Due to the positive experiences regarding the appraisal flexibilities allowed during the pandemic, in the spring of 2022, the mortgage industry decided to make the use of desk-top appraisals a more permanent option for certain transactions.
A desk-top appraisal allows for an appraiser to utilize digital methods of evaluating and determining the values of homes, in lieu of in-person inspections. And it couldn’t come at a better time. Many areas of the nation have experienced a shortage of available appraisers, causing longer lead times on appraisal orders, which in turn, causes delays to mortgage loan closings.
And it’s a problem that probably won’t be going away anytime soon. It may come as a surprise to some, but the appraisal industry is quite competitive and can be difficult to get into due to the strict licensing requirements and lengthy apprenticeship terms, which are often unpaid. The majority of veteran appraisers have been in the industry for decades and have little incentive to take on apprentices due to that stiff competition. According to an article by American Banker - “As older appraisers retire, there are fewer newcomers to replace them” (K. Campbell, 2022).
Also, any new appraisers that do make it through the apprenticeship to become licensed, often find it difficult to be assigned orders and can spend years building up a clientele before making a profit.
Though the new guidelines regarding desk-top appraisals will not have an effect on the number of appraisers in the industry, it may make it easier for existing veterans to broaden their coverage areas and pick up extra business.
However, Desktop appraisals are limited to certain mortgage transactions.
To be eligible for a desk-top appraisal, transactions must meet the following criteria:
- a one-unit property (including those with an ADU and units in a PUD),
- principal residence,
- purchase transaction (including new construction),
- LTV ratio less than or equal to 90%, and
- loan casefile must receive an Approve/Eligible recommendation.
These guidelines are currently applicable to all Fannie and Freddie mortgage loans, as of the release of this blog. And VA recently indicated they might soon be allowing desk-top appraisals on certain transactions. We will continue to provide updates as this new ruling ages. That’s all for us, thanks for reading. And for additional content like this, check out trythecoop.com.