Why We Refused Refinances In 2020
This is a quick aside but a reminder that we stopped accepting refinance applications in 2020. It cost us millions in lost revenue but we did so anyway because we wanted to make sure we could maintain our service levels for purchase business.
This is because we knew that purchase business is and always will be our most important source of revenue.
I share this because I am seeing so many loan officers and lenders in general clamor back into the purchase market – after literally sacrificing their purchase business on the altar of the refinance god in 2020. 😊
I chatted with the CEO of one of America’s largest mortgage companies last night at a mortgage banking event and she literally laughed when I asked her if she was worried about all the refi-lenders coming back into the purchase market.
Her comment: “I am not worried in the least. Purchases are night and day different from refis and all experienced agents understand that, as well as the need for experience…”
Appraisal Waivers For Purchases
Our experienced Mortgage Analysts will re-run Fannie Mae’s Desktop Underwriter over and over (because they want to meet the algorithm criteria) – in order to get a “PIW” which stands for Property Inspection Waiver or an Appraisal Wavier.
These are invaluable because they eliminate appraisal valuation risks from the transaction and allow transactions to flow much more quickly and smoothly in general.
Some of the big online refi shops literally bank on appraisal waivers to make their business models work.
But – the question is – how likely are lenders to get an appraisal waiver?
On the purchase front, appraisal waivers are not that likely – unfortunately.
The below table shows appraisal waivers for Fannie Mae Loans in August:
Cash-Out Refi 36.2%
Rate and Term Refi 69.2%
You can see all of the data here, in case anyone is interested (loan-to-value ratios/down payment %’s influence appraisal waiver likelihood significantly).
Never For Jumbo, Non-QM, FHA & VA
Only Fannie Mae and Freddie Mac offer appraisal waivers for conforming loans only.
Jumbo, Non-QM, FHA and VA purchases always require appraisals.
Only “streamline” FHA and VA refis do not require appraisals.
Appraisal Waivers For Purchases Are Unlikely
The biggest takeaway here is that appraisal waivers are unlikely for purchases.
This is important because we sometimes have agents and borrowers hoping for an appraisal waiver when value may be an issue or when the property has condition issues.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167