Page 41 - July-August 2018 GSE Report Flip Book

FANNIE MAE AND FREDDIE MAC JJUALN. U- ARUYG. 22001188
would use to improve the digitization of loan files. In addition, FHA, VA, and USDA should explore the development of shared technology platforms, including for certain origination and servicing activities.
Finally, Treasury recommends the FHLBs explore ways to address their concerns regarding eNotes with the goal of accepting eNotes on collateral pledged to secure advances.
...Recommendations [for appraisals]
Treasury recommends that Congress revisit Title XI FIRREA appraisal requirements to update them for developments that have occurred in the market during the past thirty years. Recent data has illustrated that approximately 90% of residential mortgage originations
are eligible for appraisal exceptions established since the enactment of FIRREA by the designated federal regulatory agencies. An updated appraisal statute should account for the development of automated and hybrid appraisal practices and sanction their use where the characteristics of the transaction and market conditions indicate it is prudent to do so.
Treasury supports the GSEs’ efforts to implement standardized appraisal reporting, the GSEs’ and FHA’s adoption of proprietary electronic portals to submit appraisal forms,
and the GSEs’ limited adoption of appraisal waivers. While Treasury acknowledges that automated valuation engines and appraisal waivers should apply to a defined and limited subset of loans, and that they may compete with traditional appraisers, these innovations offer borrowers upside through lower cost originations and faster closings, without sacrificing accuracy. However, further application of digital, automated property valuations must be carefully monitored and integrated with rigorous market standards where they are used in lieu of traditional appraisals.
Treasury recommends FHA and other government loan programs develop enhanced automated appraisal capabilities to improve origination quality and mitigate the credit risk of overvaluation. These programs may also wish to consider providing targeted appraisal waivers where a high degree of property standardization and information about credit
risk exists to support automated valuation, and where the overall risks of the mortgage transaction make such a waiver appropriate. Treasury supports legislative action where statutory changes are required to authorize granting limited appraisal waivers for government programs. Treasury further recommends that government loan programs explore opportunities to leverage industry-leading technology capabilities to reduce costs to taxpayers and accelerate adoption of new technology in the government-insured sector.
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