Tech-forward appraisal firms have long hoped regulators would look favorably on hybrid and remote appraisals conducted with third-party data providers.
Getting regulators’ blessing would mean access to the firehose of government sponsored enterprise-backed loans for firms that hawk automated valuations. Firms like HouseCanary are currently limited to other uses for appraisals, including for non-QM loans, loan quality control reviews, valuation desk reviews, loss mitigation, non-performing loan and property liquidations and investment portfolios of Wall Street-owned single-family rentals.
Covid-19 gave alternative appraisal processes a foot in the door. In early 2020, regulators allowed flexibilities to keep the housing market humming without spreading the virus via in-person appraisals. Appraisal waivers, which Fannie Mae and Freddie Mac offer when they feel they have sufficient information on the property’s value, proliferated.
During Covid, the Federal Housing Finance Agency also experimented with desktop appraisals, where an appraiser uses publicly available data such as tax assessments and property listings to complete an appraisal. Still, it came as a welcome surprise when the FHFA announced it would make its pandemic foray into desktop appraisals permanent.
But the regulator did not greenlight hybrid appraisals, which rely on third-party data providers. In the past, it has raised concerns about risks involved in hybrid appraisals.
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