B5-5.2-03: DU Refi Plus and Refi Plus Property Valuation and Project Standards (09/04/2018)

© Fannie Mae Single Family Selling Guide

DU Refi Plus Property Valuation Requirements

The lender must comply with the appraisal requirements issued by DU. For certain DU Refi Plus loan casefiles, DU offers to waive the requirement for an appraisal. For loan case files that are not eligible for an appraisal waiver, DU will require an appraisal based on an interior and exterior inspection reported on the appropriate appraisal report form for the type of property being appraised. If the lender exercises an appraisal waiver, the lender is not responsible for the standard representations and warranties related to the value, marketability, and condition of the property. See B5-5.2-01, DU Refi Plus and Refi Plus Eligibility (09/04/2018), for additional information related to appraisal representations and warranties.

DU Refi Plus Appraisal Waiver

When a lender exercises an appraisal waiver for a DU Refi Plus loan, Fannie Mae accepts the property value estimate submitted to DU as the market value for the subject property and as noted above, the lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property. However, the lender continues to be required to represent and warrant that all of the information and data submitted to DU is complete and accurate.

The property value the lender enters in DU may be based on:

• the lender’s estimate of value, determined at the discretion of the lender, or
• the borrower’s estimate of value.

If DU does not offer an appraisal waiver, the lender must obtain an appraisal on the form specified in the DU Underwriting Findings report.

Note: DU will issue a message on DU Refi Plus loan casefiles when the subject property address cannot be standardized, or Fannie Mae's databases do not have sufficient information about the property to determine eligibility for an appraisal waiver. This message will state that based on the address and other information available to DU, the property is not eligible for an appraisal waiver.

A lender may only exercise the appraisal waiver if:

• the final submission of the loan casefile to DU resulted in an appraisal waiver offer, and
• the appraisal waiver offer is not more than four months old on the date of the note and the mortgage.

Fannie Mae specifically does not warrant that the estimated value used in the determination of eligibility for the appraisal waiver represents the actual value of the subject property.

Laws and regulations regarding the use of appraisals and automated valuation models may vary. The lender is responsible for compliance with all federal, state and local laws, rules and regulations. When the lender is required by law to obtain an appraisal, the lender must comply with such requirements, but may still exercise the appraisal waiver.

Lenders that elect to exercise the appraisal waiver must include SFC 807 at delivery.

Refi Plus Property Valuation Requirements

For Refi Plus transactions, the lender must obtain an appraisal based on an interior and exterior inspection reported on the appropriate appraisal report form for the type of property being appraised.

See B5-5.2-01, DU Refi Plus and Refi Plus Eligibility (09/04/2018), for additional information related to appraisal representations and warranties.

DU Refi Plus and Refi Plus: Properties Affected by a Disaster

Fannie Mae will not require a property secured by a DU Refi Plus or Refi Plus mortgage that was damaged as a result of a disaster to be repaired prior to delivery as long as the loan meets the property insurance requirements described in Chapter B7–3, Property and Flood Insurance. Therefore, an additional inspection and/or new appraisal of the property is not necessary after a disaster.

DU Refi Plus: No New Appraisal Obtained

When the lender does not obtain a new appraisal

• The lender must advise the borrower not to rely on the lack of an appraisal as assurance about the condition or value of the property.
• The lender will not represent to the borrower or to any third party to the transaction that Fannie Mae or any third party performed a property review, appraisal, or valuation of any sort.
• The lender cannot charge the borrower a fee for an appraisal, a collateral review, or any similar service as part of the new mortgage transaction.
• The lender must comply with all applicable laws and regulations related to the origination and servicing of the new mortgage, including, but not limited to, the Homeowners Protection Act of 1998 (the “Act”). Certain borrower rights and lender obligations are based on the LTV ratio at the time of origination and at later dates. Lenders are advised to consult with their legal counsel with regard to establishing the “original value” as defined by the Act.

Single-Family Comparable Rent Schedule (Form 1007)

For DU Refi Plus and Refi Plus refinances of an investment property, the lender is not required to obtain a Form 1007 if the borrower is using rental income to qualify. (Lenders may disregard the DU message that requires this form.)

Condo, Co-op, and PUD Project Review Requirements

The following table provides condo, co-op, and PUD project review requirements for DU Refi Plus or Refi Plus mortgage loans:

For DU Refi Plus and Refi Plus mortgage loans, lenders must use the following project type codes at the time of delivery for loans secured by a property in a condo project, co-op project, or PUD: