Last week the Obama Administration unveiled its plan to help homeowners refinance to take advantage of historically-low interest rates. We are going to focus on the valuation side of the plan. If you want the rest of the details you can go here and here.
The program includes refinance options for GSE (government sponsored enterprises, Fannie Mae and Freddie Mac) and Federal Housing Administration (FHA) borrowers. Both programs forgo the appraisal requirements in the refinance process. According to the White House Fact Sheet, “the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.”
In line with the administration’s announcement last week, the US Department of Agriculture’s (USDA) Rural Development rolled out its refinance pilot for borrowers already using the Rural Development 502 program. It allows borrowers in the hardest hit rural areas who are underwater to refinance and take advantage of today’s rates. The lender does not have to submit new credit reports, appraisals, minimum property determinations or property inspections. The pilot is available in 19 states.