does the minimum scope of work for home value. A desktop appraisal does not include inspecting the subject property or comparable sales.

The appraiser will rely on information provided by the MLS (multiple listing service), public records, and other third-party data sources to create value for the property. This can leave room for error. My next-door neighbor is a retired appraiser with over 30 years of experience.

After talking with him about these recent changes, he mentioned that a desktop appraisal could sometimes leave up to 30% of the value of a property off the table. For example, the appraiser would not know that a homeowner recently updated their kitchen with all-new granite countertops, appliances, floors, and lighting. All of which add significant value to a property. This difference may be between appraising at the value and coming up short. The appraiser is expected to obtain photographs of the subject property, even in these challenging times. The appraiser should, by any means necessary, obtain recent and relevant pictures of the subject property. We cannot stress enough that these appraisal changes are temporary while the American people battle the COVID-19 coronavirus.

Exterior-Only Appraisal Process 

What is an exterior-only appraisal? The exterior-only inspection appraisal is the last resort for appraisal options. This report may be used for purchase transactions and rate and term refinance loans that Fannie Mae already owns. The exterior-only appraisal includes a street map showing the subject property’s location and all comparable sales used, as clear and descriptive photographs (hopefully in color) that show the subject property. This information will be combined with the thousands of data points already in the Fannie Mae database and will be acceptable for Fannie Mae selling guides.

Importance of The Home Appraisal Process Timeline

Not every day do you see major announcements and such a key aspect of the mortgage process. Appraisal is one of the most important parts of a real estate transaction. Without an appraisal, a lender cannot determine the loan-to-value thresholds. It is no secret that this COVID-19 outbreak has made most of our economic tailspin.

A major player such as Fannie Mae to announce changes like this for multiple months into the future is unprecedented. Let’s hope we don’t see anything like this again. We will continue to keep you updated.

Gustan Cho Associates will continue pressing forward to the best of our abilities during these times. Our thoughts and prayers go out to the victims of this invisible killer. We hope you and your families are safe and doing everything they can to prevent the spread of the COVID-19 coronavirus. For any questions about the appraisal or mortgages, please get in touch with us atGustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, despite these tough times. We will all get through this together. To continue to stay up-to-date, check out our YouTube CHANNEL.