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42 As part of the Plan, Fannie Mae is taking steps to support a more equitable valuation process and reduce the potential for appraisal bias through data analysis, quality control, monitoring trends, industry engagements, and technology. In addition, we are continuing to work with industry partners to expand the Appraiser Diversity Initiative (ADI), which is designed to attract new entrants to the residential appraisal field, overcome barriers to entry (such as education, training, and experience requirements), and foster diversity in the appraisal workforce. In 2022, the ADI provided 330 scholarships and will continue to grow that number in the coming years. Especially with high interest rates and chang- ing economic and housing market conditions, homeowners experiencing temporary financial hardship will need assistance to manage through that uncertainty and stay in their homes. rough mortgage forbearance and loan modification/ payment deferral plans, we will maintain our loss mitigation options for servicers and borrowers in order to manage delinquent mortgage loans and avoid foreclosure. We will also continue to provide access to Fannie Mae's Disaster Response Network™, which offers homeowners personal- ized support navigating the mortgage assistance or natural disaster recovery process. In addition, given the market uncertainty and an expected modest recession, proactive risk management will be key. Maintaining loan quality and strong risk management as the cycle continues downward and interest rates remain high will be a top priority for 2023. rough strong partnerships with our lenders, our shared commitment to loan quality, risk oversight, and quality control delivers certainty to both lenders and Fannie Mae during the origination and underwriting process, while ensuring that new homeowners are placed in a mortgage that supports sustainable homeownership. What are the victories from 2022 that you're most proud of yourself and your team for accomplishing? What were the keys to success that enabled you to succeed in these areas? e journey to modernize the valuation process had some notable wins in 2022. Fannie Mae has been working with mortgage lenders, appraisers, and industry technology providers for several years to test digital innovation and alternative ways of conducting appraisals. And we made significant progress on our apprais- al modernization journey, especially as new technological capabilities and process innovation have allowed the industry to manage collateral risks with more dynamic and targeted solutions. Desktop and hybrid appraisals allow appraisers to be more productive—they do not have to schedule appointments or visit properties but can still access comprehensive property information to confidently fulfill valuation requests, helping to alleviate capacity constraints. We also relaunched the value acceptance + property data pilot for eligible properties this year, also known as inspection-based appraisal waivers. With these alternative valuation ap- proaches, we're seeing a shorter appraisal process and the potential for reducing borrower costs. Also, on many loan transactions, we can offer a value acceptance (appraisal waiver) through our automated underwriting system, most often for home refinances or some purchases with a large down payment, because we are confident that the estimated property value submitted by the lender is consistent with expectations in the current market. Based on a Fannie Mae analysis of loan delivery data from January 2020 through October 2022, we estimate that value acceptance on loans sold to us saved mortgage borrowers more than $2.1 billion. ese changes are just a few exam- ples of how we're continuing to create efficiency and value for appraisal professionals, consumers, and the mortgage industry. Fannie Mae's efforts to eradicate appraisal bias also continue to show progress. We are committed to an efficient, effective, and equitable home valuation process and are working with the industry to continue to identify root causes and drive meaningful change related to appraisal bias through appraisal modernization, research, and analysis, fostering diversity in the appraiser workforce, and Appraiser Quality Monitoring (AQM). In February 2022, Fannie Mae produced a robust paper on the frequency and severity of appraisal bias and shared valuable insights on root causes and potential solutions. Additionally, we scanned 14 million appraisals from 2019 and 2020 to determine the extent of appraisers using problematic words and language specifically prohibited in Fannie Mae's Selling Guide, and then, through our AQM process, shared feedback letters with appraisers who had a high frequency of findings. We conducted our second round of text scanning on appraisals last year, and nearly 80% of the appraisers who previously received an education letter did not have a new finding. We also have a state referral process for egregious ap- praisal bias findings. In addition, we implemented an undervaluation risk flag in Collateral Under- writer® to help lenders and our internal reviewers identify appraisals with a high risk of potential undervaluation or bias early in the process. With a national housing supply crisis and shortage of affordable housing options, we've doubled down on our efforts to repair and pre- serve our real estate-owned (REO) single-family homes and put them back in the hands of own- er-occupants—and, in many cases, into the hands of first-time homebuyers. We renovate REO homes by completing a wide range of repairs, including cosmetic upgrades; necessary plumbing, electric, and HVAC repairs; and addressing any environmental or health issues, such as lead- based paint. We are seeing incredible results and benefits from this work. In March 2022, 95% of repaired properties in our REO portfolio were sold to owner-occupant buyers. In 2023, we will continue to build on our repair strategy to help create affordable and sustainable homeownership opportunities, which contributes to community stabilization and improves the nation's housing supply. David Wharton, Edi- tor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in journalism. Wharton has nearly 20 years' experience in journalism and previously worked at omson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at David.Wharton@eFiveStar.com. Feature By David Wharton