For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.
By G. Steven Bray
The realities of social distancing and shelter-in-place orders are impacting the real estate industry. For those who are trying to buy or refinance a home, those realities could impact your ability to close your loan. The Federal Housing Finance Agency (FHFA) has taken notice and in response has instructed Fannie Mae and Freddie Mac to ease some of its loan guidelines in two areas.
With respect to appraisals, the FHFA recognized that a standard appraisal in which the appraiser visits and inspects the home is not consistent with virus containment measures. Instead, Fannie and Freddie have agreed to accept appraisal alternatives with some conditions. For most purchase transactions, if the lender uses what’s called a desktop appraisal – for which the appraiser relies on public records, multiple listing service information, and other third-party data sources to identify the property characteristics – and the estimated value is within limits established by Fannie and Freddie, the lender won’t be held accountable for the value, which means the lender should be willing to close your loan.
With respect to employment, the FHFA recognized that many employers are either shut down or their employees are working remotely. The traditional verification of employment the lender performs before closing may not be possible. The new guidance allows lenders to accept an email from the borrower’s employer or evidence the employee is still on payroll – such as a recent pay stub or bank statement showing direct deposit of a payroll check.
While these accommodations are great, it’s up to individual lenders to agree to use them. As lenders still bear some responsibility for loans that default, and given the current economic situation, you may find that your lender isn’t willing to take the risk.
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