Under recently clarified rules, only a lender’s underwriter may request a reconsideration of value from a Federal Housing Administration roster appraiser. Furthermore, the information only needs to be considered; not necessarily resulting in an amended report. Regardless, the appraiser cannot charge for reconsideration, according to the FHA.
The clarifications are among the FHA’s updated list of frequently asked questions on valuation protocol. Other new topics addressed include appraisal portability, manufactured housing, inspections and certifications, FHA appraisals and title concerns.
“A reconsideration of value,” the FHA wrote, “is the process of analyzing data not utilized in an appraisal report … (such as) information regarding comparable sales, listings or under contract of sale properties that the FHA roster appraiser did not cite in the appraisal report but was available to the appraiser in the normal course of business as of the effective date of the appraisal.”
Since such information was available, the appraiser should already have it in their workfile – but perhaps decided not to include it in the report – the FHA said. They are therefore not allowed to charge for providing it under a reconsideration of value request, the FHA said.
The FHA further asserted that if an amended report does not occur, ordering another consideration or appraisal is not allowed; and clarified that it does not accept retrospective appraisal reports for FHA-insured loans. “Comparable sales and other market activity that occurred after the effective date of the appraisal cannot be used by the underwriter when requesting a reconsideration of value,” they wrote.
Regarding appraisal portability, the FHA recognized the need for appraisers to comply with the confidentiality section of the Uniform Standards of Professional Appraisal Practice. As such, in cases where an appraisal is transferred from one lender to another, the second lender may be required to obtain a release of liability from the first lender and provide it to the appraiser before the appraiser can cooperate with the second lender. The second lender must obtain the actual appraisal report from the original lender itself; the appraiser cannot provide the second lender with a copy.
The FHA also clarified its manufactured housing guidelines by adding that “light-weight non-load bearing skirting may be attached over [a] perimeter enclosure [of concrete, masonry or treated wood] but is not an acceptable substitute” for the enclosure. Furthermore, the FHA said that Form 10004D cannot be used in lieu of the HUD-92501 form for manufactured housing. The 1004D Part B can be used only for existing site built construction (stick built or modular).
Under “lender concerns,” the FHA clarified that a new conditional commitment only needs to be completed when a completely new second appraisal is performed, not in instances where an appraisal is updated.
The FHA also clarified its lead-based paint rules, which changed April 22. The FHA said that homeowners of houses built prior to 1978 are exempt from the rule, but are “encouraged to learn to perform lead-safe work practices.” Landlords and contractors are not exempt and are required to follow specific work practices to avoid lead contamination. The FHA said that Roster appraisers and inspectors may inspect to verify that painting repairs have been performed as required, but that they are to determine completion of the repairs, not compliance with the rules.
Other topics covered in the 26-page FAQs include: cost approach new construction, manufactured housing, home equity conversion mortgages, accessory dwelling units, two-unit properties, lender concerns and title concerns.
To view the complete FAQs, visit www.hud.gov/offices/hsg/sfh/appr/aprval.pdf.