1004c Conversion To FHA

[JAM]

Hello Appraisers Forum,

I hope you all are enjoying your weekend...I know the answer to this scenario that I have to inspect the subject property again, but I could use a little guidance how to respond back to the lender. This week, I received an assignment originally as a FHA. Then, found out that the water wasn't working and there would be an escrow account for that. So, the assignment got changed to a 1004C (mobile home). I did the job and thought I was done with it. Now, I received a request for $100 (lol, yeah, lose my license over $100) to convert this over to FHA. The power was only on for 48 hours for me to inspect when I did and electricity was working, but still the water wasn't. Now, I am getting pressure from the lender telling me to go ahead and convert it over (which I would never do, treat it as a new assignment) and doesn't want to be inconvenienced with having to turn the power back on (this is a HUD / foreclosure).

So, I am going to reply back saying, sorry, I have to treat as a new assignment and yes, the power needs to be back on and if the water is still not working, I will have to put that in the report as well. Does anyone know the USPAP or FHA handbook well enough to give me any references to show the lender / client that this is totally illegal and it's mandatory for me to go back out to inspect again since the effective date will be different. The lender is insisting that because I inspected it, that date can be used again then dealing with the power.

Plus, I never checked the appliances or other stuff when I went originally went there due to this assignment being changed to a conventional. Now, it appears the lender is trying to get me to just add some FHA language and call it a FHA when I just can't.

Please help me with some references from USPAP / FHA handbook and / or your prior experience how to educate the lender, but be tactful since I do a lot of business with the AMC company who is their client.

Thank you so much!

Cheers,

JAM

 

[glenn walker]

First do you have a FHA case Number ..Why not call your HOC Monday and get some direction on the best way. No matter what it's a new assignment. If the utilities are not turned on you cannot operate the mechanical equipment, electrical., appliances, hot water tank etc. So the report will have to state the Property Currently Does Not Meet ( FHA Minimum Property Requirements ) it cannot be completed "as is" so nothing is closing escrow until the utilities are turned back on unless this is a 203K repair loan and in that case the lender can create an escrow account but if you have never done 203K appraisals don't start now because they are a pain in the *** I won't even do them for double the fee.

 

[RSW]

I agree with Glenn. It will be necessary for you to go back out and do the FHA protocol part of the appraisal observation. You could still use the original effective date as long as the lender agrees to it. Sounds like the appraisal is going to be done subject to a lot of stuff. Stick to your ground. The only reference I can think of would a mortgagee letter 2010-15, page 2, Appraiser/Appraisal Eligibility section:

Appraiser/Appraisal Eligibility
Mortgagees are reminded to ensure that the FHA Roster appraiser selected to
perform an appraisal is listed as being active on the FHA Appraiser Roster at
the time of selection.
FHA Roster appraisers are reminded that appraisals cannot be performed for
purposes of FHA insured financing unless the appraiser is listed as being
active on the FHA Appraiser Roster during the time period in which the
appraisal is performed.
Mortgages predicated upon appraisals that are performed by appraisers who
are not current on the FHA Appraiser Roster at the time of the effective date
of the appraisal will not be insured.
The effective date of the appraisal cannot be before the case number
assignment date unless the lender certifies, via the certification field in the
Appraiser Logging Screen in FHA Connection, the appraisal was ordered for
conventional lending, HUD REO or government guaranteed loan purposes
but was performed by a FHA Roster Appraiser and is being converted to a
FHA-insured mortgage. The mortgagee must retain documentation in the
case binder substantiating conversion of the mortgage to FHA.
If the appraisal was ordered for conventional lending or government
guaranteed loan purposes but was performed by a FHA Roster Appraiser, the
mortgagee must ensure that the appraisal was performed in accordance with
FHA appraisal reporting requirements as detailed in Handbook 4150.2,
CHG-1, Valuation Analysis for Home Mortgage Insurance for Single Family
One – to Four – Unit Dwellings, and subsequent mortgagee letters.
Ensuring compliance with this requirement may entail a re-inspection of the
property by the appraiser.

 

[Meandering]

Sounds like mortgage brokers are the client ordering this appraisal.

 

[JAM]

Thank you Glenn, RSW, and Marion. Yes, this was originally ordered as FHA and I do have the case number. I just verified it's the same one when the new order came in. The problem is that I didn't check everything when I originally went there because it was changed to Conventional. The power was on and I only checked the lights were on since I didn't think this was going to be converted to FHA knowing that there is a problem with the water. The lenders must have realized this as well. I found out that there is some issue with the water, so I presumed that it was not going to be FHA. Marion, it does sound like the lender is ordering it, but they aren't. The AMC related the message to me from them. They are trying to dodge getting the electricity back on and use the original effective date. The issue I am having with this is that I did not check all of the appliances when I was there. I just did it as a conventional. I know I have to go back out there and I know I have to have them turn the electric back on so I can be more thorough with my inspection since it wasn't done as FHA. Good to know about the effective date. However, I think from this information (thank you appraisers forum) I know now I have to communicate that the electric needs to be back on. That lender either wants me to do something illegal by ignoring the fact that the electric needs to be turned back on for me to do a full FHA inspection OR the lender is new and doesn't know the difference between an appraisal inspection for a conventional loan versus FHA...Oy Veh.

 

[Meandering]

They started with a scope of work that called for FHA,
then changed that scope before you inspected, to conventional lending.
You submitted your report. Your assignment is complete.
Now they want a new report with FHA scope of work.
I would treat this whole thing as a new assignment and disclose the previous appraisal done, as ordered, for conventional lending.

Let's face it,
The lender is trying to play any game to get the deal to close.
The AMC is acting as a typical burger flipper, not recognizing any consequence to these scope of work changes, with the exception of sticking their hand out for a portion of the fees.
New scope of work, new assignment, new full fee.

Oh and it's not your problem they can only charge the borrower for one appraisal.
They should have did THEIR paperwork correctly and followed through with their first order.
The AMC, who is providing the "quality" in your report, should have billed them for a second new appraisal anyway.
It's not your fault, nor your problem.
This one will just cost the lender a few extra dollars.

That's how I would handle it.

.

 

[JAM]

They started with a scope of work that called for FHA,
then changed that scope before you inspected, to conventional lending.
You submitted your report. Your assignment is complete.
Now they want a new report with FHA scope of work.
I would treat this whole thing as a new assignment and disclose the previous appraisal done, as ordered, for conventional lending.

Let's face it,
The lender is trying to play any game to get the deal to close.
The AMC is acting as a typical burger flipper, not recognizing any consequence to these scope of work changes, with the exception of sticking their hand out for a portion of the fees.
New scope of work, new assignment, new full fee.

Oh and it's not your problem they can only charge the borrower for one appraisal.
They should have did THEIR paperwork correctly and followed through with their first order.
The AMC, who is providing the "quality" in your report, should have billed them for a second new appraisal anyway.
It's not your fault, nor your problem.
This one will just cost the lender a few extra dollars.

That's how I would handle it.

.

So True Marion, thank you! I appreciate you validating the truth of it all. I do get a lot of work from them and they pay decent. I might do it for a little less, but definitely hold my ground about turning the electric back on. I guess they are going to get the water going eventually, but I am still having a hard time understanding how this is FHA with that issue at hand. Oh well. You are correct. It's really not my problem. Sometimes, I feel bad especially since it's the purchase price is a double thousand digit number (under $75,000) and wonder if they are going to make the buyer pay for it due to them not doing the paperwork correctly...and then try to blame me for not inspecting it like a FHA in the first place. Thank you for your perspective on it. Good night everyone!

 

[glenn walker]

Call your HOC tomorrow : ) LOL