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As the Federal Housing Finance Agency (FHFA) reviews the appraisal process for the government-sponsored enterprises (GSEs), NAFCU Regulatory Affairs Counsel Aminah Moore offered the association's support for the agency's efforts to modernize and streamline the process.

The FHFA issued the request for information in December to improve the appraisal process while still ensuring the GSEs aren't taking on unintended or inappropriate levels of risk.

In response, Moore highlighted the ways in which the appraisal process has been improved over the last decade – after the 2008 financial crisis – to improve the quality of data collected, process efficiency, loan quality, and mortgage credit risk management, primarily through the GSEs' Uniform Mortgage Data Program (UMDP).

To maintain efficiency and modernize the appraisal process, Moore specifically called for:

• consistent practices among individual appraisers;
• consistent use of reliable technology to simplify the process;
• allowing lenders to use alternative processes – such as appraisal bifurcation, desktop appraisals, and exterior-only appraisals – at their discretion to fit unique needs;
• updating the Uniform Appraisal Dataset (UAD), which was implemented in 2011 with the UMDP;
• continued use of Automated Valuation Models (AVM) and appraisal waivers for low-risk mortgage loans.

Moore highlighted how these improvements will help credit unions better serve their members, especially in rural areas.

"NAFCU’s member credit unions would like to provide all their products and services, including mortgage loans, to their members in the rural communities they serve," Moore wrote. "Often, credit unions are the only financial institutions in a rural community, increasing the need for a more streamlined appraisal process so that these communities have easy access to safe, affordable mortgage credit. In rural communities, the appraisal process is less efficient than anywhere else.

"The ability to use AVMs and appraisal waivers in rural areas will decrease the strain placed on NAFCU’s member credit unions and their member-borrowers when it comes to financing the purchase of a home through the mortgage loan process," she concluded.

Read the full letter here. NAFCU will continue to advocate for policies and processes that ease credit unions' burdens and allow them to meet members' needs.