Do you ever have questions regarding FHA guidelines, requirements and policies? If you’re like most appraisers and lenders in the industry, the answer is yes. Fortunately, FHA released an updated Frequently Asked Questions (FAQ) publication for Valuation Protocol. This is a very helpful tool for both appraisers and lenders. As an appraisal management company, we see lots of these questions on a daily basis coming from both sides. With FHA continually revising their protocol, staying up to date with every checkpoint is challenging to say the least.
At Nationwide Appraisal and Settlement Network, we make it our business to keep ourselves up to date for you. When a lender calls with a question regarding an FHA appraisal, we have the answer. Our appraisers even trust us enough to call with questions and discuss scenarios with our staff appraisers to gain insight and determine how to proceed. Below are some of the most common questions that come across my desk answered by FHA…
What are the new construction documentation requirements for appraisers on properties 90% or more complete?
What are the new construction documentation requirements for lenders on new construction?
Are termite reports for homes located in southern states still automatically required?
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?
If hook-up to public water is available, must the homeowner do it?
Does the appraiser determine what inspections are required or does the lender determine that?
It was stated that handrails and trip hazards are cosmetic. Wouldn’t these items be health and safety issues?
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?
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?
How should an empty or non-functioning in-ground swimming pool be treated? Does a swimming pool require perimeter fencing?
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?
Can the DE Underwriter highlight the required repairs on the appraisal if they write on the conditional commitment – “see attached appraisal” or do the required repairs have to be listed on the Conditional Commitment?
If conditions or physical deficiencies are found, are repair estimates still required on all items?
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?
Can FHA Roster appraisers use foreclosures, short sales and other distressed sales?
ML 2010-15 states that if an appraisal is performed by a FHA Roster appraiser but for conventional or government guaranteed loan purposes and is converted to a FHA-insured mortgage, the lender must ensure that the appraisal is in compliance with FHA appraisal reporting requirements which may result in the need for a re-inspection of the property. Isn’t re-inspection of the property a new appraisal assignment?
This FHA FAQ is very useful for residential appraisers, lenders and appraisal management companies. I encourage everyone reading this to go through it and save for future reference…you will thank me later, I promise!