Mortgage Facts - Did You Know

Appraisal Waivers

For certain loan casefiles, DU offers an appraisal waiver – an option to waive the appraisal requirement. For loan casefiles that are not eligible for an appraisal waiver, DU will require an appraisal reported on the appropriate appraisal report form for the type of property being appraised.

Prior Appraisal Requirements

In order for an appraisal waiver to be considered, a prior appraisal must be found for the subject property in Fannie Mae’s Collateral Underwriter (CU) data.

DU will compare the address for the subject property to the property addresses found in CU. For refinance transactions, a borrower name match between the loan casefile and the prior appraisal must also be found. DU will use the information from the prior appraisal to determine if the loan casefile is eligible for the appraisal waiver.

In some cases, the prior appraisal may not be acceptable. For example, if a CU “Overvaluation Flag” was issued on the prior appraisal, or the appraisal could not be scored, that prior appraisal will not be used and an appraisal waiver will not be offered on the new loan casefile.

Eligible Transactions

The appraisal waiver offer will be considered for the following transactions:

  • one-unit properties, including condos
  • principal residence and second home transactions
  • investment property refinance transactions
  • certain purchase, limited cash-out, and cash-out refinance transactions
  • DU loan casefiles that receive an Approve/Eligible recommendation

 

Ineligible Transactions

The following transactions are not eligible for an appraisal waiver:

  • construction and construction-to-permanent loans
  • two- to four-unit properties
  • HomeStyle Renovation and HomeStyle Energy loans
  • leasehold properties
  • community land trusts or other properties with resale restrictions, which include loan casefiles using the Affordable LTV feature;
    co-op units and manufactured homes (including MH Advantage properties)
  • DU loan casefiles that receive an Ineligible recommendation
  • transactions using gifts of equity
  • transactions where either the purchase price or estimated value provided to DU is $1,000,000 or more
  • Texas Section 50(a)(6) loans

Furthermore, the lender may not exercise an appraisal waiver offer and must order an appraisal if one or more of the following applies:

  • DU was unable to identify ineligible criteria in the list above (for example, Texas Section 50(a)(6) loans)
  • the lender is required by law to obtain an appraisal (see A3-2-01, Compliance With Laws (02/27/2018))
  • the lender is using rental income from the subject property to qualify the borrower
  • the lender believes that an appraisal is warranted based on additional information the lender has about the property or subsequent events

 

 

 

 

Leave a Reply