DENVER, Colo.—The Federal Housing Finance Agency (FHFA) and the U.S. Department of Housing and Urban Development (HUD) announced Monday the expansion of public appraisal data to include Federal Housing Administration (FHA) loans.
That’s according to Naa Awaa Tagoe, deputy director for the Division of Housing Mission and Goals at FHFA, who shared the news Monday at the Mortgage Bankers Association (MBA) Annual Convention & Expo in Denver.
Adding FHA appraisal data broadens the information in FHFA’s Uniform Appraisal Dataset (UAD). Previously, the UAD was limited to data for loans backed by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that buy and sell most mortgages in the U.S. The expanded UAD data allows for a deeper analysis of appraisal trends—including spotting potential appraisal bias against homeowners of color.
Many Blacks, Latinos and other communities of color have been shut out of owning a home due to housing discrimination going back decades. The systemic racism communities of color have faced in real estate has continued to limit the ability to create and pass down generational wealth through homeownership.
“This new data series further exemplifies the joint commitment of FHFA to promote transparency and provide reliable information sources,” Tagoe told mortgage bankers and leaders. “The inclusion of data from FHA applications is both a fair decision and a safety and soundness decision. Accurate home valuation data are vital to all segments of the housing finance system.”
“Far too many families face unfair racial or ethnic bias when they get their home appraised. To truly eliminate this form of discrimination, we need accurate, up-to-date data on the appraisal market,” HUD Acting Secretary Adrianne Todman said in a joint news release announcing the expansion. “Today, we take a major step forward, working with our partners at FHFA to make public data that is both current and comprehensive on home appraisals.”
Tagoe also shared updates on the FHFA’s ongoing work to modernize the home appraisal process, including several appraisal alternatives the GSEs have adopted in recent years, including hybrid appraisals, appraisal waivers and inspection-based waivers.
These alternatives have helped lower costs, reduce turnaround times during periods of high transaction volume and address constraints with appraiser capacity—all while supporting fair, equitable and accurate valuations, Tagoe said.
Building on the success of appraisal waivers, Tagoe also announced Monday that the FHFA is expanding appraisal waiver eligibility for loans with higher loan-to-value (LTV) ratios. The maximum allowable LTV ratio for full appraisal waivers will increase from 80% to 90%. For inspection-based appraisal waivers, the maximum allowable LTV ratio will increase from 80% to 97%.
“This update represents a sensible step forward with the enterprises’ efforts to promote efficiencies in loan cycle times and cost savings in the home-buying process,” Tagoe told mortgage bankers. “It will allow low- and moderate-income (and) first-time homebuyers to recognize the benefits associated with appraisal waivers.”
Tagoe emphasized the agencies are putting appropriate risk management controls in place to ensure the expanded appraisal waivers don’t lead to heightened credit risk. Instead, the goal is to make mortgage closings more efficient and cost-effective for consumers.
FHFA also announced that Fannie Mae and Freddie Mac must now provide lenders with 60 days advance notice if their base guarantee fees increase more than one basis point.
“We think it’s a balance,” Tagoe said of the new policy. “It provides the Enterprises flexibility to continue to use pricing as a tool (while) also giving lenders a little bit more certainty when they price the loans.”
As FHFA continues to confront and navigate the market’s affordability pressures, Tagoe said the agency “remains committed to promoting transparency, responsible innovation and a balanced approach that serves the needs of borrowers, lenders and the broader housing market.”
