Department of Veterans Affairs issues updated circular on valuation practices during Covid-19

Federal Issues Covid-19 Department of Veterans Affairs

On April 10, the Department of Veterans Affairs (VA) issued Circular 26-20-13, which rescinds Circular 26-20-11 and updates guidance and instructions for valuations and appraisals for all VA home loan purposes. In light of the Covid-19 pandemic, valuations may be constituted by an Exterior-Only appraisal with enhanced assignment conditions or in limited instances, a Desktop Appraisal. While broader use of exterior inspections is permitted, appraisals must still follow the same procedures of the VA appraisal process and are still required to meet Uniform Standards of Appraisal Practice and state requirements for delivering an appraisal that meets those qualifications. The circular provides specific guidance on, among other topics, exterior-only appraisals, Reconsideration of Values for certain transactions, the issuance of Memorandums of Values, termite inspections, and the VA’s expectations regarding communication between the Veteran, lender, appraiser, and other stakeholders. Additionally, the circular includes Exhibit A, which contains a modified appraisal report for Desktop Appraisals. The circular is effective for all loans where the application date was made on, or after, the date of the circular and until further notice or the rescission of the circular on April 1, 2021.

On May 8, the VA updated provisions of Circular 26-20-13 to provide further clarification on the effective date of the temporary guidance as well as additional valuation information. As stated, the temporary guidance is "effective for all loans closed on, or after March 13, 2020, and until further notice or the rescission of this Circular."