New FHA Update 12/19/2008

By
Real Estate Appraiser with Tony's Appraisal Services NY Cert App # 45000044317

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSINGFEDERAL

HOUSING COMMISSIONER

www.hud.gov espanol.hud.gov

December 17, 2008

MORTGAGEE LETTER 2008-39

TO: ALL APPROVED MORTGAGEES

ALL FHA ROSTER APPRAISERS

SUBJECT: Revised Eligibility Requirements for FHA Roster Appraisers

Section 1404 of the Housing and Economic Recovery Act of 2008 (HERA) (Public

Law 110-289, approved July 30, 2008) amended Section 202 of the National Housing Act

to revise qualification standards for Federal Housing Administration (FHA) approved

appraisers. This mortgagee letter sets forth the revised eligibility requirements for

appraisers to qualify for placement and retention on the FHA Appraiser Roster and provides

the timeline for implementation of those requirements.

Section 202(f) of the National Housing Act mandates that all appraisers chosen or

approved to conduct appraisals of properties that will be security for FHA-insured

mortgages must: (1) be "certified" by the State in which the property to be appraised is

located; or by a nationally recognized professional appraisal organization, and (2) have

demonstrated verifiable education in the appraisal requirements established by FHA. (Note

that the term "state" as used throughout this Mortgagee Letter includes U.S. Territories.)

IMPLEMENTATION DATES

Although Section 202(f) of the National Housing Act was made effective upon

enactment, FHA has determined that the loss of available FHA Roster appraisers in certain

locations will impede its ability to support affordable mortgage financing in those areas,

which would contravene the goals of the HOPE for Homeowners Program and hinder use of

other FHA single family programs at a time when use of those programs has increased

significantly. Therefore, in order to implement this change in appraiser eligibility

requirements in a manner that is not disruptive to the FHA mortgage lending process, the

requirement will be phased in as follows:

1. Effective October 1, 2008, FHA stopped accepting applications to the FHA

Appraiser Roster from licensed but uncertified appraisers. All applicants for the

FHA Appraiser Roster must be state certified (certified residential or certified

general) appraisers who meet the minimum certification criteria issued by the

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Appraiser Qualifications Board (AQB) of the Appraisal Foundation. The

requirements that applicants not be listed on the General Service Administration

(GSA) Excluded Parties List System (EPLS), HUD's Limited Denial of

Participation List (LDP), or HUD's Credit Alert Interactive Voice Response System

(CAIVRS) remain unchanged.

2. No Later than October 1, 2009, all FHA Appraiser Roster appraisers in all states

and territories must be state certified in order to be eligible to conduct appraisals for

FHA-insured mortgages and remain on the FHA Appraiser Roster.

FHA MORTGAGEE INSTRUCTIONS:

Commencing October 1, 2009

, all FHA-approved lenders must use state certified

appraisers for FHA-insured mortgages. The appraiser assignment field within the Case

Number Assignment screen in FHA Connection must be input with an appraiser who is

listed as either certified residential or certified general on the FHA Roster for the state in

which the property is located. If, on or after October 1, 2009, an FHA-approved lender

enters an appraisal assignment into FHA Connection for a property from a FHA Roster

Appraiser who is licensed but not certified in accordance with this Mortgagee Letter, the

appraisal will be unacceptable for FHA-insured financing and a second appraisal, performed

by a state certified appraiser, must be completed at the lender's expense.

When appraisal assignments (case # assignments) are given to licensed appraisers

prior to October 1, 2009, but the appraisal is not completed until after that date, the appraisal

will be acceptable. However, the lender must assure that the appraisal assignment date is

entered accurately into FHA Connection which must be a date prior to October 1, 2009. In

these cases, the appraisal assignment must be submitted to the lender no later than October

30, 2009.

Appraisals that were completed by licensed appraisers prior to the deadline, which

are transferred to a new lender, may be used as long as the original assignment date occurred

prior to October 1, 2009.

ADDITIONAL INFORMATION - CERTIFICATION AND EDUCATION OF

APPRAISERS

Currently, FHA allows both licensed and certified appraisers to conduct appraisals

for FHA-insured mortgages as long as they qualify under the minimum criteria issued by the

Appraiser Qualifications Board (AQB) of the Appraisal Foundation as authorized under the

provisions of Title XI of the Financial Institutions, Reform, Recovery and Enforcement Act

of 1989 (FIRREA). (See the FHA Appraiser Roster regulations at 24 CFR 200.202.) Under

FIRREA, the AQB establishes the minimum education, experience and examination

requirements for real property appraisers to obtain a state certification. In addition, the AQB

performs a number of ancillary duties related to real property and personal property

appraiser qualifications.

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To meet the new eligibility requirement, FHA appraisers must be certified by the

state in which the property to be appraised is located, or by a nationally recognized

professional organization. Under new section 202(f) of the National Housing Act, licensed

appraisers would no longer be authorized to conduct appraisals of properties securing an

FHA-insured mortgage.

Through FIRREA, Congress authorized the Appraisal Foundation to establish

minimum qualification requirements for state certification of appraisers as well as promote

minimum uniform appraisal standards. The Appraisal Foundation serves as the parent

organization to AQB and the Appraisal Standards Board (ASB) to accomplish this mission.

The AQB promulgates and maintains appraiser qualification criteria and the ASB

promulgates and maintains the Uniform Standards of Professional Appraisal Practice

(USPAP). The FHA Appraiser Roster regulations acknowledge this national role by

requiring that appraisers applying for placement on the roster meet the minimum AQB

education, examination, and training criteria. Given these unique responsibilities, FHA has

determined that the Appraisal Foundation is a "nationally recognized professional appraisal

organization" within the meaning of new section 202(f) of the National Housing Act.

Moreover, FHA has determined that appraisers meeting the AQB criteria, as required by the

FHA Appraiser Roster regulations, have "demonstrated verifiable education in the appraisal

requirements established by FHA" under the new law.

FHA recognizes that there may be other national professional organizations that

satisfy the requirements of section 202(f), and that there may be additional means of

demonstrating verifiable education in FHA appraisal requirements. HUD will publish a

notice in the Federal Register inviting the public to comment on nationally recognized

professional appraisal organizations that FHA should consider as meeting the new statutory

requirements.

Appraiser Qualification Criteria

Appraisers seeking to become state certified should review the 2008 Real

Property Appraiser Qualification Criteria at:

http://www.appraisalfoundation.org

Procedures to Obtain Placement on the FHA Appraiser Roster

Applicants who meet all eligibility criteria may apply on-line at:

http://www.hud.gov/appraisers

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If you have any questions concerning this Mortgagee Letter, please call 1-800-

CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may access

this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner

Comments (1)

Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Anthony: I think with the new HVCC in place more brokers will start opting to do FHA loans even when they don't need to just to pick their own appraisers!

:)

May 13, 2009 02:24 AM