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Appraisals and Valuations

Senate passes VA appraisal modernization bill

HR 7735 awaits President Biden's signature

The U.S. Senate this week passed a bill that streamlines the appraisal process for U.S. Department of Veterans Affairs (VA) mortgage loans. It is expected to be signed by President Joe Biden.

With the passage of HR 7735, known as the “Improving access to the VA home loan benefit Act of 2022,” the VA is now permitting desktop appraisals, and in some circumstances, waiving appraisals altogether. Critics have long complained that VA appraisals had to be performed in-house, which has resulted in a costly and slow process for veterans and servicemembers.

The bill, introduced in the House by Rep. Mike Bost of Illinois and sponsored in the Senate by Alaska Republican Dan Sullivan, should make veterans more competitive homebuyers, the Mortgage Bankers Association (MBA) said.

“The enactment of this MBA-endorsed legislation will now help streamline the home buying process for veterans and their families by requiring the VA to update its home appraisal rules and program guidelines,” said MBA President and CEO Bob Broeksmit in a statement. “To the benefit of buyers and lenders, the VA will now be required to encourage hybrid appraisals, employ emerging technologies, and revisit policies on property inspection waivers, minimum property requirements, and comparable sales.”

In late July, the VA announced that it would accept desktop and exterior-only appraisals on certain transactions. The VA said the move was a response to “high demand for appraisal services and limited availability of appraisers in certain local market areas.”

However, the agency also said that its “willingness to accept” alternative appraisals was not a substitute for an appraisers’ assessment of the appropriate scope of work, and questioned whether a desktop or exterior-only appraisal could result in a “credible report.”

The VA noted that there were caveats, including that the purchase price cannot exceed the Federal Housing Finance Agency‘s (FHFA) conforming loan limits, which are $970,800 for 2022. Lenders also have to be approved to participate in the VA’s Lender Appraisal Processing Program.

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