In a recent article published on HousingWire, FHFA Acting Director Sandra Thompson announced expansions to the eligibility requirements for refinancing programs geared towards low-income borrowers.
Desktop appraisals, temporary flexibility was implemented in March 2020 to keep the mortgage industry afloat amid lockdowns and social distancing. This will now become permanent, the Federal Housing Finance Agency said.
Both Fannie Mae and Freddie Mac will allow appraisals to be conducted remotely, using public records such as listings and tax appraisals, for purchase loans starting in early 2022. This was announced at the Mortgage Bankers Association Annual Convention and Expo in San Diego.
Allowing desktop appraisals was one of a number of short-term appraisal flexibilities the agency had announced in March 2020. Those flexibilities expired earlier this year. But the regulator was apparently moved by the feedback it received after its December 2020 request for information on appraisal processes.
How do remote valuation solutions benefit appraisers?
To keep up with the high demand amid the ongoing pandemic, appraisers need a remote solution that keeps them in full control.
This can help each appraiser complete more loans in a day, and it can also help rural communities more readily obtain a necessary appraisal when the borrower is purchasing a property. This certainty should allow lenders, borrowers, and appraisers alike to take advantage of the efficiency gains that desktop appraisals can provide.
For RefiNow and RefiPossible, the new income threshold will be raised from 80% of area median income to 100% of AMI. The GSEs will also remove the 10-year seasoning cap from the original program.
The changes are geared towards making the programs easier for lenders to offer, by increasing the overall eligible population and addressing “operational frictions” for lenders.
The Urban Institute and others have documented tightening of credit for low-income borrowers during the refi boom. In April, after a year of refinances that mostly benefited wealthier borrowers, the FHFA announced a new refinance option for low-income borrowers.
These borrowers risk being left on the sidelines during a generational opportunity to lock in more sustainable monthly payments. These very people could benefit from adding breathing room to their budget.