FHA 'inspection Requirements' Vs State Law

[Fargo1]

I thought you have to be minimum Cert Res to do FHA now. Am I wrong?

No you are correct. I never remember to update my profile.

 

[SteveSpy]

Illinois already has a statement that must and should be inserted into every appraisal. ICAP disseminated this info a few weeks ago.
Per Brian Weaver

The comments by the licensed real estate appraiser contained within this appraisal report on the condition of the property does not address standards of practice as de-fined in the Home Inspector License Act [225 ILCS 441] and 68 Ill. Adm. Code 1410 and are not to be considered a home Inspection or home inspection report.

Thx Form! I missed Brian's communication on this. I think he addressed it in his news letter a while back.

 

[The Warrior Monk]

I went out and did some research. Per Florida state law, if my wife does this, she has to be a licensed inspector. These items are now specifically covered under the licensing act for home inspectors. If she does these inspections and sets forth her findings in the appraisal report, she is conducting an unlicensed inspection and is subject to state fines, etc.

I post this to warn other appraisers to check their state inspection licensing regulations so they do not get afoul of these conflicting laws and regulations.

I would double check that licensing law. States often have specific exemptions regarding this matter. As an example, here is the specific citation from from the Home Inspector Licensing Law in NY.


§ 444-m. Construction with other laws.

Nothing in this article shall prevent any licensed
engineer, registered architect or any other licensed or
regulated profession or governmental employee from
acting within the scope of his or her profession or
employment.

 

[reelrebel]

All interesting comments. Well, here is my game plan, pretty much the same for manufactured homes; I do not do them. Why, no one likes them, the appraisal always sucks, the Fed and State buzzards are circling and ready to throw you in jail, and the big one....too much liability. However, if I were to do one, this would be my game plan (feel free to use): Never do anything over 20 years old and charge a whole lot more. I said it before, but its worth repeating in this example. Charge by the hour not a standard fee that they say you will get. Drive time to/from 2hr+on-site field work 2hr+report writing and CYA review so you don't jail 3hrs= (7hr x conv $100 or FHA $150 = $700/$1,050). Assuming this is a basic 1500sf 3/2/2 of course.

Food for thought for every, as we all know the average age of an is 55 years old we know and they know. No one is getting in the business because their no money to made as an appraiser with all the oversight we know it, they know it, and the "M's" behind us know. So why not cash in on supply and demand, just saying.

One more food for thought which I have said before, $100,000 sale price/loan amount: Real Estate Agent 6%=6,000; Loan Officer 1%=1,000; Appraiser $400. Who has the most liability ?????....Good Luck

 

[The Warrior Monk]

One more food for thought which I have said before, $100,000 sale price/loan amount: Real Estate Agent 6%=6,000; Loan Officer 1%=1,000; Appraiser $400. Who has the most liability ?????

In NY, the Licensed Real Estate Agent/Broker has the most liability. The Real Estate License fines are the income generator for the DOS Division of Licensing Services. And keep in mind that almost everyone in NY uses an attorney for real estate transactions. In other states, so I'm told by agents that have gone to conventions in other states, that the use of attorneys is less common elsewhere. In those states, agents will draw up contracts, leases, etc. and tend to be fined/sued more often as a result. Also keep in mind that the average salary for an agent is notably less than an appraiser. When you've got sales skills and ambition, it's a great career. It's not so good when you don't.

 

[CindyR]

In NY, the Licensed Real Estate Agent/Broker has the most liability. The Real Estate License fines are the income generator for the DOS Division of Licensing Services. And keep in mind that almost everyone in NY uses an attorney for real estate transactions. In other states, so I'm told by agents that have gone to conventions in other states, that the use of attorneys is less common elsewhere. In those states, agents will draw up contracts, leases, etc. and tend to be fined/sued more often as a result..

I love it when people point out the very significant differences between the many states. Here in AZ no one ever involves an attorney in any real estate sale. Sure there must be the occasional exception but every sale I have ever seen or heard of uses the standard realtor contract with standard checkboxes and standard addendums and nothing else. But I doubt the agents get sued any more than usual since everything is so consistent there is less room for misinterpretation or misinformation.

 

[The Warrior Monk]

I love it when people point out the very significant differences between the many states. Here in AZ no one ever involves an attorney in any real estate sale. Sure there must be the occasional exception but every sale I have ever seen or heard of uses the standard realtor contract with standard checkboxes and standard addendums and nothing else. But I doubt the agents get sued any more than usual since everything is so consistent there is less room for misinterpretation or misinformation.

I'm just relaying information that other agents have relayed to me. There will always be liability when an agent, or other non-lawyer professional, fills out a legal document (lease, contract, etc.), since it can be construed as practicing law.

 

[Peter LeQuire]

I've been hammered more about HUD's requirement that an appraiser is to call for a HVAC inspection if ambient temps won't allow safe operation of either side of the H&A than (almost) any other issue. Perhaps calling for an electrician to inspect/cure defects in wiring ("By gum, them wars been goodenuff for the past 60 years, they otterbe goodenuff for the next 30, at least.")

 

[Restrain]

David pointed out that you could do certain things "withn the scope of your profession". The real estate appraiser is, first, foremost, and ONLY acting as a real estate appraiser. An appraisal is a supportable and defensible estimate of value. Appraisers operate under USPAP, which specifically does not set forth the inspection process, including how to inspect mechanicals, electrical systems, appliances, structural components, or other items FHA is requiring that the appraiser certify operate correctly. For that matter, under USPAP, an inspection is not specifically required.

Further, at no time does the specific training of the appraiser address the specific operations of AC system, electrical systems, etc. Nor does USPAP require the appraiser to train in these areas. Rather, the appraiser is trained in the valuation of property, specifically real estate.

Finally, USPAP requires the appraiser to specifically tell the client if the appraiser does not have the knowledge to complete the assignment and if the knowledge is lacking, how the appraiser solves the issue.

An example of this is the appraisal of a manufacturing facility where the M&E is included. The appraiser would have to disclose if the appraiser lacked the knowledge and experience to do a manufacturing facility and equipment and how the issue is solved (bringing in an experienced appraiser as an associate, bringing in a M&E appraiser).

Under this, I submit that the appraiser, unless having specific backgrounds in AC, electrical, plumbing, or has gone through the training to become a certified inspection, is not qualified to perform anything other than a simple visual inspection of the structural and mechanical elements, i.e. it turns on, has no obvious failure points, etc. As such, if he or she appraiser completes the required certifications stating that the home fully complies with 4001.1, the appraiser is in violation of USPAP. Further the appraiser must notify the client if the appraiser does not have the knowledge to complete the assignment, in this case being the ability to inspect the mechanicals to the extent requested by FHA. Failure to do so constitutes a violation of USPAP.

So if the appraiser lacks the licensing base (inspector) and the appraiser lacks the knowledge base (training in specific inspection techniques and specific tools), the appraiser would have to engage a licensed inspector to complete the inspection process required by FHA, refuse to certify that portion of 4001.1, or decline the assignment.

Lets take an appraisal where the appraiser certifies the HVAC system as performing correctly, borrower moves in, AC is found to not be cooling or hearing properly. Appraiser is hauled before either a court or a licensing board.

Lawyer: Mr Appraiser, is this your signature on the certification stating that you inspected the home and all equipment per HUD 4001.1?

Appraiser: yes it is.

Lawyer: so you certified that the HVAC system was working correctly.

Appraiser: yes, that is what the certification says, but then the certification states that the appraiser is not an inspector

Lawyer: So you are not an inspector and this is not an inspection. Yet you have certified that the HVAC system worked correctly. How did you determine this?

Appraiser: I turned it on and off.

Lawyer: So you did not open the system to examine the heat exchanger, did not open and examine the internal condition of the compressor, did not measure the air flow through the system, did not measure the temperature differentials between the ducts and return to determine the system efficiency?

Appraiser: No sir.

Lawyer: Now, what specific HVAC or inspection training do you have that would certify you to perform such inspections? And are you certified under the laws of your state as a home inspector or a licensed HVAC technician?

Appraiser: I have no specialized training and am not a licensed inspector.

Lawyer: and can you point out in this report where you excepted the mechanical inspection, set forth that you were not qualified to perform these inspection, and where you notified the client that you were not qualified to perform this inspection?

Appraiser: it is not in the report and no communication was sent to the client to that effect. I submit that this is no different inspection than is required under HUD 4150.2.

Lawyer: did you read the HUD 4001.1 and where it states that the appraiser certifies that the equipment, including appliances and mechanicals are working correctly? Mr. Appraiser, we are not discussing what was required under HUD 4150.2 but what you certified to. And you have admitted that you certified that the HVAC was working properly, that you certified to this, and yet you did not do an inspection sufficient to determine whether that the system worked properly, did not fully inspect the equipment, and do not have the licensing and training to make such a certification. In fact, you made a certification to something that you did not know, and have made a fraudulent statement and certification in a federally related transaction. In addition, based on your own testimony, you may have violated state licensing laws both as an appraiser through your certification, and as an inspector, by inspecting structural and mechanical equipment and preparing a report to that effect.

Do you want to be in this position?

 

[Gregory Beck]

Please provide documentation about this. I want to see something in writing.

I would consider a reasonable period of time 30 days And I will make extraordinary assumptions regarding any mechanical systems.