Effective January 1, 2010 FHA is changing the requirements for ordering appraisals. It is some what similar to the Fannie HVCC but not quite. Here are the highlights:
- Cannot accept appraisals prepared by an appraiser who is selected, retained or compensated in any manner by a mortgage broker or any member of lender’s staff who is compensated on a commission basis tied to the successful completion of the loan
- Lenders must ensure that if an Appraisal Management Company (AMC) is used, the AMC fees must comply with the following:
- FHA appraisers are not prohibited from recording the fee the appraiser was paid on the report
- FHA appraisers are compensated at a rate that is customary and reasonable for the area
- The fee for the completion of the appraisal may not include a management fee or any other activity other than the performance of the appraisal.
- Any management fee charged must be for actual services rendered to ordering, processing or reviewing appraisals
- AMC fees must not exceed what is customary and reasonable for the market area
- There are also new rules with assigning appraisals when the borrower switches lenders
- When there is a new lender, the first lender must at the borrower’s request transfer the case number to the new lender
- FHA does not require that the lender name be changed on the appraisal when it is transferred
- The lender is not permitted to request that the appraiser change the name of the lender on the appraisal unless it is a new assignment
- It is specifically not permitted for a lender to order a new appraisal just to get a higher value or get around repairs. (Do not be fooled by a new loan officer who claims that a new appraisal can be done).
The new rules are not quite as bad as HVCC. There are limitations put on AMC that might discourage them from getting into the FHA appraisal business. These rules seek to make it easier to transfer appraisals.