FHFA announces that desktop appraisals are here to stay

Much of the talk at the Mortgage Bankers Association’s (MBA) 2021 Annual Convention and Expo centered around the technological innovations sparked by the COVID-19 pandemic, and at least one change is definitely here to stay.

Sandra Thompson, acting director of the Federal Housing Finance Agency (FHFA), announced at the San Diego event that Fannie Mae and Freddie Mac will now permanently allow appraisals to be conducted remotely, beginning early next year.

Appraisals have been a discussion point for the industry of late due to a shortage of qualified appraisers able to assess properties during both a global pandemic and a scorching housing market. The problem, Thompson said, is exacerbated in remote and rural communities, with the travel times required of appraisers adding both time and tedium to the mortgage process.

Last year, with the pandemic gripping the country, the FHFA announced various appraisal flexibilities that were meant to be short-term fixes, including desktop appraisals. And while those flexibilities expired earlier in 2021, remote appraisals proved popular and had such a positive impact on the loan process that many hoped to see them adopted full-time as part of the modernization of appraisal procedures.

Many industry stakeholders provided good reviews to the agency when it submitted a request for information on the matter at the end of last year, and indeed, Thompson’s announcement was met with immediate cheers from the convention audience.

“The housing market is always changing, and we need to ensure that our structures and systems grow and evolve with it by fully using all the appropriate tools and available information,” Thompson said. “With desktop appraisals, an appraiser brings their valuation expertise to information that has already been made available to them, such as thorough listings. This can help each appraiser complete more loans in a day, and it can also help rural communities more readily obtain a necessary appraisal when the borrower is purchasing a property.

“With desktop appraisals included in the selling guides, what was one of the temporary flexibilities with an uncertain future has been adjusted to mitigate risk for use over the long term and will now become an established option for originating enterprise loans — an option that lenders can count on.”

There was no concrete timeline detailed by Thompson past the “early 2022” announcement. The FHFA also announced on its website that desktop appraisals will be incorporated into the government-sponsored enterprises’ selling guides for many new purchase loans, but did not provide further details.


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