In the continuing push to automate the appraisal industry, starting this week home loans under $400,000 that will be held in a lender’s portfolio and not underwritten by a government agency (FHA/VA) or later acquired by government sponsored agency (Fannie Mae) will longer require an appraisal.
The new rule raises the “no appraisal required” cap of $250,000, set twenty-five years ago in 1994.
The rule may effect up to 40% of home loans nationwide. The median price of Massachusetts home is $410,000 according the Massachusetts Association of Realtors.
In a possible boon to automated value model (AVM) providers, the new rule will still require lenders to obtain “an evaluation to provide an estimate of the market value of real estate collateral” consistent with sound lending practices. But that evaluation will longer need to include an appraisal from a licensed appraiser.