Freddie Mac bringing appraisal-free mortgages to condos


Freddie Mac is expanding its appraisal-free mortgage program to include condos, the government-sponsored enterprise announced this week.

Last year, Freddie Mac (and Fannie Mae) rolled out new mortgage programs that eliminate the need for an appraisal, under certain circumstances.

Back in December 2016, when the GSEs introduced their enhanced appraisal waivers, Fannie Mae elected to include condos in its list of eligible properties. Freddie Mac, however, did not. In fact, Fannie Mae explained to HousingWire that it began offering property waiver inspections on condos on a limited basis about 15 years ago. 

Freddie, however, kept its appraisal-free mortgages available only to single-family houses. But now, the GSE is expanding its no-appraisal-required mortgages to include condos too.

Under the program, certain borrowers on certain condos will be eligible for a automated appraisal waiver.

Freddie Mac’s automated collateral evaluation appraisal waiver, originally launched in 2017 for single-family home loans, gives eligible borrowers the ability to save in cases where traditional appraisals may be unnecessary.

The ACE appraisal waiver can save consumers $500 on appraisal fees and speed up the closing process by seven to 10 days, Freddie Mac claims.

The way ACE works is Freddie determines the need for a traditional appraisal by looking at data from its databank as well as from multiple listing services, public records and historical home values to determine the collateral risks.

According to Freddie Mac, borrowers’ desire for condos is growing, making this move a natural expansion of its appraisal-free mortgage program.

“We continue to see the share of condo loans we purchase increase, especially among first-time homebuyers,” Freddie Mac Executive Vice President of Single-Family business David Lowman said in a statement.

“ACE for condos will help increase the efficiency of the mortgage origination process, offer greater certainty and help save our clients, and their customers, time and money,” Lowman added. “We’re consistently innovating and improving our Loan Advisor Suite to meet the needs of our lenders, today’s borrower and the borrower of the future.”

Consumers who buy a condo or refinance an existing condo mortgage may now be eligible for the automated appraisal waivers, Freddie Mac said.

In order to determine whether a condo is eligible for an automated appraisal waiver, lenders must submit loan data through Freddie Mac’s automated underwriting system, Loan Product Advisor.

According to Freddie Mac, if its appraisal program determines that the estimated value or purchase price of the condo provided by the lender is acceptable, the lender can receive immediate representation and warranty relief upon delivery of the loan to Freddie Mac.

Freddie Mac notes that lenders and borrowers “always have the choice to either proceed with an ACE appraisal waiver or obtain a traditional appraisal,” meaning that borrowers and lenders don’t have to choose the automated appraisal. But the option is soon to be available.

According to Freddie Mac, appraisal-free mortgages for condo purchases and refinances will be available beginning July 16, 2018.

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