Fannie and Freddie approve thousands of loans with no formal appraisals
For homeowners and buyers, it’s been a windfall: relief from having to pay for a traditional mortgage appraisal that usually costs between $400 and $600. The savings nationwide to consumers in just the past year alone may total tens of millions of dollars.
Sounds great. But to some key players in the home-financing arena, the savings look ominous — potentially risky for taxpayers and financially nightmarish for the professionals who provide the service being eliminated.
Fannie’s and Freddie’s no-appraisal option has been popular with lenders. Mat Ishbia, president and CEO of United Wholesale Mortgage, the country’s largest wholesale lender, says, “We think it’s great for borrowers.” Not only does it “save time and money,” it leads to shorter interest-rate locks and quicker closings. The company is now doing more than 10 percent of its home-purchase loans appraisal-free.