November 12, 2015
HUD 4000.1, the new FHA single family home loan rulebook, has specific instructions to participating FHA lenders about the appraisal process. An appraisal is required as we learn from this line in Part II Section A of the rulebook:
“The Mortgagee must order a new appraisal for each Mortgage or refinance case number assignment and may not reuse an appraisal that was performed under another case number, even if the prior appraisal is not yet more than 120 Days old.”
The mortgagee, or participating lender, is required to insure the integrity of the appraisal process as follows:
“Appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), including the Competency Rule, when conducting appraisals of Properties intended as security for FHA-insured financing.”
“In appraising any Property for the purpose of obtaining FHA mortgage insurance, the Appraiser must certify that they are capable of performing the appraisal because they have the necessary qualifications and access to all necessary data. The Mortgagee must ensure that FHA is listed on the appraisal report as an Intended User of the appraisal.”
And to provide added clarity to these rules, the FHA rulebook states, “The Mortgagee is responsible for identifying any problems or potential problems with the integrity, accuracy and thoroughness of an appraisal submitted to FHA for mortgage insurance purposes.”
How is the appraiser selected?
“The Mortgagee must order an appraisal from an Appraiser who is listed on the FHA Appraiser Roster and is qualified and knowledgeable in the specific market area in which the Property is located.”
But the lender can’t take a passive rule here. “The Mortgagee must evaluate the Appraisers education, training and actual field experience to determine whether the Appraiser has sufficient qualifications to perform the appraisal before assignment.”
As you can see, FHA loan rules treat the appraisal process with a great deal of seriousness–it’s not just a formality which must be observed in the course of the home loan application and approval.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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