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​​​​​​​FHFA OK's Desktop Appraisals, Expands Refi Criteria

David Krechevsky
Oct 19, 2021

The Federal Housing Finance Agency (FHFA) said Monday it will take two steps to help make home ownership more affordable and sustainable for mortgage borrowers, especially for those in underserved communities. 

  • In addition to restoring desktop appraisals, it will also expand eligibility for RefiNow and Refi Possible programs.

The two steps include restoring desktop appraisals for both Fannie Mae and Freddie Mac, and expanding certain eligibility requirements for the Enterprises’ RefiNow and Refi Possible refinancing programs, which seek to help low-income borrowers.

“Expanding eligibility for low- and moderate-income families to refinance their mortgage and lower their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps towards overcoming barriers to affordable and sustainable homeownership," FHFA Acting Director Sandra L. Thompson said. 

She said the steps demonstrate that “FHFA will continue to act purposefully and in dialogue with its stakeholders to minimize market disruption and ensure its regulated entities operate in a safe and sound manner."

When the Enterprises established their RefiNow and Refi Possible programs for low-income borrowers, area median income (AMI) requirements were limited to borrowers with current income at or below 80%, FHFA siad. Monday’s announcement said Fannie & Freddie would expand the income threshold to include some moderate-income borrowers, with incomes at or below 100% of AMI. In addition, the Enterprises are modifying other requirements to address certain operational frictions for lenders.

Both Enterprises also will incorporate desktop appraisals into their selling guides for many new-purchase loans starting in early 2022. The use of desktop appraisals by the Enterprises was one of several temporary flexibilities initiated last year in response to the COVID-19 pandemic. 

The decision to restore desktop appraisals is the result of a thorough review of data collected from use of the loan flexibilities, as well as input received from the Request for Input and public listening session on appraisal-related policies, practices, and processes, FHFA said.

The agency said it will continue to ensure the safety and soundness of its regulated entities as they support the housing finance market, while ensuring equitable access to safe, decent, and affordable housing opportunities.

Donna Corley, Freddie Mac executive vice president and head of Single-Family, released a statement in support of the changes.

“Freddie Mac is taking action to ensure more deserving homeowners can benefit from today’s low mortgage rate environment through refinancing. Working with our lender clients and the (FHFA), we are now able to help even more lower-income households reduce their interest rate and their monthly mortgage payment through our Refi Possible solution. Our priority is to create more equitable opportunities that responsibly support sustainable homeownership.”

Malloy Evans, executive vice president and head of Single-Family at Fannie Mae, also released a statement supporting the changes.

“We introduced RefiNow earlier this year as an option for lower-income homeowners who often miss out on refinancing options to reduce their monthly mortgage payments and increase their potential monthly savings," she said. "The enhancements ... help expand the reach of RefiNow to additional creditworthy homeowners, further enabling equitable and sustainable access to homeownership.”

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