Modified Appraisal Processes for Some Federal Loan Programs
LOUISIANA REALTORS • March 30, 2020
During this COVID-19 national emergency, lenders are sometimes unable to obtain an appraisal based on a full interior and exterior inspection of the subject property. In response, the use of modified appraisal processes has been approved for use in many federal loan programs.
Each individual lender will determine if these modified appraisal practices are acceptable for the appraisal of a piece of property. See below for more information about these modified appraisal processes for each entity:
- Residential Appraisal Reports – Existing Dwelling
For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an “Exterior-Only Inspection Residential Appraisal Report” will be accepted.
- Repair Inspections – Existing Dwelling
Loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation.
- Verbal Verification of Employment
Lenders must document and verify the borrowers annual and repayment income in accordance with Agency regulations. When the lender is unable to obtain a Verbal Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary closure of the borrower’s employment, alternatives should be explored.
- In the case of a reduction of income, the borrower’s reduced income must be sufficient to support the new loan payment and other non-housing obligations. Borrower’s with no income at the time of closing are not eligible for SFHGLP loans regardless of available cash reserves.
Louisiana’s 2026 Regular Session opened this week with several developments that matter directly to REALTORS ®, property managers and housing providers, alongside some broader political shifts worth watching. HB 292: Security Deposit Return Timelines Rep. Delisha Boyd’s HB 292, which addresses procedures for returning residential security deposits, was deferred to next week. This provides additional time for stakeholders to engage with members on practical impacts for lease administration, move out inspections and documentation standards. We’ll continue working to ensure any changes to deposit law are clear, workable and do not expose housing providers to unreasonable liability. Land Use and Development: St. James Parish Decision The Louisiana Supreme Court’s recent St. James Parish decision significantly tightens the standards for overturning local land use decisions, reinforcing that zoning and permitting authority rests with parish and municipal governments as long as their decisions are not arbitrary or capricious. For real estate and development, that means more predictability if projects are aligned with adopted plans and ordinances, but also higher stakes in local elections, planning processes and parish-level negotiations. Governor’s State of the State In his State of the State address, Governor Jeff Landry reiterated his push to phase out the state income tax, expand the LA GATOR and MJ Foster scholarship and workforce programs, and replace vehicle inspection stickers with a QR code system. These programs frame a debate around long-term competitiveness, workforce readiness and household cost of living which are all key drivers of housing demand and migration patterns. Business & Market Trends The business community is focusing the session on insurance, workforce and energy. Commercial and property insurance costs remain a top concern for employers and property owners, and we are monitoring civil justice and insurance reform proposals that could affect market stability and availability. At the same time, Louisiana is seeing more than $100 billion in announced industrial and data center projects, which could reshape local markets, labor conditions and housing needs in multiple regions of the state. Please view the weekly bill tracking report at the link below provided by our lobbying team over at Harris, DeVille and Associates.
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