Freddie Mac’s automated collateral evaluation (ACE) program is designed to help borrowers save money on appraisals and make faster purchases in certain scenarios. The ACE program was initially designed to “assess the need for a traditional appraisal by leveraging proprietary models and using data from multiple listing services and public records as well as a wealth of historical home values to determine collateral risks,” explained a spokesperson for the GSE. If ACE determines that an estimated value or purchase price is acceptable, a lender may receive clearance to proceed with a loan without a formal appraisal, although all parties involved may choose to get an appraisal anyway.
The program was originally launched in 2017 for single-family home loans, but Freddie Mac recently expanded the program to condo purchases. Condo buyers who leverage the program effectively could save about $500 on appraisal fees and close seven to 10 days faster.
The program is intended to expand efficiency in the home-buying process in a way that will help first-time homebuyers in particular. “We continue to see the share of condo loans we purchase increase, especially among first-time homebuyers,” said David Lowman, who is the executive vice president of Freddie Mac’s single-family business. He added, “ACE for condos will help increase the efficiency of the mortgage origination process.” ACE will be available for condo purchases and refinances starting July 16, 2018.
What makes a loan eligible for ACE?
Only certain loans and borrowers qualify for this program. To be eligible, Freddie Mac requires:
- The purchase be a single-family one-unit property (this can be a condo or freestanding residence)
- The purchase is a primary residence or second home
- The purchase or refinance does not contain a cash-out element
- Loan-to-Value (LTV) less than or equal to 80%
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