Fannie Mae Dropping In-person Appraisals for Refi’s

by Isaac Benmergui, Esq on August 10, 2017

Fannie MaeFederal mortgage lenders Fannie Mae and Freddie Mac are dropping the in-person appraisal requirement for individuals who are refinancing a property. Some appraisals will be generated via algorithm, not unlike what Zillow and other third-party real estate sites do, but the data that Freddie and Fannie are using are based off past sales information, as well as notes and comments from previous appraisers.

Freddie Mac will fund up to 80 percent of a home’s value without appraisal on some refinances. Next, Freddic Mac will consider whether to finance new mortgages with 20 percent or more down without an appraisal. Fannie Mae is doing the same, but only with refinancing borrowers.

This is great news for borrowers, who can now skip the $500-700 price tag for an appraisal. However, it could be bad news for lenders since there will be no real-time quality assessments of a home before money is taken out. And taxpayers will foot the bill for loans that go bad.

As more and more homes are refinanced without a fresh set of eyes on them, the current appraisal data that the algorithm is based on will slowly become outdated, and computer-generated appraisals less accurate.

This doesn’t have dire consequences for borrowers who are refinancing, since they are already in the home and know what the situation is. But for purchasers, it could be risky. As Fannie and Freddie totally drop appraisal requirements, it would still be wise to get your own, independent appraisal to make sure the home you are buying is worth what you’re paying.

Call Miami Real Estate Lawyer Isaac Benmergui at 305.397.8547 and set up a no charge, no obligation consultation to discuss your case. We have over a decade of experience handling Real Estate and Civil Litigation cases throughout Miami and South Florida, and will use our expertise to help your case to the best of our abilities.

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