Condo buyers and refinancers could be eligible for a new program that allows them to bypass a traditional in-person appraisal with a faster automated process, Freddie Mac said last week.
Freddie’s automated collateral evaluation program is essentially an appraisal waiver that gives borrowers the opportunity to save on the costs of having a human appraiser come round and assess their property. The company reckons that borrowers can save up to $500 on fees, and also close on their deal around seven to ten days faster. the program was first rolled out last year, but was not available to condo buyers at that time.
“We continue to see the share of condo loans we purchase increase, especially among first-time home buyers,” said David Lowman, executive vice president of Freddie Mac’s single-family business.
Freddie’s ACE program works works by culling data from multiple listing services, public records and historical home values in order to determine the collateral risk. Loan data must be submitted by lenders via Freddie’s automated underwriting system, called the Loan Product Advisor, in order to see if a condominium is eligible for the waiver. The program will then factor in credit, capacity, and collateral to assess the quality of the loan and determine whether the estimated value of the home provided by the lender is acceptable.
Freddie says that demand for condos is growing fast, and so the move is a natural expansion of its appraisal-free mortgage offering.
“ACE for condos will help increase the efficiency of the mortgage origination process, offer greater certainty and help save our clients, and their customers, time and money,” Lowman added. “We’re consistently innovating and improving our Loan Advisor Suite to meet the needs of our lenders, today’s borrower and the borrower of the future.”
ACE for condo purchases and refinances will be available starting July 16.