Like its secondary cousin, the Federal National Mortgage Association will begin allowing some home-purchase financing loans without appraisals.
On Friday, rival Freddie Mac revealed that its new automated collateral evaluation tool will enable some loans to be made made without a full appraisal.
The move by Freddie followed a decision back in June by the McLean, Virginia-based company to allow ACE to replace appraisals on some refinances.
Fannie Mae also announced on Friday that its automated underwriting system, Desktop Underwriter, has been updated to allow a property inspection waiver on some loans used to finance a home purchase.
The Washington-based company initially began allowing the property inspection waivers on refinances last year.
The waiver will enable lenders to skip an appraisal on some purchase-money mortgages with low loan-to-value ratios.
“With the updated property inspection waiver, lenders can be certain on Day 1 that they will receive representation and warranty relief on property value, condition, and marketability of a property,” the notice stated. “In addition, lenders may see a shorter origination process and loan origination costs can be reduced, making it easier for lenders to do business while simplifying the process for borrowers.”
Borrowers can still obtain an appraisal on transactions with waivers, while lenders can require a full appraisal if they have reason to believe that one is warranted.
But despite the expansion of the waiver, Fannie said the vast majority of purchase financing loans will still have a full appraisal.
The move by Fannie comes just six months after it relaxed requirements for comparable sales used in appraisal reports.
