Sometimes when competing for a new loan, your running “neck and neck” on the offered interest rate and need to find little edge to win over your competition, and that edge is lower costs. One of the biggest expenses for a refinance is the appraisal. Did you know you can re-use the borrower’s appraisal one time at both Fannie & Freddie?
How to Re-Use An Appraisal
FNMA B4-1.2-02 outlines that it is possible keeping the following requirements in mind:
- The subsequent transaction may only be a Limited Cash-Out Refinance
- The appraisal report must not be more than 12 months old on the note date of the subsequent transaction. If the appraisal report is greater than 4 months old on the date of the note and mortgage, then an appraisal update is required.
- The lender must ensure that the property has not undergone any significant remodeling, renovation, or deterioration to the extent that the improvement or deterioration of the property would materially affect the market value of the subject property.
- The borrower and the lender/client must be the same on the original and subsequent transaction
Note: The appraisal must comply with all other requirements in the Underwriting Property section of the Selling Guide.
FHLMC Section 5601 Section (F) outlines basically the same concept.
- The Borrowers on the new transaction must be the Borrowers on the prior transaction. The only exception is in the event of a divorce or legal separation. The Borrower for the new transaction must be one of the Borrowers on the prior transaction, and the file must document that the Borrower for the new transaction obtained the property through a divorce or legal separation.
- Since the effective date of the prior appraisal report, the Mortgaged Premises must not have undergone any substantial rehabilitation or renovation or have been affected by disaster to the extent that the improvement or deterioration of the property would affect marketability or market value.
- The new transaction may not be a purchase transaction, a cash-out refinancing, or a payoff of secondary financing
- The appraisal report from the prior transaction must meet all the following requirements:
- The effective date of the appraisal report from the prior transaction must not be more than 12 months prior to the Note Date of the subsequent transaction
- The lender/client is the Seller or a third party specifically authorized by the Seller
The appraisal update must meet all requirements in Chapter 5601 and reflect the Mortgage transaction (e.g., the current Borrowers, the appropriate transaction type, owner of record, lender/client)
We hope this inside tip will be enough to help you edge our your competition, knowing the guidelines to leverage them for your client is a win-win.
When we designed IncomeXpert we had the same win-win concept in mind, using IncomeXpert you get faster, more accurate income analysis (Win for you and your operations staff). And your company can save thousands of dollars in labor and just wasted time debating and determining income.