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FHFA Asks for ‘Alternative Appraisal Requirements’

The agency directed Fannie Mae and Freddie Mac to OK appraisals and employment verifications in a way that minimizes human contact to avoid the spread of COVID-19.

WASHINGTON – The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to provide alternative appraisal requirements and employment verifications on loans the agencies service through May 17 – a response to the COVID-19 outbreak. Collectively, Fannie Mae and Freddie Mac back more than half of all U.S. mortgages.

Appraisals: “To allow for homes to be bought, sold and refinanced as our nation deals with the challenges of the coronavirus, [Fannie Mae and Freddie Mac] will leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages,” the FHFA said in a statement.

The Appraisal Foundation has issued guidelines for appraisers during the pandemic. Among other things, it suggests that an interior inspection is not always required for an appraisal if “a health or other emergency condition may require an appraiser to make an extraordinary assumption about the interior of a property … as long as the appraiser has a reasonable basis for the extraordinary assumption, and as long as its use still results in a credible analysis.”

Additional information can be found on the Appraisal Foundation’s website.

Employment: If lenders cannot obtain verbal verification of a borrower’s employment before a loan closing, they will allow lenders to obtain verification via email from the employer, a recent year-to-date pay stub from the borrower, or a bank statement showing a recent payroll deposit.

The FHFA has released several updates to its guidance since the coronavirus outbreak has led to mass sheltering in place or stay at home orders among cities. The FHFA has also suspended foreclosures and evictions for at least 60 days and offered forbearance for borrowers who are facing hardship from the coronavirus.

Also in a move on Monday, the FHFA suspended mortgage payments for landlords who are facing hardship with their buildings due to the coronavirus outbreak. Multifamily owners with loans serviced by Fannie Mae and Freddie Mac may be eligible for financial relief, but they must agree to not evict tenants during the outbreak.

“Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building due to the coronavirus,” FHFA director Mark Calabria said in a statement.

FHFA’s coronavirus actions webpage offers more information about available aid.

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