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FHFA to Make Desktop Appraisal Use Permanent

The Federal Housing Finance Agency (“FHFA”) recently announced that Fannie Mae and Freddie Mac (the “GSEs”) will be updating their selling guides to allow for the permanent use of desktop appraisals for many types of new purchase loans starting in early 2022.

Unlike a full appraisal, a desktop appraisal is completed by a licensed appraiser without a physical inspection of a property.  Working remotely, an appraiser uses public records such as property listings and tax records to provide an appraised value.  Sandra L. Thompson, Acting Director of the FHFA, stated that this measure is part of a greater effort towards “overcoming barriers to affordable and sustainable homeownership.”  Issues with completing a full appraisal can slow down a loan closing, especially in rural communities where appraisers must allocate more time driving from property to property, Thompson said. Using technology and available information, an appraiser can complete a desktop appraisal in less time than it takes to complete a full appraisal, and generally at a lower cost to the borrower.

The GSEs began allowing the use of desktop appraisals in 2020 as a temporary flexibility in response to the COVID-19 pandemic when appraisers needed to be able to perform valuations during lock down periods. The FHFA advised that the decision to allow for continued use of remote appraisals was made after a review of data collected during the pandemic and input received from a Request for Information (RFI) and public listening session on appraisal practices.