Mortgage Market Update - FHA Appraisal Changes / HVCC Strategies

With all the HVCC changes to conventional loans - FHA released some of their new appraisal guidelines.  Lets look at them


FHA Appraisal Changes

1- Changes effective January 1st, 2010.

2- Mortgage brokers and commission based lender staff are now PROHIBITED from selecting the FHA appraiser.

3- Lenders are not required to use Appraisal Management Companies.

4- When a borrower switches lenders FHA prohibits the 2nd lender for ordering additional appraisals to obtain a higher value unless:
     -The FHA DE underwriter determines the 1st appraisal is deficient
     -The appriaser of the 1st appraisal is the other lenders exclusionary list
     -The first lender delayed the trasfer of appraisal to cause harm

5- Appraisals are now valid for only 120 days for all existing and proposed or under construction properties.

Please remember that this has just been released and that most lenders have not created policy to handle this.  Just like most other regulatory changes this year I am sure most lenders will create their own policy on how to comply with these guidelines.  The good news is that everyone has some time to prepare.  I don't believe this will be difficult to work with and will update you as things continue to develop. 

Strategies and Tips for Realtors on working with Appraisers and the HVCC:

Remove the lockbox off of the home before the appraiser comes out to generate a phone call from the appraiser asking to gain entry (make sure you enter "call before showing" in listing info).  When the appraiser calls, politely ask them to get a sense of their competency. Here are some suggestions: Where are they based? Have they ever appraised in the area before? What data sources will they be utilizing? Do they have enough time to complete the appraisal? 

1. If you feel that the appraiser is not knowledgeable about the area, politely ask them to hold off. Next contact the lender and see about having someone else assigned. Rely heavily on the USPAP(page2)rules regarding appraising only in geographical areas in which an appraiser is competent (familiar).
2. Provide comps of your own before the appraiser comes out. This is important as appraisers have to take pictures and will want to avoid making a second trip. It is also important that the comps you offer have closed in the last 3 months. Comps closing longer than 3 to 6 months will likely be adjusted downwards for date of closing. (Comps closing longer than 6 months ago are unacceptable).  
3. Download this helpful document  from the NAR regarding the HVCC and educate yourselves.
   
   

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