As the real estate and mortgage industries work to modernize the home valuation process, Freddie Mac and Fannie Mae continue to offer new collateral valuation methods. The introduction of inspection-based appraisal waivers offers an increasingly positive impact to both lenders and borrowers.
What is an inspection-based appraisal waiver, who can act as a property data collector for inspection-based appraisal waivers, and how can lenders take advantage? We’ll dive into the details to help readers gain the confidence to leverage these collateral valuation options.
What is an appraisal waiver?
Appraisal waivers shorten the valuation process by not requiring an appraisal. Freddie Mac’s Loan Product Advisor® (LPASM) or Fannie Mae’s Desktop Underwriter® (DU) determine whether a loan is eligible for an appraisal waiver. LPA and DU leverage proprietary models, historical data, and public records to make the determination. While these waivers can save borrowers the time and cost associated with ordering a traditional appraisal, not all loans will qualify for an appraisal waiver when applying for a mortgage.
Inspection-based appraisal waivers — expanding the flexibility of valuation modernization
For many years, there have only been two options for lenders: a traditional appraisal or an appraisal waiver. Now, Freddie Mac and Fannie Mae offer inspection-based appraisal waivers. Inspection-based appraisal waivers allow lenders to take a risk-based approach to the collateral valuation process while still saving money and time using Clear Capital’s Universal Data Collection® (UDC®), compared to a traditional appraisal.
Eligibility for an inspection-based appraisal waiver is determined by LPA or DU; when a lender accepts an inspection-based appraisal waiver, a trained property data collector performs a property data collection to collect property information.
How do inspection-based appraisal waivers work?
Lenders can obtain an inspection-based appraisal waiver for qualified loans in three steps:
- Submit the loan to LPA or DU.
- LPA or DU will determine whether a loan is eligible for an inspection-based appraisal waiver.
- If eligible, order a property data collection from a verified provider. A trained and qualified property data collector must visit the property to collect information about the property’s features. This information is digitally submitted to Freddie Mac’s bACE API (Beyond ACE application programming interface) and/or Fannie Mae’s Property Data API and delivered back to you for underwriting.
Benefits of appraisal waiver programs for underwriters
Inspection-based appraisal waivers create efficiency for underwriters and reduce the likelihood of human error.
Historically, traditional appraisals have been a source of uncertainty in the timeliness of the loan process — making it difficult to confirm a closing date. Using an inspection-based appraisal waiver can save time and cost when compared to obtaining a traditional appraisal. The property data collected by a trained and qualified property data collector is used to underwrite the collateral.
When using Clear Capital’s Universal Data Collection (UDC) for an inspection-based appraisal waiver it’s often at least 50% faster than using a traditional appraisal. And it’s more affordable, creating savings that can be passed on to the borrower.
Freddie Mac’s new Beyond ACE (bACE) API feedback messages are also a game-changer for lender underwriting and quality control staff. The messages have the potential to turn the property data report (PDR) review process into a more data-driven, targeted one. Underwriting and quality control staff can more efficiently underwrite property conditions and eligibility. This is analogous to using Uniform Collateral Data Portal® (UCDP®) or Freddie Mac’s Loan Collateral Advisor® results when performing a review of a traditional appraisal.
What is property data collection?
Property data collection is a crucial part of the inspection-based appraisal waiver process. It is intended to standardize the collection of property information.
During the property data collection process, data collectors are required to identify and photograph all structures and rooms on a property — documenting any upgrades, damage, additions, conversions, and site features. Property data collectors will also take note of all building materials and utilities present.
In addition, property data collectors use a tool like CubiCasa® to generate an ANSI-aligned floor plan that includes gross living area (GLA) calculations. Once the property data collection is complete and the property data collector has gathered all the necessary information, the data is digitally submitted to Freddie Mac’s bACE API and/or Fannie Mae’s Property Data API and delivered to the lender for underwriting.
Who can collect property data for Freddie Mac’s ACE+ PDR solution and Fannie Mae’s Value Acceptance + Property Data program?
The qualifications and requirements for property data collectors vary slightly between Freddie Mac’s ACE+ PDR and Fannie Mae’s Value Acceptance + Property Data.
Freddie Mac’s ACE+ PDR requires that the data collection be completed by a trained property data collector:
- Property data collectors can be non-appraisers, appraisers, or appraiser trainees. If a property data collector is not an appraiser, they must be trained in all aspects of property data collection using the Uniform Property Dataset (UPD).
- The training must include instructor-led or online training and an exam to ensure the proficiency of the property data collector.
- The property data collector must also be independent and unbiased and have no present or prospective interest with respect to the transaction.
Read Freddie Mac’s ACE+ PDR page to learn more.
For Fannie Mae’s Value Acceptance + Property Data, the data collector must be:
- Selected in accordance with Fannie Mae requirements, including the Property Data Collector Independence Requirements to ensure they have no interest with respect to the transaction.
- Vetted through annual background checks
- Professionally trained and possess the essential skills and knowledge to competently complete the property data collection.
Read Fannie Mae’s Value Acceptance + Property Data Fact Sheet to learn more.
Both GSEs mandate that data collectors:
- Pass a background check,
- Perform the data collection on site,
- Be independent and unbiased, and
- Certify that they have no present or prospective interest or bias with respect to the transaction or the property and no present or prospective personal interest or bias with respect to the participants in the transaction.
Real estate agents
While many different labor forces can be used to perform property data collection, Clear Capital uses licensed, independent real estate agents. Real estate agents are a great choice for property data collection services because they are trained in real estate and must meet state licensing and monitoring requirements. When engaging a real estate agent to perform data collection services, we verify they are not an interested party in the transaction.
Real estate agents are accustomed to providing excellent customer service and are more flexible to the scheduling demands of homeowners — typically scheduling twice as many inspections in the evenings and weekends than appraisers. After Clear Capital certifies real estate agents to perform property data collection services, our panel of real estate agents — armed with a guided mobile technology experience — deliver battle-tested quality property data collections.
Property data collection technology
When collecting property data, collectors are required to capture photos throughout the property while completing the data collection. Clear Capital provides data collectors on our panel with our mobile data collection application, ClearInsight™. ClearInsight provides a guided data collection experience that includes a seamless integration with CubiCasa. CubiCasa allows a user to scan a home’s floor plan in five minutes. Once scanned, the user can receive a full, 3D, ANSI-aligned floor plan in as little as six hours.
Once the data collector completes the data collection and submits the data, our technology enables automated and human-based review to ensure consistent quality.
Take advantage of valuation modernization programs today
Inspection-based appraisal waiver programs like Freddie Mac’s ACE+ PDR and Fannie Mae’s Value Acceptance + Property Data are great solutions for consumers and lenders alike. When using Clear Capital’s Universal Data Collection (UDC) they can save time and cost when compared to a traditional appraisal and may help borrowers close on a home loan faster.
Get started with valuation modernization programs today with Clear Capital’s Universal Data Collection (UDC). UDC aligns to the Uniform Property Dataset required by both Freddie Mac’s ACE+ PDR and Fannie Mae’s Value Acceptance + Property Data, enabling lenders to easily implement and scale inspection-based appraisal waiver programs nationally.
Learn more about UDC or email sales@clearcapital.com to get started today!
