APPRAISAL REVIEWS SLOW DOWN JUMBO FINANCING
The appraisal review requirement is one of the reasons why jumbo loans take at least a week longer to close than conforming (Fannie/Freddie) loans.
These appraisal reviews take anywhere from two to five days and can only be performed of course after the appraisal report is complete.
This is why we often get appraisal reports in “at value” for jumbo loans but we cannot release the appraisal contingency for several more days – while we wait for the review to come back.
Almost all of our best jumbo investors require some sort of appraisal review for every transaction.
Appraisal reviews are sometimes required for conforming and FHA loans too, but they are at the underwriter’s discretion and are not required for every loan.
MANY TYPES OF APPRAISAL REVIEWS
Appraisal reviews come in many forms including – (1) fully automated analyses employing software only; (2) formal desk reviews by an actual appraiser who does not go “into the field;” and (3) field reviews that require the reviewer to drive by the property and the comparable sales.
These reviews come with many names and/or form numbers attached, including Form 2055, Automated Valuation Model (AVM), Collateral Desk Review (CDR), Collateral Desk Analysis (CDA®), Desk Review, and Field Review.
Note that the “CDA®” is actually a registered trademark of a company Clear Capital, and it is one of the most common reviews required by jumbo lenders.
Note also that many of the investors that buy jumbo loans insist on ordering or performing the appraisal reviews themselves, fostering further delays. This is b/c we have to send the appraisal to the investor before we close and ask them to order the review in a somewhat cumbersome process, and the turn-times for these reviews can vary greatly.
APPRAISAL CONDITIONS – BIGGEST CAUSE OF DELAYS
And finally and perhaps most importantly, these appraisal reviews often require additional appraisal conditions that can result in significant additional delays, as the conditions are sometimes very difficult to wrangle from very busy appraisers and/or other entities (agents, counties, cities, zoning authorities, etc.).
These additional delays can be very frustrating for borrowers and agents alike and they often get frustrated with us as a result, but, and I cannot say this emphatically enough, we have no control over the process and there is simply no way we can “foresee” these conditions prior to receiving them.
To summarize – (1) almost all jumbo loans require some sort of appraisal review; (2) conforming loans require appraisal reviews at the underwriter’s discretion; (3) there are many types of appraisal reviews; (4) reviews often result in additional conditions; and (5) appraisal reviews and conditions can delay contingency releases and transaction by two to ten business days.
Founder/Broker | JVM Lending
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