Breaking news this morning for potential home buyers amidst the current climate: The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to begin offering and providing alternatives to appraisal and employment verification requirements.
From now until May 17, if buying, selling or refinancing a home, these two possible hurdles have been lowered to allow for more efficient and flexible requirements, opening the door to additional potential mortgage transactions. Shortly following these directions by the FHFA, Freddie Mac officially issued updated guidelines to comply and assist in the ever-changing situations.
Made with an eye on reducing the amount of in-person and inside inspection situations, the FHFA has instructed Fannie Mae and Freddie Mac to use drive-by/exterior-only or desktop appraisal options to ensure there is minimal hold up with the mortgage processes during the current coronavirus national emergency.
Desktop appraisals are the preferred option if and when a traditional appraisal is not feasible. These inspections rely on a variety of third-party online data, including public records and service information, to provide an in-depth overview of property information.
“We are in the middle of a crisis that has impacted and will continue to impact millions, directly and indirectly. We feel for those effected and continue to strive to help make a positive impact in any way possible. Today’s news, and the increased flexibility provided by these organizations, will allow purchase transactions in areas heavily impacted by COVID-19 to move forward without disruption," said Wyndham Capital Chief Operating Officer Josh Hankins. "In states that have not adopted e-closings with remote online notarization closing may still be a challenge, but obtaining loan approval will not be an issue. "
The rise in accessibility and validity given to online-driven inspection methods falls in line with a growing shift to a digitally-driven home buying experience. Wyndham Capital’s focus on providing borrowers with unparalleled digital tools, including the opportunity to experience a complete digital mortgage from application start to eClose, allows a sense a convenience and reliability to potential and current borrowers.
Supplementing the inspection updates, and with recognition to rising difficulty in acquiring employment verification through traditional methods, the FHFA has opened the accepted forms of verification to reflect this growing shift.
According to the release, “in the event lenders cannot obtain a verbal verification of the borrower’s employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit.”
Lenders must still validate a potential borrower is employed at the time of consummation of the loan, with the change focusing primarily on types of verification that are now allowed.
This aspect of the update will be a welcome relief for many consumers facing uncertain employment statuses, in addition to organizations being forced to work with minimal resources or who have made the decision to shutter operations. It should be applauded that the FHFA has found opportunities to remove much of the uncertainty and stress that go along with the home buying experience, especially in today’s environment.
These announcements add two more reasons why now is shaping up to be an ideal time to explore homeownership or refinancing. With lowered rates, higher supply, and relaxed requirements, the earlier you begin the process the earlier you can benefit from these moves.