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FHA Appraisal Expiration ........... Change

The third and last change that we have been notified of this week is a change to FHA Appraisal Expiration. FHA Appraisals use to be good for six month, this was both good and bad. Good because if an appraisal was done on a property, and the deal fell apart, the appraisal would still be applicable for a six month period, and the new Buyers/Borrowers would continue to use the same appraisal, because it was attached to the FHA Case Number. Therefore, they were able to save money on an appraisal. The Bad part is that if the reason for the deal falling apart was because of appraisal issues, or the house under appraised, those issues would continue to be a problem for six months, and you could not get away from them by doing a new appraisal.

With this change FHA has reduced the appraisal expiration to 120 days for all existing and new construction properties effective with case numbers assigned on or after Jan 1, 2010. This change aligns FHA with current industry practices.

This again is both good and bad. Good because you are able to replace an appraisal that had issues or under appraised sooner. But likewise it is bad because an appraisal that did not have any issues will now be good for only 120 days in stead of the previous six month.

This concludes the changes that I have to report on for now, but keep in mind that these three changes that I have blogged about, are all Program Changes, there are other changes that have also been made that are Investor Changes. Investor Changes are an additional layer of qualifying requirements that are imposed on by Investor which are over and above those made by Fannie Mae, Freddie Mac, FHA, VA, and USDA. Those changes will differ from Lender to Lender depending on whom the Lender is selling their loans to. The best way to keep up with these changes is by having a good working relationship with a Loan Officer that will keep you up to date on them.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 10/28/2009 02:15 PM

Comments (21)

FHA Appraisals in the Mortgage / Finance Channel

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Originally posted at: George's Blog: FHA Appraisal Expiration ........... Change

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21 Comments on FHA Appraisal Expiration ........... Change

OCT

George, as usual great info. I wasn't aware of the appraisal change. 120 days isn't bad, I think I can live with that. I hope you are having a great day! ;)

Debbie this is a change that I actually think makes sense, and I have not been able to say that about many of them :)

George, I will argue one point with you. You said;

" The best way to keep up with these changes is by having a good working relationship with a Loan Officer that will keep you up to date on them."

That is the ONLY way to keep up with the changes.

Great post, I can live with the change. But I can't live without a loan officer who knows his stuff!

I really like how you present both sides of the issue. Most people choose to push an agenda to drive business. Well done George, I enjoyed reading your series

George,

In this volatile housing market it seems to be better to have that expiration lowered to 120 days.

Andrea, I can live with that :) :)

Danial the goal is to present the pros and cons, and let the readers make up their own mind. Glad that you enjoyed the series.

Esko, I agree.

Once again, thank you George for keeping us up to date on these changes. I'm glad you're on top of it.

Jen, I try, and hopefully it helps those who are reading these blogs.

OCT

I agree with Andrea and want to add to it... The ONLY way to keep up with the changes is to look at the timely and informative posts that GEORGE SOUTO equips the Active Rain Community with!

Diane, thank you. But I think that we all do a great job of keeping each other informed of what is going on in our end of the Industry.

It makes a lot of sense George given the fact of how volatile the markets have been around the country. This one seems like a good change.

OCT

Bill I agree.

OCT

This is a positive move. In most cases it will help. I am sure that there will be complaints but for the most part this will be good.

NOV

Phil I think it is also a good move, but time will tell.

NOV

George,

This may turn out to be a mistake. I think the 6 months appraisal is good because if that is the issue with the deal, the seller is more likely to sell given the appraisal will stick with the house for 6 months. Otherwise, they may think, they will just wait and of course the appraisal will increase after 120 days....

Ann Hayden in sunny Wildwood, MO

Ann I understand your reasoning, and I guess that could happen, but usually I find when someone is trying to sell their house they are not going to want to wait 4 months hoping that the house goes up by a few thousand dollars. But anything is possible.

NOV

George,

Unfortunately, every "man's house is his castle".... And some sellers get so upset they do take the house off the market...

Ann

Ann, that does happen, but they need to realize that until the market change, the appraisal is more likely to go down then up.

NOV

George,

Yes, now that would be the case but back in the day in a week or two the house could be worth much more...

Ann

NOV

Have you considered doing loans in Oklahoma? :)

George, this is timely and great info that I have not read anywhere else. I only do about 3 FHA's a year. Thanks so much for such an informative blog all of the time!

NOV

Judi, glad that you found the information useful, and who know if life will take me to Oklahoma someday :)

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