Appraisal Scoop

FHA Releases New Frequently Asked Questions (FAQ)

Here are just a few of the topic's discussed in FHA's newest Frequently Asked Questions release:

What are the new construction documentation requirements for appraisers on properties 90% or more complete?

When a property is "Under construction, more than 90% complete with only minor finish work remaining…”, the appraiser is instructed to condition the appraisal "Subject to the following Repairs or Alterations" Who does the final inspection, an Inspector or an Appraiser?

Is the appraiser still required to report well, septic and property line distances on an addendum to the URAR or is this only required when problems are noted? How is the lender to determine if these distance requirements are met if the appraiser is not required to identify?

Does the appraiser determine what inspections are required or does the lender determine that?

Is an engineer's report (certification) still required for manufactured homes?

Can you confirm my understanding as to whether or not the DE Underwriter has the authority to waive cosmetic repairs if they are listed on the appraisal report? If so, does the DE Underwriter need to fill out a specific form or just leave the repairs off of the Conditional Commitment?

Who can perform repairs when the appraiser noted defective paint in a home built prior to 1978 in view of EPA’s new lead based paint Renovation, Repair and Remodeling Rule?

How should an empty or non-functioning in-ground swimming pool be treated? Does a swimming pool require perimeter fencing?

When is the cost approach required for an FHA appraisal?

If there is a manufactured home on the property, does it have to meet FHA standards if it is only being used for storage or has a family member living in it, but is NOT paying rent?

If conditions or physical deficiencies are found, are repair estimates still required on all items?

Are private road maintenance agreements still required?

Can information regarding sales of properties after the effective date of the appraisal be used?

If the appraisal is transferred from one lender to another must the appraiser cooperate with the second lender?

Click HERE for the complete FHA FAQ - Download FHA - FAQs 12-07-2012_1358966459

Updated (2/28/12) FHA Valuation Protocol FAQ's

THANKS! to appraiser Dave Towne for finding the latest HUD/FHA issued update to the Valuation Protocol FAQ document dated Feb. 28, 2012.

Here are just a few of the topics covered:

What are the new construction documentation requirements for appraisers on properties 90% or more complete?

Mortgagee Letter 2005-48 states that a termite inspection is no longer automatically required unless there is evidence of active infestation, it is mandated by the state or local jurisdiction, is customary to the area, or at the lender’s discretion. Can you provide more clarification of exactly how lenders should apply "customary to the area?"

Is the appraiser still required to report well, septic and property line distances on an addendum to the URAR or is this only required when problems are noted? How is the lender to determine if these distance requirements are met if the appraiser is not required to identify?

Is it mandatory for a well/septic report to show distance to lot lines?

Is a well located in the basement okay? If not allowed by FHA, what if local laws permit it?

Does the appraiser determine what inspections are required or does the lender determine that?

Are oil tank certifications still required for underground tanks with no evidence of surface contamination?

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

When is the cost approach required for an FHA appraisal?

If there is a manufactured home on the property, does it have to meet FHA standards if it is only being used for storage or has a family member living in it, but is NOT paying rent?

Please discuss the ongoing treatment of garage door openers that don't reverse with pressure. What about the sensor beam that stops the door when something breaks down?

Does the appraiser need to state the remaining economic life or just effective age?

Does the appraiser have to change the appraisal based on the “new” information?

Can information regarding sales of properties after the effective date of the appraisal be used?

Should data on the 1004MC mirror that in the neighborhood section of the appraisal report?

Can FHA Roster appraisers use foreclosures, short sales and other distressed sales?

 

HUD/FHA: "Site Condo" Definition and Reporting Requirements - ML 2011-22

An appraiser on the Inland CA Appraiser forum posted the following question:

"I received information from a client that FHA recently issued a directive in Mortgagee Letter 2011-22 that "site condos" are to be placed on FNMA form 1073. Does FHA have a formal definition of a "site condo"? I know one when I see one but I wondered if FHA has the same concept that I do. If anyone can tell me where in the maze of FHA I can see a copy of their definition I would appreciate the help."

It just so happens that I own a property down in TN that is a "Site Condo" so the question spurred me on to do a little digging! What I found was HUD's Mortgagee Letter 2011-12

 

Prior to the release Mortgagee Letter ML11-22, HUD had exempted so-called “Site Condominiums” from the requirement to become approved in order for FHA financing to be allowed within the project. ML11-22 clarifies what a Site Condominium is in order for it to not be required to obtain HUD’s approval.

What IS a "Site Condominium" (per HUD)

According to Pg. 73 of Apendix C – Glossary (Condominium Project Approval and Processing Guide)

Site Condo - A site condominium is defined as a single family totally detached dwelling (no shared garages or any other attached buildings) encumbered by a declaration of condominium covenants or condominium form of ownership.

But WAIT . . .There's MORE!

Pg. 19, Unique Projects, section 1.8.1 of the (Condominium Project Approval and Processing Guide) further outlines and defines what a Site Condo is:

Condominium project approval is not required for Site Condominiums meeting all of the below defined requirements.

Site Condominiums are defined as:

• Single family totally detached dwellings (no shared garages or any other attached buildings or e.g. archways, breezeways); and
• Are encumbered by a declaration of condominium covenants or condominium form of ownership; and
• The condominium unit consists of the entire structure as well as the site and air space and are not considered to be common areas or limited common areas; and
• Insurance and maintenance costs are totally the responsibility of the unit owner; and
• Any common assessments collected will be for amenities outside of the footprint of the individual site.

Condominiums that do not meet this definition will require full project approval.

Manufactured Housing Condominium Projects (MHCPs) may not be treated as Site Condominiums - these projects require approval under the HRAP option. Modular homes are processed as single family homes for insurance purposes and are eligible to be treated as Site Condominiums as long as they meet the stated definition.

OK!  So I know what a Site Condo IS, but I thought we always reported them on the Fannie Mae 1004 appraisal report.  Right?  That WAS true . . . until this ML.

 It was Mortgagee Letter 2009-46B on page 14 under Section VI Site Condominiums that stated:

Appraisal data is collected and reported on Fannie Mae form 1004, in accordance with the Valuation Protocols, Appendix D of HUD Handbook 4150.2.

However, THIS ML and the Guide clarify, expand, consolidate and update existing guidance, and replaces MLs 2009-46 a, 2009-46 b and 2011-03.

3.14 Site Condominiums (pg. 51 ) of (Condominium Project Approval and Processing Guide) states:

Although not subject to the general condominium approval requirements, the applicable ADP codes for Site condominiums are 731 (Adjustable Rate Mortgages) and 734.

Appraisal data is collected and reported on Fannie Mae form 1073, Individual Condominium Unit Appraisal Report.

The Condominium Rider (Appendix G) must be included in the FHA case binder submitted for insurance endorsement.

 

HUD/FHA Extends Mandatory UAD Implementation - Mortgagee Letter 2011-30

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSING FEDERAL HOUSING COMMISSIONER

AUGUST 22, 2 011

MORTGAGEE LETTER 2011-30

To ALL APPROVED MORTGAGEES & ALL FHA ROSTER APPRAISERS

Subject: The Uniform Appraisal Dataset (UAD) and appraisal reporting forms

Purpose of this Mortgagee Letter: The Federal Housing Administration (FHA) will adopt the Uniform Appraisal Dataset (UAD) and two of the UAD compliant appraisal reporting forms, which further define specific data fields in these industry standard appraisal reporting forms.

Effective Date:

To allow Mortgagees sufficient time to make any necessary data system changes, the requirements of this Mortgagee Letter are mandatory for all case numbers assigned on or after January 1, 2012 and for all appraisals performed on HUD real estate owned (REO) and Pre-Foreclosure Sale (PFS) properties with an effective date on or after January 1, 2012.

Prior to the effective date, Mortgagees, at their discretion, may accept and submit for loan endorsement an appraisal in either a UAD compliant format or a non-UAD compliant reporting format.

Click HERE to read the complete Mortgagee Letter 2011-30

HUD Unveils New Web-Based Mapping Tool to Display Nearly Half of U.S. Foreclosed Properties

New portal will help communities target NSP Funds to stabilize hard-hit neighborhoods

HUD No. 11 -166
Brian Sullivan
(202) 402-7527

WASHINGTON – The U.S. Department of Housing and Urban Development today launched a new web-based mapping tool displaying the location of all foreclosed properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).  These foreclosed homes collectively account for nearly half of all real estate-owned or REO properties in the U.S.  HUD’s REO Portal is intended to help local communities, homebuyers and responsible investors to acquire these properties and accelerate efforts to stabilize local housing markets.  Click Here: http://www.huduser.org/REO/reo.html

 This new mapping tool will be of particular help to those communities employing HUD’s Neighborhood Stabilization Program (NSP) in the targeted acquisition, rehabilitation and/or demolition of these REO properties.  The REO Portal’s consolidated graphic listing includes properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).  The tool enables users to search a specific address or neighborhood, as well as estimated delinquency counts based on HUD analysis for local NSP program activities.

 “In this case, a picture is worth more than a thousand words,” said HUD Secretary Shaun Donovan.  “This new mapping tool gives local communities a much clearer picture of where these foreclosed properties are so they can focus their energies in especially hard-hit neighborhoods.”

 

  “HUD’s REO Portal gives prospective homebuyers and local community development organizations a comprehensive view of housing opportunities in their desired neighborhood,” said Ed Neill, Senior Vice President of Credit Loss Management at Fannie Mae. “The REO Portal supports Fannie Mae’s ongoing commitment to stabilizing neighborhoods by allowing buyers to search through a vast selection of houses and find one they can call their home.”

 Anthony Renzi, executive vice president of single family business and information technology at Freddie Mac added, “The HUD REO Portal gives buyers a terrific new tool for comparison shopping affordable homes, including Freddie Mac’s HomeSteps homes, in the neighborhood of their choice.   I want to thank Secretary Donovan for giving Freddie Mac the opportunity to help develop the REO Portal, which underscores our mission to foster stable communities and support the nation’s housing markets.”

 In partnership with Fannie Mae, Freddie Mac, FHA, and the Federal Housing Finance Agency, HUD’s Office of Policy Development and Research developed this REO web portal allowing users to map available REO properties in their local community.  In addition to mapping individual properties, the portal provides consolidated listing for user-defined neighborhoods with details such as list date, price, number of bedrooms, bathrooms, and links to Homepath (Fannie Mae), Homesteps (Freddie Mac), and HUD Homestore (FHA) to connect potential buyers to the acquisition process.  The REO Portal supports more efficient disposition of REO properties to support the stabilization of neighborhoods and recovery of local housing markets by enabling a neighborhood-focused, strategic approach to acquisition.

HUD Embraces Implementation of the Uniform Appraisal Dataset [UAD]

" In December 2010, Freddie Mac and Fannie Mae (the GSEs) published the full details of the Uniform Appraisal Dataset (UAD). The publication of the UAD, which defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields, marked a major milestone in our effort to improve the quality and consistency of appraisal data delivered to the GSEs. " - Freddie Mac Update

The Spring 2011 (Issue 3) of FHA APPRAISER embraces that initiative with their article "Uniform Appraisal Dataset [UAD]

In an effort to enhance appraisal data quality and consistency and to promote the collection of electronic appraisal data, Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) have developed the Uniform Appraisal Dataset (UAD). The UAD modifies 4 of the industry standard appraisal reporting forms: the URAR, the Individual Condominium Unit Report, the Exterior Only

Residential Inspection Report and the Exterior Only Inspection Individual Condominium Unit Report. Fannie Mae and Freddie Mac will require appraisals reported on one of these four appraisal reporting forms to be in compliance with the UAD for all conventional loans delivered to the GSEs on or after September 1, 2011. The UAD is part of the Uniform Mortgage Data Program (UMDP) which also includes the

Uniform Loan Delivery Dataset (ULDD) and the Uniform Collateral Data Portal (UCDP). As the ULDD and the UCDP are for submission and electronic collection of appraisal and loan data related to conventional loans delivered to the GSEs, this article will only address the UAD which will directly impact FHA Roster Appraisers. When performing appraisals reported on the URAR and the individual condominium unit report form, FHA Roster Appraisers will be required to submit reports which are UAD compliant. FHA does not permit the use of either of the two exterior only inspection reporting forms.

The UAD will standardize the definitions of select key appraisal data elements such as property condition and quality of construction as well as the describing the view which will prevent appraisers from inputting descriptions such as average in the field for view in the Site Section or average quality in the Improvements Section of the report. UAD compliant appraisal reporting forms require the following information that was never explicitly required before:

1. Days on market for subject property and the comparable sales
2. Specifically defined condition and quality ratings
3. Status of improvements to kitchen and bathrooms
4. Sale type for the subject property and each comparable sale

Appraisal report software form providers have incorporated the UAD requirements into their form software and UAD compliant appraisal reporting forms will be available on an industry wide basis this Spring.

FHA Roster appraisers can become familiar with the UAD field specific requirements detailed in Appendix D of the Uniform Mortgage Data Program by visiting either of the GSEs’ web sites: Fannie Mae or Freddie Mac

FHA plans to release guidance concerning the use of the UAD appraisal reporting forms later this year.

Source: FHA Appraiser - Spring 2011 [Issue 3]

Housing Scorecard: Delinquencies Down. Foreclosures Delayed - HAMP Report

The Departments of Housing and Urban Development (HUD) and Treasury released their Monthly Housing Scorecard for February on Wednesday afternoon according to Jann Swanson's Mortgage News Daily article.

This monthly report is an attempt to encapsulate the Obama Administration's efforts to stabilize the housing market and provide a snapshot of the status of that market.  It contains a round-up of information from both public and private sources.  The Scorecard is issued simultaneous with the release of the monthly report on the Making Home Affordable Program (HAMP).

FULL HAMP REPORT

According to the Scorecard, the housing market remains fragile as data through January paint a mixed picture of recovery.  On the sales front there was a little good news as sales of existing homes ticked up to 446,700 in January compared to 435,000 in December.  New home sales, however, dropped from 27,100 to 23,700.  The inventory of existing homes fell by slightly less than 200 thousand to 3.38 million while the supply of new homes was almost flat at 188,000.  There is a 7.6 month supply of existing homes compared to 8.2 months in December and a 7.9 month supply of new homes as compared to 7.0 months. 

Over 3.6 million homes are currently vacant and held off the market for a variety of reasons.  This is an increase of 45,000 since December.

Click here to read the full article

New HUD Portal and Appraiser Newsletter

FHA has started publishing their own appraiser newsletter.  I will begin to monitor their appraiser homepage in an effort to notify our readers when a new edition comes out.

Here is the link to the FHA Roster Appraisers Homepage:

http://portal.hud.gov/hudportal/HUD?src=/groups/appraisers

All FHA appraisers should put this page under their favorites.  It's a quick and easy way to keep up with numerous FHA appraisal requirements including Mortgagee Letters, Handbooks, FAQ's and now their newsletter.

Here is the link to the Winter 2011 Newsletter: http://www.hud.gov/offices/hsg/sfh/appr/newsletter01_13_2011.pdf

Soure: ICAP eMail

 

TAVMA writes letter to delay paying appraisers reasonable fees - Says VA Fees " . . . artificially inflate appraisal fees in most markets"

Appraisers  . . . please read a letter written by Jeff Schurman, Executive Director of TAVMA - Title/Appraisal Vendor Management Association to the Board of Governors of the Federal Reserve System urging them to delay implementation of the appraisal fee provision in Title XIV of the Dodd-Frank Act. 

Download TAVMA FEE OBJECTION LETTER 8-2010

They are asking the FRB for sufficient time to define and analyze the implications of the "customary and reasonable" appraisal fee provision of the Act. 

Translation...AMC's don't want to comply with this legislation and pay appraisers a fair fee.

The TAVMA letter supports a HUD FAQ clarification in defining what a customary and reasonable fee should be:

The letter claims - 

"Yet, only one agency, the Veterans Administration (VA), publishes an appraisal fee schedule, (available at: http://www.benefits.va.gov/homeloans/fee_timeliness.asp ). These fees, however, are higher than many consumers will expect to pay in a retail mortgage transaction. 

Moreover, VA loan appraisal fees do not purport to be “customary and reasonable” for non-VA loans. Rather, they reflect “maximum allowable fees for the appraisal type” according to the VA website. Thus lenders, AMCs, and appraisers that use the VA fee schedule are very likely to distort (by artificially inflating) appraisal fees in most markets.

This could become a self-perpetuating problem, as higher “customary and reasonable” fees for non-FHA work may have the effect of increasing VA appraisal fees resulting in a vicious cycle."

Their Conclusion 

The final implementing regulation must consider these complex issues before establishing a workable and accurate set of “customary and reasonable fees.” Unfortunately, a credible source of “objective third-party” fee information simply does not exist at this time. 

The premature adoption of the fee provision will cause unanticipated harm [to] AMCs, lenders, and consumers, and likely will adversely affect competition among appraisers.

Read the full letter here:  Download TAVMA FEE OBJECTION LETTER 8-2010

HUD Updates REO Lead-Based Paint Appraisal Reporting Requirements - Mortgagee Letter 2010-17

Handbook Change

Appendix A, Section A-3, bullet two is being replaced in its entirety with the language below: 

"If the appraiser observes defective paint in a home that was built before 1978, in the physical deficiencies or adverse conditions section of the appraisal report, the appraiser must enter an “X” in the “Yes” box, and note all areas affected. However, if the appraiser does not observe defective paint in a home that was built before 1978, an explanation is not required in the physical deficiencies or adverse conditions section of the appraisal report."

If you should have any questions concerning this Mortgagee Letter, call 1-800-CALLFHA. Persons with hearing or speech impairments may access this number via TDD/TTY, by calling 1-877-TDD-2HUD (1-877-833-2483). 

Download HUD-FHA ML 2010-17 - Lead Paint