Fannie Mae Will Consider Appraisal Waiver in Rural High-Needs Areas

• September 20, 2018
• Anna DeSimone

Home Inspection Alternative Issued Through Desktop Underwriter®

For certain home purchase transactions in rural high-needs areas, Fannie Mae may offer to waive the appraisal in exchange for a mandatory home property inspection. The rural high-needs appraisal waiver seeks to help low- to moderate-income borrowers avoid unanticipated, potentially high-cost, post-purchase repairs.

This offer will be considered only for property locations designated as rural high-needs by the Duty to Serve  requirements.  To view a heat map of the High Needs Counties throughout the United States, go to the website of the Federal Housing Finance Agency and search for Duty to Serve, High Needs Map, or click on the following link

https://www.fhfa.gov/DataTools/Tools/Pages/Duty-to-Serve-High-Needs-Counties-Map.aspx

The following eligibility requirements must also be met:

• Purchase transactions only
• Desktop Underwriter (DU) loan casefile receives an Approve/Eligible recommendation
• One-unit principal residence properties (excluding manufactured homes)
• Borrowers with income equal to or less than 100% of the area median
• LTV ratios up to 97%; and CLTV ratios up to 105% with a Community Seconds®

Appraisal waiver offers are issued through DU. If an offer is received and the lender and borrower agree to accept the offer, the lender follows these steps:

1. Obtain a home property inspection report from a state licensed inspector or from a professionally designated inspector in locales that do not have licensure.
2. Review the property inspection report and represent and warrant that the property is safe, sound, and structurally secure and that the property is not in C6 condition.
3. Provide a copy of the property inspection report to the borrower, who signs an affidavit that they have been given a copy, read the report, and have been notified of any lender-required repairs.
4. Provide Special Feature Code (SFC) 801 at the time of loan delivery and maintain a copy of the inspection report in the loan file.

See the Selling Guide for a full list of lender responsibilities. Standard mortgage insurance is required for this offering. The waiver my be combined with other Selling Guide offerings such as Home Ready. Offers are available for eligible transactions in late 2018.  For detailed information, refer to Selling Guide B4-1.4-10 which may be access using the following link.

https://www.fanniemae.com/content/guide/selling/b4/1.4/10.html

 

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