Fannie Mae offers appraisal waivers on purchase mortgages

Fannie Mae has begun allowing property inspection waivers for certain purchase loans that have prior appraisals in its Collateral Underwriter system.

The move allows Fannie Mae to make an appraisal alternative available to the purchase market ahead of Freddie Mac, which plans to release an appraisal alternative for purchase mortgages on Sept. 1. The Federal Housing Finance Agency gave the concept a green light last week.

Both GSEs are requiring buyers to make a 20% down payment on all loans that a purchase-money appraisal alternative is applied to.

Lenders, who have faced lengthy appraisal delays in hot purchase-lending markets, may welcome Fannie and Freddie's decision to provide the alternatives.

But appraisers have protested the move.

After Freddie originally made plans to extend its appraisal alternative to the market last fall, the Appraisal Institute had asked the FHFA, the GSEs' conservator and regulator, to look closely at the risk involved before approving it.

"The policy change by Freddie Mac appears to be oriented to purchase-mortgage transactions or transactions with the highest risk to the agency," the Appraisal Institute said in a letter to FHFA Director Mel Watt.

Both GSEs also had previously launched appraisal alternatives for certain refinance transactions, a practice which had been used selectively in the market before and was less controversial. Fannie had previously planned to only offer its property inspection waivers on refinance loans.