From the Housing Wire, Fannie and Freddie are considering a change with regard to how “Streamlined Refi’s” are appraised:
In particular, the GSEs are considering a plan to allow some borrowers to refinance without the use of an updated appraisal.
“If they refinance someone, rather than doing a loan mod, do they need a new appraisal if they already have the credit?” Federal Housing Finance Agency director James Lockhart told reporters after a speech, according to a Bloomberg report. “That’s an issue that’s being discussed. They’re looking at it.”
The article continues:
The U.S. Department of Housing and Urban Development has permitted so-called “streamlined refis” without appraisals on FHA loans since the early 1980s, according to a department Web page. It’s a program limited, however, to rate and term refis — no cash-out refis here — and borrowers must be current on their loan. The VA has a similar program.
In contrast, the GSEs generally require a new appraisal on any refi, whether cash-out or a rate or term refinancing. It seems likely, although Lockhart did not specify details, that Fannie and Freddie are looking to follow the lead of the FHA in terms of making it easier for borrowers to refinance in certain situations.
What do you appraisers think? Are there some circumstances where allowing a refi without an appraisal makes sense?