Fannie Mae and Freddie Mac loosening rules on home appraisals


The nation’s two largest loan backers, Fannie Mae and Freddie Mac, are loosening their rules when it comes to lending. The mortgage giants are now allowing for home appraisals to be waived on certain loans.

Bill Altermatt is the owner of Altermatt Appraisal Services. The change in practice by Fannie Mae and Freddie Mac has his attention, using automated valuation models to determine home value for some home loans versus a physical appraisal.

“Is it a good idea to pursue this? I think it is. It’s the natural progression of things. I’m not going to stand in the way of this and say it’s a terrible idea,” Altermatt said.

This may sound strange coming from someone whose livelihood is based on doing home appraisals, but Altermatt says automated valuation models have come a long way in terms of accuracy. However, there will still be a need for people like him, contributing data to these models.

“There’s always going to be a need, in some capacity, to have an appraiser, an experienced evaluation professional, put eyes and ears on the ground,” Altermatt said. “I’m a disinterested, unbiased third party.”

Alan Tinney, V.P. of Mortgage Lending at Waterford Bank,  says the new rules will actually save some homeowners a lot of time and money, that’s if they can put at least 20 percent down.

Some consumers may be thinking the practice of waiving appraisals is somewhat reminiscent of what led up to the 2008 housing market crash, but lenders says things are very different now. 

“These are highly qualified buyers with very large down payments, so we’re not going back to the days of three percent, or five percent, or ten percent down, or borrowers with marginal credit scores being eligible for this,” Tinney explained. 

Altermatt says most borrowers will not qualify, maybe only about ten percent. Before the crash, that number was around 30 percent.

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