Freddie Mac to Do Away With Human Appraisers

Federal mortgage giant Freddie Mac – a major player in the New York City co-op and condo world – has announced plans to do away with human appraisers on some applications for home purchases, and instead use a computer-driven system that would be free of charge to both lenders and borrowers. The new system could be in place as early as next spring, the Chicago Tribune reports, and it would mark a break with the tightened lending rules spawned by the 2008 financial meltdown.

Instead of using professional appraisers, Freddie plans to tap into a vast trove of data it has assembled on millions of existing houses nationwide, supplement that with additional, unspecified information related to valuation, and use the results in its assessments of applications.

Freddie says the change will eliminate delays in closings as well as appraisal costs, which sometimes exceed $600. Of course the home appraisal industry is not thrilled. The Chicago-based Appraisal Institute, the largest professional group in the valuation field, issued a statement saying the change would be a return to the pre-2008 abuses that “turned out to be disastrous for the entire economy.”