Articles Tagged With: Second Mortgage

June 29, 2023

FHA Mortgage Loans: Second Appraisals

If you or the seller don’t agree with the results of the appraisal, is it possible to get a second appraisal and a reconsideration of value of the home? FHA loan rules specifically prohibit ordering a second appraisal just because one party or the other is hoping for a different result. HUD 4000.1, the FHA Single-Family Lender’s Handbook, states the lender is prohibited from “ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required.” FHA loan rules note the lender is permitted to order a second appraisal “for Mortgages that are in accordance with requirements on Property Flipping”. But what circumstances permit a second appraisal? HUD 4000.1 says that the original mortgagee or lender is allowed to | more...

February 8, 2017

Second Appraisal For An FHA Loan? The Rules You Should Know

By Joe Wallace

There are times when a borrower or even the seller may not agree with the results of an FHA appraisal. Does the FHA loan rule book, HUD 4000.1, permit the request of a second one? Under what circumstances might another one be allowed? According to page 123 of HUD 4000.1, simply disagreeing with the fair market value determination of the original-likely one of the most common reasons to look into a second attempt-isn’t enough to justify such a request. “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required.” Second appraisals “may only be ordered if the Direct Endorsement (DE) underwriter (underwriter) determines the first appraisal is materially deficient and the Appraiser | more...

January 10, 2017

FHA Appraisal Update: A Reader Question

By Joe Wallace

What’s the difference between an FHA appraisal update and ordering a second appraisal? That’s an important point when it comes to answering the reader question that came in via our comments section this week: “My question is this: Can a lender order a new appraisal on a property that has already been assigned an FHA case number (previous buyer offer fell thru)? Appraisal is less than 120 days old. Since the initial appraisal the seller has installed a new roof, WDO repairs and other minor repairs. Would this give the new lender a reason to order a new appraisal?” FHA loan rules in HUD 4000.1 make a distinction between an FHA appraisal update and a “second appraisal”. HUD 4000.1 says the following about a second lender ordering a new appraisal | more...

FHA One-Time Close Construction Loans In 2019

October 13, 2016

Second Appraisal Rules For FHA Mortgages

By Joe Wallace

There are some circumstances where a borrower may wonder about requesting a second appraisal on a property to be purchased with an FHA mortgage. For example, if the loan applicant decides to switch lenders, is a new appraisal required? What about cases where there’s a disagreement over the results of the appraisal? Many of the answers to these questions are circumstantial-it all depends on the nature of the request. Sometimes a second appraisal may be permitted IF conditions described in HUD 4000.1 exist. But in other cases a second appraisal is simply not permitted. One good example of that-a borrower or seller cannot request a second appraisal to increase the fair market value of the property. However, if “material deficiencies” are suspected in the original appraisal, the market value of | more...

July 19, 2016

FHA Loan Appraisal Rule Questions: A New Appraisal For A New Lender?

By Joe Wallace

A reader asks, “I am selling a home that has a septic system that does not meet local requirements but has been grandfathered. The septic system has been inspected and is in good working condition. The appraiser said that because the age of the septic (greater than 30 years) that it would need to be replaced.” “We bit the bullet and decided to replace the septic but under new requirements we are going to also have to replace our water well to fit the new septic on our property. The combined cost of replacing both system will approximately $15k. Should I ask the buyers to try a different lender or is this going to be an issue with all lenders/appraisers?” FHA loan rules governing this issue can be found on | more...

May 31, 2016

FHA Loan Questions: The Good Neighbor Next Door Program

By Joe Wallace

A reader asked us a question recently in the comments section about the HUD Good Neighbor Next Door program. “I am a 13 year veteran Corrections Officer of the Maryland’s DCSCS and I wanted to inquire as to whether or not I qualified for the Good Neighbor Next Door Program.” The HUD Good Neighbor Next Door program is mentioned on the FHA/HUD official site, which states, “Law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your | more...

Can I buy a manufactured home with an FHA loan?

May 25, 2016

FHA Loan Appraisal Expiration Dates, Update Requirements

By Joe Wallace

One common question about FHA home loan rules involves how long an appraisal is considered valid before it can no longer be used. FHA loan rules for this topic are found in HUD 4000.1 and address both the age of the appraisal as well as the age of other documentation not considered “evergreen” or without an expiration date (such as divorce decrees, military discharge paperwork, etc). According to HUD 4000.1, in general terms the documents to be used for “…the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, may be more than 120 Days old at the Disbursement Date.” | more...

May 19, 2016

What is an FHA Reverse Mortgage?

By Joe Wallace

In a recent blog post we wrote about the steps the FHA and HUD are taking to further improve the FHA Home Equity Conversion Mortgage (HECM) loan program. The FHA HECM, also known as a reverse mortgage or FHA reverse mortgage, is a different type of home loan than a typical “forward mortgage” for a new purchase or refinance on a previous mortgage. The FHA reverse mortgage or HECM is for qualified borrowers age 62 or older who either own their property outright (with the mortgage paid off in full and documentation of that paid-in-full status) or are very close to paying off the current loan. According to the FHA official site, HECM loans are a “…special type of home loan that lets you convert a portion of the equity | more...

January 21, 2016

Qualifying For An FHA Reverse Mortgage

By Joe Wallace

One commonly asked question about the FHA home loan program is whether or not FHA insures or guarantees reverse mortgages. The FHA does have a reverse mortgage loan program, called the Home Equity Conversion Mortgage or HECM for short. Who qualifies for an FHA HECM loan and what are the basic ground rules? To start, it’s very important to understand the difference between an FHA HECM loan and traditional refinancing. According to the FHA official site, “A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.” FHA HECM loans are not like standard home equity loan or second mortgage | more...

December 14, 2015

HUD 4000.1 On Appraisal Expiration Dates

By Joe Wallace

Ever since the FHA and HUD published the new FHA single-family mortgage loan rule book, HUD 4000.1, we’ve been examining important sections of the rules to see what current FHA mortgage loan policy is; FHA and HUD announced there would be no comparison document outlining the myriad of changes from the old guidelines to new and that it was the reader’s responsibility to learn what current policy might be for any given FHA loan topic. With that in mind we started reviewing HUD 4000.1 and discussing important issues. One such issue is the FHA’s rules on appraisal expiration dates. FHA appraisals are generally valid for 120 days, but the rules in HUD 4000.1 add: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 | more...