The majority of HARP loans are eligible for appraisal waiver, however there are certain criteria that must be met to allow the execution of the waiver. Generally speaking it is advisable to complete your transaction with waiver as it eliminates any risk of an uncertain value, while at the same saving on the expense and inconvenience of having a full report done.
In the DU Refi Plus new servicer version for Fannie Mae eligible loans, Fannie Mae software will indicate in their automated findings if the subject property is eligible for waiver. Only Single Family, Condo or PUD property have the chance to be eligible in this version. When the waiver eligibility is revealed, Fannie Mae will also indicate a suggested value of the property. Many lenders will only offer HARP 2.0 loan if the application is resubmitted and underwritten at the Fannie prescribed value. This can be advantageous if the initial estimate is lower than the suggested value.
If the estimated value is above the Fannie Mae suggestion, Fannie will STILL offer the waiver AT the higher value, provided the higher estimate is within a reasonable tolerance of the suggestion. If you are to be underwritten and reviewed at the higher value, it is crucial that the lender policy allows for this possibility. Fannie Mae approval result will often improve at lower Loan to Value, and an application can have a better chance for success with favorable terms if the estimated value is within tolerance to allow waiver execution.
For Freddie Mac loans underwritten in the Open Access version of HARP, the process is similar, where Freddie Mac will prescribe a suggested value for waiver execution (called HVE by Freddie). Unlike Fannie Mae, Freddie will only accept HVE usage when the file is underwritten at the suggested HVE value (as long as the HVE was generated within 120 days of the Note Date).
Both Fannie and Freddie do allow full appraisal to be used if the HVE or Fannie Waiver option do not lead to a favorable result. Unfortunately many lenders will only offer the high loan to value option with HVE or Waiver option exercised, likley because they do not want any risk of dispute from Fannie or Freddie on the appraised value.
In cases where HVE or Fannie suggested value are not provided, full appraisal must be used, and it is important to work with a lender who allows appraisal in particular at high Loan To Value.