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Consequently, Nichols suggested, it behooves loan officers to implement the changes to their own protocols. “We’re encouraging loan officers to really get up to speed and educated on this because it’s a value they can bring to their referral partners.”
Fear of the unknown keeps some LOs at bay
Yet some LOs are hesitant to try, she suggested. “I think loan officers are having a hard time sorting through this,” she said, providing hypothetical sentiments some may have to the changes: “ ‘What is this thing? I don’t know if I trust it. I only have two loans in the pipeline that are purchases, and I don’t know if I’m trying that out – it scares me. I know what the appraisal process looks like, but I don’t understand this.’”
For the uninitiated, Fannie Mae was the latest to announce changes to property valuations, calling its efforts “valuation modernization.” For its part, Freddie Mac uses the term “appraisal modernization” in referring to its changes. Both efforts aim to give borrowers alternatives to full appraisals, reduce turn times in the appraisal process and lower the cost to consumers.
Along the way, the acronym PIW – property inspection waiver – has been shed in lieu of the term “value acceptance.” Freddie Mac still uses the ACE (automated collateral evaluation) terminology, Nichols noted. Moreover, Fannie Mae now offers a Value Acceptance + Property Data Collection (PDC) instead of an appraisal. On the Fannie Mae Desktop Underwriter (DU), loan officers now have the option of ordering a property data collection (PDC) in lieu of an appraisal, Nichols said.
“In purchase markets with limited supply, meeting appraisal contingencies can be quicker with these appraisal alternatives,” Nichols noted. “The cost of PDCs are lower than appraisals, and borrowers can save potentially hundreds of dollars.”
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