In response to the COVID-19 crisis, Fannie Mae has posted Lender Letter 2020-04 (LL-2020-04), which permits temporary revisions to GSE appraisal requirements in this time of national emergency. This Lender Letter can be found here.
Fannie Mae and Freddie Mac have been working together on these temporary flexibilities to enable mortgage lending to continue while appraisers and others take necessary measures to avoid the spread of COVID-19.
Based on these temporary flexibilities, Fannie Mae will now permit appraisers to complete desktop appraisals or exterior-only inspection appraisals in certain situations in which interior and exterior inspection appraisals (“traditional” appraisals) had formerly been required.
The appraiser is instructed to report the results of the desktop or exterior-only inspection appraisal on the current 1004 form (or the 1073 form if the subject is a condominium unit). The appraiser must follow the modified set of instructions that are included as an attachment to the lender letter. The appraiser is instructed to insert “Desktop” or “Exterior” on the form under the Map Reference field and then copy specific GSE-provided text and paste it into the report. This required text has been developed jointly by Fannie Mae and Freddie Mac; it modifies the scope of work, statement of assumptions and limiting conditions, and the certifications for the 1004 and 1073 forms. The required text is slightly over 2,600 words in length, which is too lengthy to include here.
Lender Letter 2020-04 states that if there is insufficient information about the property’s physical characteristics to enable an appraiser to complete an appraisal assignment with a desktop (i.e., no physical inspection) or an exterior-only inspection appraisal, the loan will not be eligible for delivery to Fannie Mae.
Fannie Mae and Freddie Mac, along with their federal regulator, FHFA, are continuing to monitor this ongoing situation and will issue additional guidance as deemed necessary.
McKissock Learning will be hosting a free Pro-Series webinar, Fannie Mae Q1 2020 Appraisal Update, which will give appraisers the chance to hear directly from a Fannie Mae representative and ask questions regarding these new requirements. A link to register for this webinar can be found here.
For more info regarding Coronavirus and appraisers, visit the Appraisal News section of our blog.
Written by Dan Bradley. Daniel A. Bradley, SRA, CDEI is the Director of Online Appraisal Curriculum for McKissock Learning. He has been a practicing real property appraiser since 1987, and has been instructing and authoring appraisal courses since 1992. He is a state certified general appraiser in Pennsylvania and is currently on the FHA appraiser roster. From 2004 to 2013, Dan was a member of the Pennsylvania State Board of Certified Real Estate Appraisers, serving for five years as vice-chairman and three years as chairman. He has also has served as a contracted expert witness appraisal reviewer for the Pennsylvania Department of State.