1004D and an Engineer's Certification of compliance with PFGMH

[outatime]

I hope this isn't a repeat question... I did a search but didn't find a specific answer to this:

I often get requests to complete an certification of completion for FHA manufactured home appraisals. Most often they request a 1004D. My concern is two fold: 1)the 1004D form is not appropriate as this should be done on a HUD-92051 form, and 2)I am simply restating what the real professional is stating in their certification report and then I am simply charging someone for this service, but I feel like I am taking on this liability should anything arise from this factor. It seems to me that this is not a situation that an appraiser should be filing this out... I feel like the engineer/architect should fill out the HUD-92051.

Thoughts? Also, please consider the following:

1)FHA requires all appraisals of manufactured homes to be conditioned upon the certification of an engineer or architect that the foundation is in compliance with the PFGMH (pg 510ish). I am neither of these and it seems an unnecessary step to add the appraiser in the mix...
2)FHA requires form HUD-92051 for compliance or final inspection of all manufactured housing (pg 488ish)... So a 1004D is never appropriate correct?
3)HUD-92051 states "I certify that I have carefully inspected this property on this date..." - I did not and I would disclose this on the form
4)1004D states "I certify that I have performed a visual inspecton of the subject property to determine if the conditions or requirements stated in the original appraisal have been satisfied" - again I would disclose that I did not in fact inspect.
5)Overall I feel like an appraiser should not do this, however we get incredible pressure from lenders to do this... Please comment

 

[alebrewer]

(1) FHA allows the use of either the 1004D or the 92051 form for final inspections. (2) if the appraisal is made 'subject to' some repair that the appraiser is qualified to opine on - the appraiser should do the final (e.g. removal of a manufactured home, installation of permanent heat source, etc). If the appraisal is made 'subject to' something only a 'qualified' professional is 'qualified' to perform (e.g. foundation in compliance, roof inspection, plumbing inspection, termite inspection, etc.), the client should not be engaging the appraiser to perform the final. The appraiser is not (in most cases) qualified to opine, and doing so could potentially expose the appraiser to undue liability. For those types of 'subject to' inspections, the DE underwriter is to sign off on the loan with documentation in file that the 'subject to' condition was remedied, with no other action required by the appraiser.

 

[glenn walker]

(1) FHA allows the use of either the 1004D or the 92051 form for final inspections. (2) if the appraisal is made 'subject to' some repair that the appraiser is qualified to opine on - the appraiser should do the final (e.g. removal of a manufactured home, installation of permanent heat source, etc). If the appraisal is made 'subject to' something only a 'qualified' professional is 'qualified' to perform (e.g. foundation in compliance, roof inspection, plumbing inspection, termite inspection, etc.), the client should not be engaging the appraiser to perform the final. The appraiser is not (in most cases) qualified to opine, and doing so could potentially expose the appraiser to undue liability. For those types of 'subject to' inspections, the DE underwriter is to sign off on the loan with documentation in file that the 'subject to' condition was remedied, with no other action required by the appraiser.

 

[glenn walker]

The engineers certification is sent to the FHA-DE-Underwriter-As appraisers we do not reinspect or even comment on his findings- It an-inspection by another professional and He/She is responsible- PERIOD Then upon receipt the DE Underwriter includes the Engineers -Certification in her/his work file and its signed off on. The appraiser has nothing to do with it.

 

[outatime]

(1) FHA allows the use of either the 1004D or the 92051 form for final inspections. (2) if the appraisal is made 'subject to' some repair that the appraiser is qualified to opine on - the appraiser should do the final (e.g. removal of a manufactured home, installation of permanent heat source, etc). If the appraisal is made 'subject to' something only a 'qualified' professional is 'qualified' to perform (e.g. foundation in compliance, roof inspection, plumbing inspection, termite inspection, etc.), the client should not be engaging the appraiser to perform the final. The appraiser is not (in most cases) qualified to opine, and doing so could potentially expose the appraiser to undue liability. For those types of 'subject to' inspections, the DE underwriter is to sign off on the loan with documentation in file that the 'subject to' condition was remedied, with no other action required by the appraiser.

Alebrewer,
Thanks for the input, however in response to your point (1) - based on what I read on page 540 of 4000.1, it clearly states for the compliance or final inspection of New Construction or MANUFACTURED HOUSING, a HUD-92051 is required. A 1004D would only be appropriate for an update of MH. In regards to point (2), I would argue this could go either way... I can know if a home needs a permanent heat source and require the repair, however I don't necessarily know if it has been done properly. I can know if a deck needs repaired but I don't know if it was installed to code. Yes I can visually see the change, however I cannot attest to the adequacy/correctness of the change. I would reference you back to the pre-printed certifications on the 1004D / HUD-92051 and argue it still wouldn't be appropriate for the appraiser to finish the final inspection. We are not inspectors, we are simply observers. Yes I can report it is present and appears to be adequate but the verbiage on those forms of "Certification of Completion" you are taking on the responsibility that it was done right... **But to stay to the original point of this thread, we can save that discussion for later**. Point 3)Yes, I agree, but it happens and it happens often... How do you suggest I maintain a positive client relationship and also say, "I won't do that?". They don't typically care who does what, they just want a pretty little file to submit to sell on the secondary market regardless of who completed what portion. It would seem my follow-up question is this --> To whom or what do I direct a lender who is pressing me for this assignment (Specifically a completion report in the case of inspection for PFGMH)? Should I have them ask the engineer to complete the HUD-92051?

 

[outatime]

The engineers certification is sent to the FHA-DE-Underwriter-As appraisers we do not reinspect or even comment on his findings- It an-inspection by another professional and He/She is responsible- PERIOD Then upon receipt the DE Underwriter includes the Engineers -Certification in her/his work file and its signed off on. The appraiser has nothing to do with it.

Glenn Walker,
Thanks for the direct answer... I would say this is probably the most direct/correct answer I could have asked for, however my question is simply this... Is this written in policy somewhere that I can point the lender or is this simply best practice? I ask because I have a few clients who would strongly disagree and say things to the order of "We have to have this to close the file..."... I have often argued this is an unnecessary step. Yes I have done this in the past but as I get more seasoned and experienced in the field I understand that this is scope creep. I want to maintain positive relationships with my clients but also stay in my lane and keep them in theirs.

 

[alebrewer]

Alebrewer,
Thanks for the input, however in response to your point (1) - based on what I read on page 540 of 4000.1, it clearly states for the compliance or final inspection of New Construction or MANUFACTURED HOUSING, a HUD-92051 is required. A 1004D would only be appropriate for an update of MH. In regards to point (2), I would argue this could go either way... I can know if a home needs a permanent heat source and require the repair, however I don't necessarily know if it has been done properly. I can know if a deck needs repaired but I don't know if it was installed to code. Yes I can visually see the change, however I cannot attest to the adequacy/correctness of the change. I would reference you back to the pre-printed certifications on the 1004D / HUD-92051 and argue it still wouldn't be appropriate for the appraiser to finish the final inspection. We are not inspectors, we are simply observers. Yes I can report it is present and appears to be adequate but the verbiage on those forms of "Certification of Completion" you are taking on the responsibility that it was done right... **But to stay to the original point of this thread, we can save that discussion for later**. Point 3)Yes, I agree, but it happens and it happens often... How do you suggest I maintain a positive client relationship and also say, "I won't do that?". They don't typically care who does what, they just want a pretty little file to submit to sell on the secondary market regardless of who completed what portion. It would seem my follow-up question is this --> To whom or what do I direct a lender who is pressing me for this assignment (Specifically a completion report in the case of inspection for PFGMH)? Should I have them ask the engineer to complete the HUD-92051?

Yes - when I was referring to the 1004D as being acceptable, it was a general statement about MPR/MPS repairs, in which case, the final inspection can be reported on the 1004D or 92051 (as per 4000.1/II/A/7/xvi, which says: " Confirm that form HUD-92051, Compliance Inspection Report, or Fannie Mae Form 1004D/Freddie Mac Form 442, Appraisal Update and/or Completion Report, Part B, is completed, signed and dated by an approved inspector. Local government inspection with the underwriter certification may be accepted." As to how you'd argue point #2, that is a business decision you have to make. If you believe you should do the final, do it. If not, don't. No need to try to convince me of why or why not you'd do it. As to where you would find wording to push back to the lender on repairs you're not qualified to opine on, check out 4000.1 - II (Origination through Post Closing) - D (Appraiser and Property Requirements - 3 (Acceptable Appraisal Reporting Forms and Protocols) - b. (Application of MPS/MPR) - iv (Inspection by a Qualified Individual or Entity).

 

[outatime]

Yes - when I was referring to the 1004D as being acceptable, it was a general statement about MPR/MPS repairs, in which case, the final inspection can be reported on the 1004D or 92051 (as per 4000.1/II/A/7/xvi, which says: " Confirm that form HUD-92051, Compliance Inspection Report, or Fannie Mae Form 1004D/Freddie Mac Form 442, Appraisal Update and/or Completion Report, Part B, is completed, signed and dated by an approved inspector. Local government inspection with the underwriter certification may be accepted." As to how you'd argue point #2, that is a business decision you have to make. If you believe you should do the final, do it. If not, don't. No need to try to convince me of why or why not you'd do it. As to where you would find wording to push back to the lender on repairs you're not qualified to opine on, check out 4000.1 - II (Origination through Post Closing) - D (Appraiser and Property Requirements - 3 (Acceptable Appraisal Reporting Forms and Protocols) - b. (Application of MPS/MPR) - iv (Inspection by a Qualified Individual or Entity).

Thanks for the input. I will read that section again!

 

[alebrewer]

And this is from the first paragraph in the Property Acceptability Criteria:
"When examination of a Property reveals noncompliance with the Property Acceptability Criteria, the Appraiser must note all repairs necessary to make the Property comply with HUD’s Property Acceptability Criteria, together with the estimated cost to cure. If the Appraiser cannot determine that a Property meets HUD’s MPR or MPS, the Mortgagee may obtain an inspection from a qualified Entity to make the determination. Mortgagees must use professional judgment in determining when inspections are necessary to determine that a property meets MPR or MPS. Mortgagees must also use professional judgment in determining when a Property condition poses a threat to the health and safety of the occupant and/or jeopardizes the soundness and structural integrity of the Property, such that additional inspections and/or repairs are necessary." Bold added by me.

 

[Rlong]

Glenn Walker,
Thanks for the direct answer... I would say this is probably the most direct/correct answer I could have asked for, however my question is simply this... Is this written in policy somewhere that I can point the lender or is this simply best practice? I ask because I have a few clients who would strongly disagree and say things to the order of "We have to have this to close the file..."... I have often argued this is an unnecessary step. Yes I have done this in the past but as I get more seasoned and experienced in the field I understand that this is scope creep. I want to maintain positive relationships with my clients but also stay in my lane and keep them in theirs.

Yes HUD/FHA reviewer stated it emphatically to me in a presentation to our regional appraisers group, to this specific question I asked. We do not "remove" the requirement for the engineering letter. I think like you I wanted a reg quote. He read back to me "Appraiser to require".. (whatever guideline states). When they push back I simply say it was personally stated to me by reviewer (investigator) with Denver HOC; although I realize that doesn't help YOU.

Bob in CO