The appraisal industry has not be sheltered by the global pandemic. People are social distancing and for most home-owners the thought of having a stranger come into your home for an appraisal right now is unsettling. It is no different for the appraiser involved in the transaction. The average age of appraisers in the United States is 59 years old, which means that a large portion of appraisers are already at increased risk from the disease. Appraisers do not want to go into homes right now either, touching your light switches and door handles, all areas where cross contamination would likely occur. The governing bodies have made many adjustments to the appraisal industry in light of the growing health concerns.
Introduction of “Desktop ” and “Exterior Only” appraisals – Many lenders are now accepting a type of appraisal that does not require the appraiser to go inside your home, and in many cases, the appraiser might not even be asked to visit the property at all. These types of appraisals have always existed, but the reliance on such assignments has been minimal due to the need for someone to visually inspect a property before tax payers are asked to insure the mortgage of hundreds of thousands of dollars. In trying times, however, this has been seen as an acceptable method to mitigate risk and still allow for access to lending solutions for those seeking to purchase or refinance a property.
Increased dependency of “Appraisal Waivers” – If Fannie Mae, Freddie Mac, and the other GSEs have enough information about your home while they are analyzing a property for a loan, they have had the option for several years now to issue an appraisal waiver. This means that these lenders would not be required to order an appraisal for certain transactions. Mortgage lenders on the ground love this process, while appraisers cringe at the possibility of unchecked lending. The number of appraisal waivers issued has been tested and analyzed. The numbers have shown that the market can support roughly 17% of all transactions receiving an appraisal waiver before the risk becomes to great and the public trust is negatively impacted.
During these trying times the reliance upon appraisal waivers has increased greatly. There are many lenders who are piloting programs where the appraisal might not be done until 4 months after the loan is already in place.
There are no easy answers to the problems that we face as a country and as the human race. All of these solutions lower the integrity of the lending process in the United States, but increase the safety to our people, which is the reason for all measures being taken at this time. For the time being, don’t be surprised if you aren’t required to get an appraisal for your loan.