Editor's Note: National Mortgage Professional contributing writer Lew Sichelman is onsite at this week's Mortgage Bankers Association annual conference in Denver. This is one of a series of reports from the event, exclusively for NMP.
For years, government entities waited until the major trade association’s annual conventions to make major announcements. And then it just stopped. Nothing. Nadda. Zip. Sometimes they didn’t even bother to show up.
Guess what? They’re back.
At the Mortgage Bankers Association’s annual conclave yesterday, both Freddie Mac and Fannie Mae offered new initiatives, as did numerous vendors. Even Uncle Sam’s major housing agencies took to the pulpit.
The government-sponsored enterprises, fondly known as the Agencies, announced shifts to their eligibility requirements for appraisal waivers as part of their efforts to balance traditional appraisals with alternatives that still confirm a property’s value.
At Fannie, the waivers are now known as Value Acceptance and, for inspection-based appraisal waivers, as Value Acceptance + Property Data. At Freddie, the waiver expansions are still called ACE, for Automated Collateral Evaluation, and ACE-PDR, for property data report.
In both cases, though, the terms are the same. For purchase loans for primary residences and second homes, the eligible loan-to-value ratios will increase from 80% to 90% beginning January 1. And on the data-driven appraisals, the ratio will jump to the limits for a particular loan program.
Both options are designed to match the risk of the collateral and the loan transaction and save lower-income borrowers and first-time buyers money. To date, Freddie Mac said its waivers have saved borrowers more than $1.63 billion in appraisal fees. Fannie claims to have saved borrowers more than $2.5 billion.
In her remarks to the conference, Naa Awaa Tagoe, Deputy Director at the Federal Housing Finance Agency, the GSEs conservator, said that to make sure the expansion is undertaken in a manner consistent with the agencies’ safety and soundness requirements, they will undertake appropriate risk management controls.
“To be clear,” Tagoe told the crowd, “the expanded eligibility of appraisal waivers does not constitute an expanded credit box... Rather (it) will allow more first-time home buyers, and particularly low and moderate-income first-time home buyers, to recognize the benefits associated with appraisal waivers.”
The FHFA official also said that FHFA is instituting an aligned practice for the Enterprises to provide advance notice of certain base guarantee-fee increases that could otherwise have significant impacts on loan pipelines. Specifically, for lenders using the MBS swap channel, the Enterprises will provide a 60-day advance notice of increases to base G-fees greater than 1 basis point.
The new advanced pricing notice will give lenders more certainty when pricing loans, while still allowing the Enterprises to respond rapidly to evolving market conditions, she said.
MBA President Bob Broeksmit welcomed the change, saying it would allow lenders to better manage their pricing strategies and loan pipelines. But, he added, “more conversations are needed” to discuss who bears the risk of pricing volatility, primary lenders or the GSEs.
The Department of Housing and Urban Development (HUD) was in on the act, too. Together with the FHFA, HUD said it was adding appraisal data from the Federal Housing Administration to the FHFA’s Uniform Appraisal Database so lenders and the public at large can have a more complete picture of housing values.
Until now, the data set included only appraisals on properties in which their loans were purchased by the GSEs. But FHFA Director Sandra Thompson said in a statement that “offering the public access to appraisal data for FHA-insured loans will bolster policymakers’ efforts to identify and address potential inaccuracy, bias, and discrimination in the broader mortgage market.”
The expanded UAD furthers the work of the Interagency Task Force on Property Appraisal and Valuation, or PAVE, which aims to evaluate the causes, extent, and consequences of appraisal bias.
“Far too many families face unfair racial or ethnic bias when they get their home appraised,” HUD’s Acting Secretary, Adrianne Todman, told the conference. “To truly eliminate this form of discrimination, we need accurate, up-to-date data on the appraisal market.”
The appraisal-level public use file for FHA-insured mortgages now contains details on about 266,000 single-family appraisals conducted from 2017 through 2022 plus appraisal-level data or single-family home mortgages acquired by the enterprises and collected on some 1.5 million appraisals conducted from 2013 through 2022.
