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Fannie Mae Releases COVID-19 Guidance on Appraisal Flexibility

by Jennifer Aguilar | Mar 20, 2020

On March 23, Fannie Mae released Lender Letter 2020-04 which lays out how Fannie Mae intends to provide flexibility around appraisals during the COVID-19 outbreak. Specifically, Fannie Mae intends to leverage desktop and exterior-only appraisals in lieu of traditional appraisals with an interior inspection performed by the appraiser.

In the Lender Letter, Fannie Mae lays out the circumstances in which either alternative would be acceptable for sale to them, and states that warrant and representation relief is still available for any alternative so long as the appraisal returns as Collateral Underwriter (CU) score of 2.5 or better. Generally, desktops may only be used in connection with purchase money transactions, while exterior-only appraisals may be used in purchases as well as cash out or limited cash out refinance transactions.

As part of the Lender Letter, Fannie Mae has provided Modified Instructions, Scope of Work, Statement of Assumptions and Limiting Conditions and Certification for both desktop and exterior-only appraisals. Appraisers should review these, as well as a forthcoming FAQ, to understand whether and when it is appropriate to rely on images provided by the homeowner or listing agent as part of competing an assignment.

ASA will continue to monitor the guidance and FAQs and provide them as needed. To read the Lender Letter, click here.