Appraisers raise concerns over Fannie, Freddie automated appraisals.
Last week, both GSEs announced their new appraisal-free product for purchase mortgages, and appraisers are already raising concerns over this new step.
Freddie Mae announced its Automated Collateral Evaluation will begin on September 1, and Fannie Mae announced its Property Inspection Waiver, which went into effect immediately.
The GSEs also explained to HousingWire how their new systems work, and what lenders need to know about which buyers qualify for the new loans, which Fannie estimates will be about 5% of the purchase market.
But now, the appraisal industry is raising concerns over the automated appraisals, even accusing the GSEs of not bearing the consequences of the risk they are taking.
“Republicans might slap them down for increasing the risk profile of the two GSEs and possibly the exposure to the American taxpayer,” Francis Grady, an attorney at Grady & Associates, a financial institutions and banking law practice, told HousingWire.
He explained that this is a dangerous step for the origination process, and could lead to disastrous consequences, such as those seen in the housing crisis.
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