August 30, 2017 – Anthony Lamacchia was featured in today’s Washington Post article which discusses Fannie Mae and Freddie Mac’s refined regulations which have, until now, required home appraisals prior to obtaining mortgages. Based on a newly developed loan underwriting model, if there is enough information about the property in question, the buyer will have the choice to either pay for a traditional appraisal, which costs between $500 and $700, or go with a free in-house valuation executed by Fannie or Freddie. This assessment will determine right then and there whether the contract price, agreed upon by the buyer and seller, is suitable for the mortgage amount for which the buyer applied.
Not surprisingly, this development has mixed reviews mostly dependent on who is asked. Appraisers are not fans, citing that Fannie and Freddie are putting themselves at risk by underwriting loans with potentially iffy collateral. Buyers generally like the idea that they have the choice to save the appraisal fee up front, but are forewarned that the cost for skipping this step could be much greater once they own the home and discover problems on their own. Our own Anthony Lamacchia “thinks appraisal-free loans are “a good thing,” provided buyers have made significant down payments. But he worries that if Fannie and Freddie waive appraisals at lower equity levels, “it will lead to what happened in the bust.” Click here to read the full article.