Valligent recognizes and supports the forward momentum within the mortgage industry as Fannie Mae and Freddie Mac (the Government-Sponsored Entities – GSEs) broaden the scope of hybrid appraisal eligibility. This change, set to take effect with Desktop Underwriter® (DU®) the weekend of March 22, 2025, and Loan Product Advisor® (LPASM) on April 7, 2025, marks a significant step forward in modernizing mortgage lending.
In a real estate market characterized by continuous technological advancement and evolving consumer demands, hybrid appraisals present a progressive approach that aligns seamlessly with the ongoing drive for efficiency and innovation within financial services.
Hybrid appraisals, such as Valligent’s ValHYBRID, offers a wider product offering to lenders looking to lean into appraisal modernization efforts. This expansion of eligibility introduces meaningful changes for lenders, appraisers, and the overall mortgage process.
Understanding Hybrid Appraisals
Hybrid appraisals utilize a bifurcated approach to enhance efficiency and consistency in property valuation. This process includes:
- Data Collection: Trained and vetted third-party professionals gather a comprehensive and prescribed property data set, adhering to the Uniform Property Dataset (UPD) standards.
- Appraisal Analysis: A state-certified or licensed appraiser, possessing local market knowledge, analyzes the collected data and accompanying artifacts to formulate a credible opinion of value from their desk.
This approach integrates traditional appraisal methods with digital data collection. By optimizing workflow and leveraging technology, hybrid appraisals enable appraisers to complete valuations more quickly, allowing lenders to make faster decisions, underwriting and loan closings.
Key Benefits of Hybrid Appraisal
Hybrid appraisals offer a compelling alternative to traditional methods by increasing efficiency of processes and reducing costs without compromising quality.
- Efficiency, Speed & Enhanced Productivity: By leveraging third-party property inspectors, appraisers can focus on data analysis rather than fieldwork, resulting in faster appraisal report completion times—crucial for lenders aiming to shorten loan closing timelines. This approach also optimizes appraiser workloads, allowing them to handle more appraisal orders and increase their income. Additionally, during periods of heightened mortgage activity, utilizing third-party inspectors helps mitigate appraiser shortages, reducing delays in property valuations.
- Cost Savings: Hybrid appraisals can offer a lower-cost alternative to traditional appraisals. This financial advantage makes hybrid appraisals an attractive option for both lenders and borrowers.
- Standardization & Compliance: Hybrid appraisals ensure adherence to regulatory standards and consistent reports through the implementation of standardized data collection methods and forms.
Eligible Transaction Types*
Hybrid appraisals are allowed for a wide range of property types, with some restrictions. Lenders will receive their hybrid eligibility from GSEs, as they do with any other appraisal product. Always refer to the GSEs’ guides for the latest information. As of the publication date of this blog, eligible transactions include:
Fannie Mae®
Forms: 1004 Hybrid and 1073 Hybrid
- Purchases, limited cash-out, or cash-out refinances
- Existing one-unit properties, including condos and PUDs
- Principal residences, second homes, and investment properties
- Properties under construction or with incomplete renovations
- Community land trusts and other resale price-restricted properties
- Texas 50(a)(6) loans
*Eligibility subject to GSE updates; refer to: Fannie Mae’s Selling Guide, B4-1.2-03, Hybrid Appraisals and Freddie Mac’s Guide, Sections 5602.4, 5604.1 and 5604.2.
Valligent is committed to supporting the evolution of the appraisal process and looks forward to helping lenders and appraisers leverage the benefits of hybrid appraisals.
Implementing Hybrid Appraisals: Steps for Lenders
Lenders looking to integrate hybrid appraisals into their operations should consider taking the following steps:
- Stay Updated on GSE Guidelines: Regularly review Fannie Mae and Freddie Mac’s selling guides to ensure compliance with hybrid appraisal eligibility requirements. Keep an eye out for GSE eligibility notifications and take advantage of the opportunity to experience the benefits of hybrid appraisals.
- Partner with Qualified Appraisal Vendors: Work with experienced appraisal management companies (AMCs) that specialize in hybrid appraisals. Valligent’s ValHYBRID nationwide solution is equipped to support these needs.
- Educate Staff & Borrowers: Train internal teams on hybrid appraisal workflows and communicate the benefits to borrowers for a seamless experience.
As the mortgage industry continues to embrace digital advancements, hybrid appraisals offer a valuable solution that balances efficiency, accuracy, and cost-effectiveness. With the GSEs expanding their eligibility criteria, lenders and appraisers have a unique opportunity to modernize their valuation processes and enhance the borrower experience.
Get Expert Support on Hybrid Appraisals
Hybrid appraisals are transforming property valuations, and Valligent is here to help lenders navigate this shift. Our ValHYBRID appraisal solution ensures accurate, efficient valuations using GSE-approved hybrid appraisal forms. It also supports the GSEs’ inspection-based waiver solutions. Contact Valligent today to learn how ValHYBRID can modernize and streamline your valuation process.
©2025 Valligent, a Veros Software Company. Form 1004 Hybrid and 1073 Hybrid are appraisal solutions of Fannie Mae®. Desktop Underwriter® (DU®) is a trademark of Fannie Mae®. Form 70H and 465H are appraisal solutions of Freddie Mac®. Loan Product Advisor® (LPASM) is a trademark of Freddie Mac®. All Rights Reserved.
