May 2, 2012
One question about FHA home loans doesn’t usually come up unless someone in the FHA loan process is dissatisfied with the appraisal, but it’s a question asked often enough to be included in the FHA/HUD list of the most frequently asked questions: Who is responsible for the quality of an FHA appraisal?
According to the FHA FAQ, “The lender is held responsible, equally with the appraiser, for the integrity, accuracy and thoroughness of an appraisal submitted to FHA for mortgage insurance purposes. FHA may pursue appropriate enforcement actions against both or either party for violations.”
In Mortgagee Letter 2009-41, The FHA also says, “FHA requires that all appraisers performing appraisals of properties that will be security for FHA-insured financing be knowledgeable of FHA appraisal reporting requirements…” and, “Appraisals performed for purposes of FHA-insured financing are reviewed to ensure credibility, accuracy and compliance with FHA standards and guidelines.”
That basically means the FHA could take action, pending a proper investigation or review, against an individual appraiser, the lender, or both at once where appropriate in cases where the quality of an appraisal is called into question. But what does that mean for the FHA borrower?
FHA appraisals may be appealed under some circumstances. If there is evidence that some existing factors were not included in the original appraisal, a review may be requested. This does not guarantee that those factors will be included in the appraisal, but it does mean that where warranted the appraiser will look over the case once more. This process is called a reconsideration of value.
The FHA official site says,
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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