Modified Appraisal Processes for Some Federal Loan Programs
LOUISIANA REALTORS • March 30, 2020
During this COVID-19 national emergency, lenders are sometimes unable to obtain an appraisal based on a full interior and exterior inspection of the subject property. In response, the use of modified appraisal processes has been approved for use in many federal loan programs.
Each individual lender will determine if these modified appraisal practices are acceptable for the appraisal of a piece of property. See below for more information about these modified appraisal processes for each entity:
- Residential Appraisal Reports – Existing Dwelling
For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an “Exterior-Only Inspection Residential Appraisal Report” will be accepted.
- Repair Inspections – Existing Dwelling
Loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation.
- Verbal Verification of Employment
Lenders must document and verify the borrowers annual and repayment income in accordance with Agency regulations. When the lender is unable to obtain a Verbal Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary closure of the borrower’s employment, alternatives should be explored.
- In the case of a reduction of income, the borrower’s reduced income must be sufficient to support the new loan payment and other non-housing obligations. Borrower’s with no income at the time of closing are not eligible for SFHGLP loans regardless of available cash reserves.
From the Louisiana Department of Insurance: Insurance Commissioner Tim Temple joined Governor Jeff Landry and Senate Insurance Committee Chairman Kirk Talbot today to announce that Louisiana is investing an additional $20 million in Fortified homes, bringing the total amount invested in state Fortified projects this year to $100 million. Governor Landry announced that $20 million from the U.S. Department of Housing and Urban Development will be transferred to the Louisiana Office of Community Development Restore Resilient Opportunities for Overhead Fortification (Restore ROOF) program to strengthen residential structures and reduce long-term disaster risk. Earlier this year, the Legislature passed a bill that allows $50 million in additional Katrina and Rita bond money from Louisiana Citizens Property Insurance Corporation to be added to the Department of Insurance’s Louisiana Fortify Homes Program (LFHP). Also beginning this year, LFHP is projected to receive approximately $30 million annually from taxes and fees the Louisiana Department of Insurance collects from the insurance industry. “Building stronger homes is a vital part of making homeowners insurance affordable in Louisiana,” said Commissioner Temple. “I appreciate Governor Landry’s leadership and support as we work with legislators like Chairman Talbot to make Louisiana a national leader in the adoption of Fortified roofs.” The Louisiana Department of Insurance (LDI) has finalized its promulgation of Regulation 136—Fortify Homes Premium Discounts. The purpose of Regulation 136 is to implement the statutory provisions set forth in La. R.S. 22:1483, et seq. , which require that all Louisiana property and casualty insurers provide premium discounts or insurance rate reductions for homes constructed or upgraded in accordance with the fortified standards created by the Insurance Institute for Business and Home Safety. View Regulation 136 here .
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