FHA Appraisal and Lender Eligibility Update
Explained by Jeff Mifsud, this update contains the pertinent changes to Appraiser and Lender Eligibility guides as outlined in Mortgage Letters 2009-28, 29, 30 and 31.
Here are the 8 things you need to know about these changes:
- Changes are effective as of January 1st, 2010.
- Mortgage brokers and commission based lender staff are now PROHIBITED from selecting the FHA appraiser.
- Lenders are not required to use Appraisal Management Companies, but may do so.
- When a borrower switches to another lender, FHA prohibits the 2nd lender from ordering additional appraisals to obtain a higher value, unless: a. The DE Underwriter determines the 1st appraisal is deficient, b. The Appraiser of 1st appraisal is on 2nd lender's exclusionary list, or c. First lender delayed the appraisal transfer to the 2nd lender so as to cause a harm to the borrower, e.g. missing a closing date, or expiration of a rate lock.
- Appraisals are now valid for only 120 days for all existing and proposed or under construction properties.
- Changes are effective as May 20th, 2009 in accordance with the Helping Families Save Their Homes Act of 2009.
- A Lender or Mortgagee applying for FHA approval may not currently employ anyone who is currently suspended, debarred, under indictment, under investigation by HUD, or was convicted or pled guilty to a felony related to the real estate or mortgage industries during the 7 year period prior to the date of the application or any time if felony involved fraud, dishonesty, breach of trust, or money laundering.
- FHA lenders must use their HUD registered name in all advertisements and promotional materials and keep copies of all materials for 2 years from date of use.