No Appraisal on Refinance Home Loans

Appraisal Waviers

Appraisal Waivers

UPDATE: Appraisal Waivers now allowed on purchase transactions too

The lending pendulum continues to sway toward normalcy.  Pre-meltdown,  lenders could sometimes skip having an appraisal done.  We would get a notice on a loans automated approval that would allow us to skip an appraisal.   It is/was called a “Property Inspection Wavier.” 

Property Inspection Waiver = No Appraisal Needed

Fast forward to October 2016 and we get to re-introduce you to the Property Inspection Waiver – in other words, NO APPRAISAL NEEDED on eligible refinance transactions.  

Appraisal Waiver Rules:

No Appraisal – Eligibility Rules (these just makes a file eligible – they do not guarantee a property inspection waiver)

  • Fannie Mae Conventional loans equal to $424,100 or lower
  • 1 unit properties
  • Purchases and rate/term refinances (no cash out refinances)
  • Primary residence, second home (vacation home) and rental property
  • Loan to value of 80% or lower

What confirms Property Inspection Waiver/No Appraisal is an options?

When we run a file through DU (Desktop Underwriter – Fannie Mae’s automated underwriting system) it must issue the following note in the findings (exact text below).  Without this note, even if the transaction meets the eligibility requirements an appraisal will still be needed.

“Desktop Underwriter accepts the value submitted as the market value for this subject property. This loan is eligible for delivery to Fannie Mae without an appraisal if the Property Inspection Waiver is exercised by the lender at the time of loan delivery to Fannie Mae. To exercise this Property Inspection Waiver and be eligible for representation and warranty relief on the value, condition and marketability of the subject property, Special Feature Code 801 and the Casefile ID must be included in the loan delivery file. A fee will be charged for this waiver. If the waiver is not exercised, an appraisal based on an interior and exterior property inspection reported on Form 1004 is required for this transaction. If an appraisal is obtained for this transaction, the Property Inspection Waiver may not be exercised and the loan cannot be delivered with Special Feature Code 801.”

 By Jeremy House

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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  1. […] and now allowed on certain Conventional home loan backed purchases.  This may sound familiar as appraisal waivers have been allowed on refinances since late 2016.  To have appraisal waivers available on Conventional home loans for purchase transactions is […]

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