Fannie Loosens Appraisal Requirement on Refis

Fannie Mae said Thursday that it would no longer require an appraisal or property inspection of some borrowers trying to refinance a Fannie-owned mortgage. Some analysts said the change would have a marginal impact. Starting April 4, Fannie said, its Desktop Underwriter system will validate property values for refis of Fannie loans by means of automated models instead of requiring an appraisal or property inspection. Brian Faith, a Fannie spokesman, said the change and several others would let "potentially millions of current mortgage holders" take advantage of historically low interest rates and "break the logjam in mortgage refinancing." A report by UBS analyst Jena Curro notes that the impact on prepayment speeds will be limited but says, "there are still some possible effects (pressure from lenders and third parties, origination) that should not be overlooked."