A lender has an AVM estimate for a property. Does that estimate alone establish that the lender may use Fannie Mae value acceptance for the loan?
Correct Answer
D) No; a model estimate is not an eligible DU offer, whose conditions must be met.
A valuation estimate is not itself a value-acceptance offer. Under the Fannie Mae option, the loan casefile must receive an eligible offer and the lender must satisfy the conditions for exercising it. Equal prices, an address match or possession of a model estimate alone does not establish that eligibility.
Why This Is the Correct Answer
Option D is correct because a model estimate is not an eligible DU offer. A lender may only exercise value acceptance if the final DU submission resulted in a value acceptance offer, an appraisal is not obtained for the transaction, and the offer is not more than four months old on the date of the note and mortgage. Possessing an AVM estimate does not satisfy those conditions.
Why the Other Options Are Wrong
Option A: Yes; a computer-generated estimate creates a waiver offer.
Option A is wrong because a computer-generated estimate does not create a waiver offer. The offer comes from the final DU submission of the loan casefile, not from the lender holding an AVM value.
Option B: Yes, as long as the model’s estimate exactly equals the borrower’s purchase price.
Option B is wrong because the model's estimate exactly equaling the borrower's purchase price does not establish value acceptance eligibility. Eligibility depends on a DU offer and the stated conditions, not on a price match.
Option C: No; the model estimate must first be confirmed by an appraiser
Option C is wrong because appraiser confirmation of the model estimate is not the requirement. Value acceptance applies when an appraisal is not obtained, and eligibility turns on receiving a DU offer and meeting its conditions.
Offer comes from DU
Value acceptance starts with a DU offer for the casefile, not with any estimate the lender happens to have.
How to use: Use this when a question asks whether an AVM or price match qualifies a loan for value acceptance.
Exam Tip
Look for the answer tying eligibility to the DU offer and its conditions. Distractors substitute an estimate, a price match or an appraiser's sign-off.
Common Mistakes to Avoid
- -Thinking an AVM estimate itself creates a waiver offer
- -Believing a match with the purchase price establishes eligibility
- -Overlooking the conditions for exercising the offer
Concept Deep Dive
Analysis
This question tests the distinction between a valuation estimate and a Fannie Mae value acceptance offer. Eligibility depends on DU issuing an offer for the loan casefile and the lender meeting the conditions for exercising it. Having an AVM estimate, or a price match, does not establish eligibility.
Background Knowledge
Fannie Mae's value acceptance is an offer issued through Desktop Underwriter for eligible casefiles. The lender must meet the stated conditions to exercise it, including not obtaining an appraisal and using an offer that is not too old on the note date.
Real-World Application
A lender's internal AVM supports a purchase price, and the loan officer hopes to skip the appraisal. The final DU submission does not return a value acceptance offer, so the lender orders an appraisal.
More Emerging Methods Questions
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