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Help Please 203k or REO Addendum

Discussion in 'Newbies/Appraiser WannaBe' started by Josh Kenny, Oct 2, 2008.

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  1. Josh Kenny

    Josh Kenny New Member

    0
    Jul 7, 2006
    Professional Status:
    Appraiser Trainee
    State:
    Michigan
    Well one of the appraisers who answered my last question was correct, My mentor would like to see me put together the cost to cure part correctly, on the 1004 but also says their are lots of these type appraisals coming are way in the future but not all will be the standard 1004 with cost to cure.

    Would someone here be willing to send me a 203k report or a report that has REO Addendum added to it so i could use as a sample and do some learning at the same time. It would be so much appreciated even if and when my mentor gives me 1 or 2 I always like to see other ways that appraisers do things. Instead of only knowing his way.

    If you would be nice enough to show me the way you tackel these reports please send it to dreamhomedet@aol.com and as always thanks ahead of time, I always learn so much from the other appraisers here.
     
  2. JENIFFERW

    JENIFFERW Member

    7
    Nov 26, 2007
    Professional Status:
    Licensed Appraiser
    State:
    California
    I got your e-mail and will send you a sample REO.
     
  3. JSmith43

    JSmith43 Elite Member

    19
    May 5, 2003
    Professional Status:
    Certified General Appraiser
    State:
    California
    Josh, Google HUD Mortgagee letters, and read the 203K mortgagee letters.

    Here is the link for a compilation of all the 203K related Mortgagee letters (most recent on the bottom). http://www.hud.gov/offices/hsg/sfh/203k/203kltrs.cfm

    Here is appraisal requirements if you are doing an appraisal for a 203K Streamline, clipped from the 5-50 Mortgagee letter:

    What are the appraisal requirements under the Streamlined (k) program?

    The Streamlined (k) program may be used for discretionary repairs and/or improvements that may not have been identified in the course of a pre-purchase inspection or appraisal. The mortgagee must provide the appraiser with information regarding the proposed rehabilitation or improvements and all cost estimates so that an after-improved value can be estimated. A

    description of the proposed repairs and/or improvement must be included in the appraisal report as well as the contractor’s cost estimate. The appraiser is to indicate in the reconciliation section of the appraisal report an after-improved value subject to completion of the proposed repairs and/or improvements.


    If it is a 203K Streamline, you will get an amateurish work write-up in many cases, because it was probably a collaborative effort from the borrower, the agent and/or the loan officer. Hopefully, they will send you bid copies of proposed work as well.

    If you get a consultant's report along with the bids, more than likely, it is a reasonably coherent write-up. That would indicate a regular 203K renovation loan. You can do two separate appraisal reports (2 different forms), but I think most appraisers would opt for the 2 values reported on the 1004 as described in the part I pasted in above.

    It might sound like you are going overboard, but, if you are going to do more than one 203K appraisal, It might be worth reading through the 203K mortgagee letters to get the hang of the program, paying attention to what is allowed improvements, etc.

    Example: Suspected luxury items need to be described in sufficient detail since they may not be allowed.

    Pay attention to energy efficient improvements and describe them per observation and/or specification. You may not have to do a final inspection on a 203K streamline, if the renovation is under $15,000. It is a lender's call to accept a paid receipt and signed statement of satisfaction with the work, from the owner.
     
  4. Timothy Rock

    Timothy Rock New Member

    0
    Jan 3, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Is there a specific 203k form or cost to cure form that must be included in addition to the typical FHA 1004? Can the cost to cure be provided within the 1004 addendum with descriptive segregated costs? I am also interested in the details of the 203k appraisal. Thank you for the responses.
     
  5. Lobo Fan

    Lobo Fan Elite Member

    0
    Nov 28, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    I would rather have a root canal than do a 203K appraisal. First you are doing two appraisals, as-is and subject-to. Then getting all the estimates and bids together and to add up is rarely possible. If you want to spend 3-4 times the amount of effort and then get stpiied to death, then be my guest. I will run away from every 203K I can avoid.
     
  6. JSmith43

    JSmith43 Elite Member

    19
    May 5, 2003
    Professional Status:
    Certified General Appraiser
    State:
    California
    Lobo: Were you doing a 203K streamline or was there a HUD consultant that
    did the work write-up?

    I think you might have run into a situation where the work write-up was sloppy. If there was a HUD consultant involved, did you try and get clarification? Confidentiality is a PITA when it comes to gaining clarity, so it would help to get email approval to contact the HUD consultant from your client.

    Why is it the appraiser's job to get the bids to add up? Maybe I misunderstand your comment. An appraiser should comment if a bid is way out of line, but if the work to be done is described adequately, that should be enough info to develop an as improved MV opinion.

    Just describe the repair/improvements and the cost per bid.

    Most appraisers have been doing 203K's very infrequently, so this is a great opportunity to share how "peers" handle the situation. It might come in handy at the next board inquiry:)
     
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