New Program to Help Buyers Bypass Appraisals
Mortgage giant Freddie Mac has announced a new program allowing some home buyers to skip a traditional appraisal, which could lower the fees the buyers pay and speed up the closing process. Freddie’s Automated Collateral Evaluation (or ACE) will determine a property’s collateral risk by culling data from multiple listing services, public records, and historical home values, and then assess whether a buyer needs a traditional appraisal or an automated one. Borrowers who are refinancing may also be eligible for the program.
Those who qualify for an automated appraisal could save up to $500 in fees and make it to settlement up to 10 days sooner, Freddie says. “By leveraging big data and advanced analytics, as well as 40-plus years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” says David Lowman, Freddie Mac’s executive vice president of single-family business. “At the same time, we’re providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”
Lenders will be able to assess whether a property is eligible for ACE by submitting data through Freddie’s Loan Product Advisor. The program will factor in credit, capacity, and collateral to assess the quality of the loan and determine whether the estimated value of the home provided by the lender is acceptable. ACE will be available for home purchases beginning Sept. 1; it has been available for qualified refinances since June 19.
Contact San Ramon mortgage broker for questions about home appraisals and loan approval process.