FHA realized that they dropped the ball back on February 7, 2008, when they lowered the requirements to become an FHA approved appraiser. Basically if you were an appraiser and you had a pulse you could join the FHA roster.
FHA has been like a knight in shining armor to the lending world as it slays the ARM dragon and helps the homeowner damsels in distress. This fairy tale world was created in part by the serious lack of lending standards in place during the refinance boom. Basically if you were a homeowner and were breathing you could qualify for some type of loan.
There were many unscrupulous and/or inexperienced appraisers a.k.a. "Skippy" who helped to hyper inflate the market and cause the turmoil we all have come to know and love today. The market is currently in a re-adjustment stage and many of the Skippies are without work. FHA volume is up and they opened their arms wide to embrace Skippy and keep food on his table when they dropped the test requirement. Now Skippy was enabled to do to FHA what they did in the conventional market.
Thankfully, the light has come on for FHA and they realized that maybe letting anyone and everyone appraise for FHA was not the best of ideas. A bill recently passed by the House (H.R. 3221) under Section 1404 "Revised Standards for FHA Appraisers" requires that appraisers (A) "be certified" and (B) "have demonstrated verifiable education in the appraisal requirements established by the Federal Housing Administration under this subsection.''
This bill eliminates the open invitation from FHA and now sets standards to those applying. It requires a higher license level in which will help to eliminate many of the inexperienced appraisers who have less education and appraisal experience than required for the higher certified levels. I am not saying that all licensed level appraisers are in this boat. I know and respect many appraisers who are licensed instead of being certified. Many of them made this choice because back in the day it made the most sense based on the home values in the areas they appraised. I also know some certified appraisers who aren't worth a darn and I wouldn't trust them to appraise my dog's house let alone a real house.
The second thing this bill does is require appraisers to take some kind of course on FHA in order to be approved for their roster. FHA appraisals are not difficult if you know what you are doing. FHA requires additional things than a conventional appraisal does not. It makes sense that in order to be approved for FHA you have the proper training and knowledge of FHA's requirements.
It is my hope that the floodgates did not let in too many Skippies. It appears as if anyone who became approved after 2/7/08 up until this bill goes into effect will remain on the roster regardless of their license level or FHA educational background. FHA can help to save the day if they can keep greedy and unethical people from poisoning the water.
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