What lenders should know about today’s Fannie Mae Selling Guide changes, and how Clear Capital can help
It’s an exciting time in the mortgage industry, especially for appraisals. Over the past few years, leading companies from across the industry have modernized and transformed how appraisals are manufactured to streamline the lending process and improve the borrower’s experience. Today’s announcement from Fannie Mae — the incorporation of 1004 Desktop appraisals into their Selling Guide for many new purchase loans — is a big step forward in the journey to a fully modern appraisal process. We applaud this move and are dedicated to supporting lenders in the adoption of 1004 Desktop appraisals.
How does the new 1004 Desktop differ from the COVID-19 desktop appraisal?
The 1004 Desktop appraisal guidelines are a bit different than the COVID-19 desktop guidelines. For example, the 1004 Desktop guidelines specify that a purchase transaction must have a loan-to-value ratio less than or equal to 90% and be a one-unit, principal residence. In addition, the 1004 Desktop must take into consideration a detailed floor plan with interior walls and gross living area (GLA) calculations:
“The minimum scope of work for Form 1004 Desktop does not include an interior and exterior on-site physical inspection of the subject property or comparable sales by the appraiser; instead, the appraiser relies on data obtained from alternative sources to identify property characteristics and condition. Form 1004 Desktop requires the use of a floor plan in addition to other exhibits required for traditional appraisals.”
Testing with the COVID-19 desktop showed similar risk performance when compared to traditional appraisals, and the 1004 Desktop guidelines announced today go even further to mitigate risk.
What are the benefits of 1004 Desktop appraisals?
Today’s Selling Guide change presents a great opportunity for mortgage lenders and the borrowers they serve. Modern valuation products like 1004 Desktop appraisals enable an appraisal process that is cost- and time-efficient without sacrificing quality or thoroughness. Armed with these benefits, lenders can confidently schedule earlier closing dates for borrowers. More notably, the standardization of property data collection and GLA standards can drive appraisal consistency nationwide.
Appraisers also benefit from the 1004 Desktop workflow. The pairing of modern technology and a redesigned process enables appraisers to complete 1004 Desktop appraisals without conducting a physical inspection, potentially shortening appraisal turnaround time by an incredible 40–50% and easing appraiser capacity constraints. Desktop appraisals also provide a great opportunity to extend the careers of appraisers who would rather not — or are unable to — go into the field, as well as those who may wish to shift the focus of their practice to in-office work.
Clear Capital can help lenders unlock the potential of 1004 Desktop appraisals
For years, Clear Capital has designed, developed, and tested technology and processes we envisioned would one day become the accepted — even preferred — way to value real estate. Today’s Selling Guide update for 1004 Desktop appraisals signal the industry-wide adoption of modern appraisal methodologies. And we have the technology, trained network of property data collectors, and experienced appraisers that lenders will need to seamlessly adapt to the change. Clear Capital can provide high-fidelity, 2D floor plans with interior walls, digital GLA calculations, and a complete 1004 Desktop appraisal lenders can trust.
Interested in learning more or being an early adopter of 1004 Desktop appraisals? Visit this webpage or reach out to us at 530-550-2525.
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