What does the October 2026 housing order mean for appraisals and PMI?

What the order actually says about appraisals

On October 22, 2026, the White House published an executive order called "Decreasing Housing Costs for the American People." Most of it covers title insurance, manufactured homes and USDA and VA loan rates. Two parts land on my desk: how a home's value gets checked when you want to drop private mortgage insurance (PMI), and when a refinance can skip the appraisal.

Here is the appraisal language, quoted, so nobody has to take my word for it:

• Section 2, the PMI pilot. The Director of the Federal Housing Finance Agency (FHFA) "shall, if he determines that it is in the best interests" of Fannie Mae and the other parties the order lists, direct Fannie Mae and Freddie Mac to set up a pilot. It would find borrowers who appear to meet the equity rules for canceling mortgage insurance "as determined through an automated valuation model or other means approved by the Director." It would be "applicable only to mortgages made after the establishment of the pilot program," and it aims to cut "unnecessary documentation requests, appraisal costs, and other administrative barriers."
• Section 4(b)(iii), refinances. While expanding a title program, "the Director shall consider" "waiving appraisals, income re-verification, and other documentation requirements" "for limited cash-out refinances that reduce the borrower's monthly payment," "where the Enterprise's existing data support doing so."

An automated valuation model, or AVM, is a computer program that estimates a home's value from records and past sales. It is fast, it never needs a parking spot, and it has never been inside your house. It doesn't have feet.

What the order does not do, at least not yet

Read the verbs. Section 2 starts with "if he determines." Section 4(b) says the Director "shall consider." Considering is not doing. I have been considering a rowing machine since 2019.

Section 6 says the order must be carried out "consistent with applicable law and subject to the availability of appropriations," and that it does not "create any right or benefit." Neither Section 2 nor Section 4 sets a deadline in days. Nothing in a loan file changes until FHFA acts and Fannie Mae or Freddie Mac publishes new guide language.

A few more limits worth knowing:

• The PMI pilot is for new loans. It covers mortgages made after the pilot starts. If you already have a loan, the order does not move you into it.
• The refinance idea is narrow. It names limited cash-out refinances that lower the monthly payment. It does not mention purchases or larger cash-out refinances.
• It is about Fannie Mae and Freddie Mac. The order calls them the Enterprises. FHA mortgage insurance runs on HUD's own rules.

How PMI comes off today, and what already changed in September

Two sets of rules already exist. The federal Homeowners Protection Act covers most loans on a single-family principal residence closed on or after July 29, 1999. You can ask in writing to cancel PMI when your balance reaches 80% of original value, if you are current and have a good payment history. PMI ends automatically when the balance is scheduled to reach 78% of original value, if you are current. Original value is usually the lower of the sales price or the appraised value when you bought.

That law runs on original value. Today's value comes from Fannie Mae and Freddie Mac rules. Under Fannie Mae's servicing rules, a one-unit primary or second home can drop PMI on current value at 75% loan-to-value after two to five years, or 80% after five years, with a clean payment record. You ask, and the servicer orders the valuation through Fannie Mae's process.

One change already happened. Fannie Mae's Lender Letter LL-2026-07, dated September 16, 2026, now lets servicers "solicit borrowers that may be eligible for mortgage insurance termination" "based on the current value of the property." So your servicer may actually call you. Pick up. It might be the only call from a loan company that saves you money.

Freddie Mac sets its own servicing terms, so if Freddie owns your loan, ask your servicer for them. For the step-by-step version, see can I get PMI removed with a new appraisal.

What I see in the field: what a computer value misses

I like computers. I use them every day to find sales and measure what buyers pay for each difference. I have blended data science with human insight for almost two decades, long before anyone called it AI. But an AVM only knows what the records say, and records are like a dating profile: technically true, heavily filtered, and the photo is from 2014.

Here is what a model misses most often:

• Condition. A gut remodel and a house untouched since the first iPhone look the same in public data. In the markets I work, buyers pay for condition more than age.
• Work the county never recorded. A new kitchen with no permit, or an addition the assessor has never heard of.
• Slope. A half-acre hillside lot is not a half acre of backyard. Ask anyone who has tried to mow it.
• View and noise. A bay view and a freeway sound wall can share a street.
• Layout. A bedroom you can only reach by walking through another bedroom.

Regulators know this. Six federal agencies, including the CFPB and FHFA, issued a quality control rule for AVMs that took effect October 1, 2025. Lenders that use AVMs for certain mortgage decisions need controls to "ensure a high level of confidence in the estimates produced," guard against data manipulation, avoid conflicts of interest, run random sample testing and follow nondiscrimination laws. More on that in can AI replace your appraiser.

Why attorneys and families still want a real appraisal

Skipping an appraisal on a low-risk refinance is one thing. A number that someone will fight over is another. You still want a real appraisal when:

• A divorce buyout depends on the equity
• An estate or trust needs a date-of-death value
• Siblings are buying each other out of a parent's house
• Any number a lawyer, a judge or a tax reviewer may question

For attorneys: California Evidence Code section 801 limits expert opinion to one based on matter "of a type that reasonably may be relied upon by an expert in forming an opinion" on the subject. Section 802 lets the witness explain the reasons for the opinion and the matter it rests on. An AVM printout has no witness behind it to explain which sales it used, how it adjusted them, or whether it knew the kitchen was gutted. It can't be cross-examined. It can't even be sworn in, because it has no hand to raise. How a court treats any piece of evidence is your call as counsel, not mine.

An appraisal I sign carries my sales, my reasons and my license: California Certified Residential Appraiser, License AR041465. If you don't need a site visit, my desktop appraisal uses the facts and photos you send, plus records and market data.

A calm checklist for loan officers

1. Change nothing today. The Fannie Mae and Freddie Mac guides still control your files, not a headline.
2. Watch for the actual paperwork. An FHFA directive or a GSE lender letter is what changes a rule. Read that, not the recap.
3. Tell PMI borrowers the current path. Existing loans use today's servicing rules. The pilot, if it comes, is for new mortgages.
4. Find out who owns the loan before you promise anything. Fannie Mae, Freddie Mac and portfolio loans each follow their own rules.
5. Keep appraisals in the plan for unusual homes. Hillside lots, heavy remodels and ADUs are where models miss. Fannie Mae's Value Acceptance already excludes homes valued at $1,000,000 or more.
6. Flag dispute files. If a refinance funds a divorce buyout or an estate settlement, the borrower may want an independent appraisal even when the loan does not require one.

And if a borrower asks whether a computer will appraise their house now, the honest answer is: not yet, and it still doesn't have feet.