Articles Tagged With: FHA Appraisal Rules

April 30, 2015

“Second” FHA Appraisals: A Reader Question

A reader asks, “I am in the process of selling my home. There was an appraisal done and it came in low. We negotiated with the buyers on that appraisal. Now I am learning they got another appraisal that was higher so they could get a higher loan amount for closing costs but will not provide the appraisal to us.” “By the way, this is FHA and apparently the lender never filed the first appraisal with the FHA. Additionally, the lender has now changed their story stating they paid for the first appraisal and that the buyer paid for the 2nd appraisal and therefore they dont have to give it to us for re-negotiations. This cant be legal? And surely I have recourse? We are set to close tomorrow, and | more...

April 27, 2015

FHA Loan Appraisals and Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “I have a client that is FHA approved, and has had their appraisal done but can not locate the well. Well and septic have been tested and municipality has signed off on both stating they were ok with the way they are.” “My clients lender says no way, must meet the 50′ set back, other lenders say we can do it as long as you have the letter from the township My buyers dont want to start over as they are set to close on the house they are selling in 2 weeks. How can one bank say something different from another while following FHA guidelines?” There are several unanswered questions to go along with this reader question–are the lenders interpreting local or state building code or | more...

April 11, 2015

FHA Appraisals Versus Home Inspections: Part Two

By Joe Wallace

A reader asks, “My follow up question is that I believed that there would be an FHA inspection done and if serious problems or defects are found then the seller would be required to fix the issues. I realize FHA does not “check” for everything so a home inspection is still in order, but has this rule changed?” This is a follow-up to our answer to this reader’s question in our April 3, 2015 post, “Is A Home Ever ‘FHA Approved'” where we answered the original question as follows: “…there is one serious issue raised here that we MUST address–the prevailing misconception some borrowers have that the FHA or HUD would ever ‘approve’ a home. Some borrowers mistakenly assume that because a home passes the appraisal process that it is free | more...

March 10, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “FHA mortgages, at one time,required the properties to meet stringent guidelines for habitability; (ie)roof, heating and other standards were the seller’s responsibilities, before escrow closed…. Are these parameters no longer an issue? Can a government secured loan be approved without these conditions being met?” FHA loan rules still require an appraisal of any home to be purchased with a new purchase single family FHA mortgage and certain types of FHA refinancing. The FHA appraisal is required to establish the fair market value of the property and to make sure the home meets basic FHA minimum property requirements. FHA appraisals should not, however, be misconstrued as a seal of approval from the FHA. Just because a home passes the FHA appraisal process with few or no required corrections | more...

January 31, 2015

FHA Loan Rules On Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks, “Is the seller responsible to pay for all repairs before closing?” Assuming that this reader question is in reference to required corrections or alterations to a home listed by the FHA appraiser, much depends on the type of repairs or corrections required. If repairs or corrections are required to fix hazardous conditions, those fixes must happen and a compliance inspection (where required) must occur before the loan can be approved. Let’s see what HUD 4155.1 Chapter Four says about the appraisal process and required corrections: “In the performance of an FHA appraisal, the appraiser must • denote any deficiency in the appropriate section(s) of the appraisal report (site issues in the site section, improvement issues in the improvements section, and so on), and • note those repairs | more...

December 12, 2014

FHA Appraisal Appeals: A Reader Question

By Joe Wallace

A reader asks, “A buyer for my property secured an FHA approval and had a FHA appraisal performed. The appraisal was well below the contract price, so much so that it was below the County’s tax assessed value. Better comps and explanations were provided for the market area, but the appraiser would not amend the appraisal.” “The buyer went to another lender to but was told the previous FHA appraisal was valid for 6 months and a new appraisal could not be requested. Is this true, even if the circumstances were clearly presented?” In some limited cases an FHA appraisal may be appealed, but this would be handled on a case-by-case basis and would be at the FHA’s discretion. FHA loan rules do not permit borrowers to appeal an appraisal | more...

September 24, 2014

FHA Appraisals and Loan Approval: A Reader Question

By Joe Wallace

A reader asks, “In our contract, we agree and stated the sale was as is. The price had been adjusted for this. We listed that the a/c needed repair on the disclosure. I did not want to spend the money to repair it because I live alone and put in window units, plus my buyer said she planned on replacing it anyway.” “This was noted on our contract. 3 months later the lender says the a/c has to be in working order, even though the window units work fine and the central heat did work. I had it fixed, $825.00 for a circuit board! What a waste of money. I would rather have given it to my buyer to replace the whole thing! Since they knew about this upfront, should | more...

April 25, 2014

FHA Loan Rules For Adding Repairs To The Sales Price Of The Home

By Joe Wallace

When it comes to FHA appraisals, some borrowers and sellers have a common question. Can the cost of a repair or improvement be added to the sales price of the home? If an FHA appraiser requires the upgrade, repair or improvement, does this expense have to be negotiated separately instead? FHA loan rules covering this question are found in HUD 4155.1 Chapter Two Section A, which explains: “Repairs and improvements may be added to the sales price before calculating the mortgage amount when the repairs and improvements are required by the appraiser as essential for property eligibility, and paid by the borrower”. But there’s more. These repairs must be included in the sales contract or an addition to the contract stating that the borrower is responsible for the payment of | more...

April 22, 2014

FHA Loan Appraisals–When Do They Expire?

By Joe Wallace

One common question about FHA loans involves the length of time an appraisal is valid. How much time before a current appraisal expires on the property you want to purchase with an FHA mortgage loan? According to FHA loan rules, “The validity period for all appraisals on existing, proposed and under construction properties is 120 days.” That is found in HUD 4155.2 Chapter Four, which also adds some instructions to the lender about when the appraisal is considered valid–the actual starting date for the validity period: “The term of the appraisal begins on the day the home is inspected by the FHA-approved appraiser and this date appears on the URAR.” The existence of these rules begs an important question. Can an FHA borrower refinance with an “appraisal required” FHA refinancing | more...

April 7, 2014

FHA Loan Reader Questions: Building Code and FHA Minimum Property Requirements

By Joe Wallace

A reader asks, “I have a front porch that is 40 feet long and 12 feet wide and is about 3 1/2 to 4 feet high, would FHA require banisters around this porch? It has steps with railings on each side to come onto the porch…” The main problem with addressing specific appraisal questions like this is that FHA loan rules do have some general guidelines (as well as more specific ones in some cases) but the FHA minimum property requirements are not the only rules that must be complied with in order for a home to pass the FHA appraisal. Federal, state, and local building code requirements may also apply, and the property that is not in compliance with these requirements may need corrections or repairs before the FHA | more...