As real estate lenders begin to embrace desktop appraisal technology as a new industry standard for a wider variety of loans, many lenders have questions. In this blog, we answer the ten most common questions we receive about desktop appraisals and outline how you can leverage desktop appraisal technology to process a higher volume of loans, reduce overhead costs, expand product offerings, and gain a competitive advantage.
What form does an appraiser use to complete a desktop appraisal?
Lenders must use a Fannie Mae 1004 (desktop) or Freddie Mac 70D form to complete desktop appraisals. It’s worth mentioning that these forms are different than the temporary COVID-19 response form, which were discontinued on May 31, 2022.
What is the difference between a desktop appraisal and a hybrid appraisal?
It’s easy to get desktop and hybrid appraisals confused. A desktop appraisal is completed entirely online. The property valuation leverages tax records, data from multiple listing services (MLS), floor plans with interior walls, internal and external property photos, gross living area (GLA) calculations and other data to conduct a thorough analysis. During a hybrid appraisal – also known as a bifurcated appraisal – the property valuation is conducted by an appraiser using interior and exterior property data collected by a third-party who is onsite, as well as public information like tax records and MLS data.
Are desktop appraisals Uniform Standards of Professional Appraisal Practice (USPAP) compliant?
Yes, desktop appraisals are USPAP complaint. USPAP standards do not require appraisers to conduct an inspection of a property as part of the appraisal process. The appraiser agrees to do a fair assessment of the property based on required data points collected during the appraisal process.
Is the age of appraisal requirements for desktop appraisals different from other appraisals?
Yes. According to Fannie Mae, “when the effective date of the original desktop appraisal report is more than four months from the date of the note and mortgage, a new appraisal is required.” It is important that you keep this in mind during your appraisal process.
Are property photos required to conduct a desktop appraisal?
Property photos are required for desktop appraisals. Desktop appraisals must include pictures of the exterior front, rear and street as well as the interior kitchen, bathrooms, and main living area. They can be collected by a real estate agent, homeowner, or third-party source.
Do property photos go through a verification process?
Photos taken by a third-party with an appraiser present do not require verification. Photos taken by a real estate agent or homeowner are subject to further verification that the images submitted are a correct representation of the property.
What is the difference between a floor plan and a sketch?
According to Fannie Mae, “the floor plan is different than the building sketch. The building sketch is an exterior drawing of the dwelling, while the floor plan is an interior detail of the dwelling’s layout that indicates interior walls and the flow of rooms.”
Floor plans allow appraisers to conduct the GLA and square footage of the property and must include interior walls to distinguish living spaces, doorways, staircases, exterior ingress/egress, and labels for each room.
Fannie Mae does not require a floor plan to complete a desktop, however there is a requirement that the appraiser understands if there is any functional obsolescence in the floor plan of the home which is typically achieved by supplying a floor plan.
Also, an appraiser can use a previously available floor plan if it is accurate and representative of the current state of the property, and meets the requirements in the Exhibits for Appraisals section of Selling Guide B4-1.2-01, Appraisal Report Forms and Exhibits.
For Freddie Mac, the desktop appraisal, completed on new Guide Form 70D, Uniform Residential Appraisal Report, has a specific requirement that the appraiser must provide a floor plan in addition to a building sketch.
Are Desktop Appraisals supported in Collateral Underwriter (CU)?
Desktop appraisals will receive CU risk scores and messages. Just like traditional appraisals, if a CU risk score is 2.5 or less, the lender will receive enforcement relief of certain responsibilities and warranties.
When a desktop appraisal is submitted to the Uniform Collateral Data Portal, where will the form type be reported in the submission summary report (SSR)?
The forms are the same. The form type will be reported in the SSR as FNMA 1004 for both traditional and desktop appraisals.
Can the appraiser perform a personal onsite interior and exterior inspection of the subject property for a desktop appraisal?
No. Per Fannie Mae, if the appraiser assigned the desktop physically visits the property and does an interior inspection, it has crossed over to a traditional appraisal and is no longer a desktop.
The importance of a trusted partner
Accurate Group’s market-leading desktop appraisal technology platform – ValueNet™ – utilizes vetted local data sources and certified local appraisers throughout the nation to conduct thorough assessments of each property – resulting in fast, accurate, regulatory-compliant valuations.
In addition, we have a strategic partnership with an industry leading provider of 3D scan technology, that is available to our panel, which produces highly precise floor plans and calculates gross living area (GLA) aligned with American National Standards Institute (ANSI).
We also offer several resources to help lenders strategically think about their approach to digital mortgages, including our whitepaper Appraisers, Third-party Inspections and the Rise of Hybrid Appraisals, which examines alternative approaches – including desktop and hybrid appraisals – to keep the loan process flowing without needing to have boots on the ground.
With the GSEs acceptance of desktop appraisal technology, we’re seeing more and more lenders making the switch. If you’re ready for a change, let us help guide you through the process and make desktop appraisal technology a part of your competitive advantage. Contact Accurate Group today!
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