Announcement 2020-048 - COVID-19 Conventional Updates - Property

Updated August 11, 2020

NewRez is closely monitoring the evolving situation of COVID-19 and is providing an update on temporary guidance while we navigate through this uncertain time.  This announcement provides flexibilities for conventional conforming loans for project review and property valuation flexibilities per Fannie Mae Lender Letter LL-2020-04 and Freddie Mac Bulletins 2020-8 and 2020-11.  Note that these flexibilities do not extend to conventional conforming loans originated in conformance with state Bond or HFA programs.


These temporary flexibilities are effective immediately for all conventional conforming loans in process and remain in place for loans with applications dated on or before May 17, 2020.


We will continue to provide updates as the situation changes.



Property Valuations - Appraisal Flexibilities

Effective immediately, NewRez will allow desktop appraisals as a temporary flexibility to the currently permitted appraisals, with the exclusion of Texas 50(a)(6) loans.


Please refer to NewRez Announcement 2020-026 for previous guidance on exterior-only appraisals.


When an interior inspection of the subject property by either the appraiser or borrower is not feasible on a purchase transaction due to COVID-19 concerns, a desktop appraisal will be permitted based on the following:

Loan Purpose



Ownership of Loan being Refinanced

Permitted Appraisals

Purchase, and new construction properties1

Up to 97%

Primary residence


Interior and Exterior appraisal,
Desktop appraisal, or

Exterior-only appraisal1

≤ 85%

Second home
Investment property


Interior and Exterior appraisal,
Desktop appraisal, or

Exterior-only appraisal1

> 85%

Second home


Interior and Exterior appraisal

1 Exterior-only not permitted on new construction loans.


An inspection of the subject property or comparable sales is not completed for a desktop appraisal. The appraiser relies on public records, multiple listing service (MLS) information, and other third-party data sources to identify the property characteristics.


1-unit, including PUDs and detached condos

Uniform Residential Appraisal Report (Form 1004/70)

Condo unit

Individual Condominium Unit Appraisal Report (Form 1073/465)

Co-op unit

Individual Cooperative Interest Appraisal Report (Fannie Mae Form 2090)

2-4 units

Small Residential Income Property Appraisal Report (Form 1025/72)

Manufactured home

Manufactured Home Appraisal Report (Form 1004C/70B)

To accommodate the desktop appraisal on the existing forms, the following must accompany the form:

·        Revised scope of work

·        Statement of assumptions and limiting conditions

·        Certifications


Additionally, the appraiser must identify a desktop appraisal was performed by populating the Map Reference field on the appraisal with “desktop.”


Interior and exterior inspection appraisals are required for:


  • Second home purchase transactions with LTV ratios > 85%
  • “No cash-out” refinances when the Mortgage being refinanced is not owned by Freddie Mac or Freddie Mac
  • Cash-out refinances


Revisions to Scope of Work, Statement of Assumptions and Limited Conditions, and Appraiser’s Certification

The following documents include modified language to be used with a desktop appraisal reports:



These documents include modified language for the scope of work, statement of assumptions and limiting conditions, and certifications. It is important to note that certification #10 has been removed in recognition that the appraiser may have relied on information from an interested party to the transaction (borrower, realtor, property contact, etc.) and additional verification may not have been feasible. Appraisal reports submitted using the flexibilities provided in this Announcement must include these documents with the modified language for scope of work, statement of assumptions and limiting conditions, and certifications.


Documentation Requirements for New Construction Loans

If construction of the property has not yet begun or is partially complete, and the appraisal report will be completed “subject to completion per plans and specifications,” the lender must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:

  • Plans and specifications
  • Survey and/or plot plan
  • Current photos of the subject property
    • If construction has not yet begun, a photograph of the site and down the street in both directions
    • If construction is partially complete, a photograph is required of the following:
    • A front view of the subject property
    • A rear view of the subject property
    • A street scene (i.e., a photograph down the street in both directions)
    • The following interior photos are required when construction is at a stage in which they are available
    • The kitchen of the subject property
    • All bathrooms of the subject property
    • The main living area of the subject property
    • Basement, including all finished rooms
    • A copy of the complete, ratified sales contract, and all addenda


Builder Certification

A signed Builder Certification attesting that the information provided is true and correct must be included in the loan file.


Completion Reports for New Construction Properties

For new construction properties where the appraisal report was completed “subject to completion per plans and specifications,” the Completion of Construction Certification will be acceptable if a completed Appraisal Update and/or Completion Report (Form 1004D/442) cannot be obtained as a result of COVID-19 related issues.


Virtual Inspections for Appraisals

Appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only inspection appraisal. A virtual inspection is not a substitute for an on-site interior and exterior inspection.


Additional Instructions for Appraisals

For an appraisal with a desktop appraisal or an exterior-only inspection that is completed on a form for an interior and exterior inspection (e.g., Form 1004/70), as permitted above, the appraisal report must include, in the “Map Reference” field, the corresponding text identifier that verifies the type of appraisal completed; specifically, “desktop” or “exterior,” as applicable.


No other words or phrases may be used or included.

Condominium Project Reviews


Additional guidance and temporary flexibilities for project eligibility reviews on condo projects are being offered due to COVID-19 concerns.


Waiver of Project Review

We are extending project review waiver flexibilities for loans with LTV ratios greater than 80% and up to 90%. This flexibility applies to Fannie Mae owned, or Freddie Mac owned, limited cash-out refinance transactions for owner-occupied condo units only. Second homes and investment transactions are excluded.


When applying this flexibility, confirm the project meets the following, existing requirements:

Fannie Mae

  • the litigation requirements described in Selling Guide B4-2.1-03, Ineligible Projects
  • all policies in Selling Guide B4-2.1-02, Waiver of Project Review

Freddie Mac 


Project Documents Used in Project Reviews


When a budget review is required on an established project, the budget from the 2019 fiscal year may be provided if the current year’s budget has not yet been ratified due to issues related to COVID-19.  


Confirm the project currently meets the HOA dues delinquency requirements.


Project Documents

Other sources of condo project data may be used to complete project reviews including, but not limited to:

  • Appraisals
  • MLS records
  • Plat map/site surveys
  • Public records
  • State laws or local ordinances
  • Tax searches
  • Vendors


Reminder: If a project review for an established condo project was previously completed, that project review may be used for additional condo unit loans in the same condo project for up to one year (measured to the note date of the subsequent loans).


For new condo projects, the timeframe is 180 days prior to the note date.


For additional information, below are links to Fannie Mae and Freddie Mac Frequently Asked Questions


Remember that NewRez is not adopting all flexibilities in the Fannie Mae and Freddie Mac announcements, therefore some guidelines in their announcements and FAQ may not apply.