Appraisal for HECM in Default

[Netherwood]

Hello,
I have to appraise homes which are reverse mortgages now in default for Market Value, no loan. The vast majority of these properties do not meet FHA minimum requirements but the client requires an as-is report along with repairs estimate and as-repaired value. These properties have an FHA # of course as they are reverse mortgage but as they are for market value only I believe that the reports can be completed as-is even thought they do not meet FHA minimum requirements but I cannot find any documentation confirming this.

I have looked everywhere, and I am waiting for a reply from FHA Connection but thought I would ask if anyone has come across any documentation regarding this question.

Thanks as always.

 

[Terrel L. Shields]

Do an 'as is' value
Then do an "as repaired" value to bring it to FHA minimum standards.

 

[J Grant]

Hello,
I have to appraise homes which are reverse mortgages now in default for Market Value, no loan. The vast majority of these properties do not meet FHA minimum requirements but the client requires an as-is report along with repairs estimate and as-repaired value. These properties have an FHA # of course as they are reverse mortgage but as they are for market value only I believe that the reports can be completed as-is even thought they do not meet FHA minimum requirements but I cannot find any documentation confirming this.

I have looked everywhere, and I am waiting for a reply from FHA Connection but thought I would ask if anyone has come across any documentation regarding this question.

Thanks as always.

Just my opinion, but imo the fact that they had a past loan with an FHA case number does not mean this current appraisal needs to be based on FHA min standards.

Does your ASSIGNMENT have a new FHA case number?

 

[Dublin ohio]

Hello,
I have to appraise homes which are reverse mortgages now in default for Market Value, no loan. The vast majority of these properties do not meet FHA minimum requirements but the client requires an as-is report along with repairs estimate and as-repaired value. These properties have an FHA # of course as they are reverse mortgage but as they are for market value only I believe that the reports can be completed as-is even thought they do not meet FHA minimum requirements but I cannot find any documentation confirming this.

I have looked everywhere, and I am waiting for a reply from FHA Connection but thought I would ask if anyone has come across any documentation regarding this question.

Thanks as always.

Unless something has changed. FHA REO properties are typically appraised 'as is". with a list of repairs. Sounds like they are wanting something similar but with an "as repaired" value

 

[J Grant]

Hello,
I have to appraise homes which are reverse mortgages now in default for Market Value, no loan. The vast majority of these properties do not meet FHA minimum requirements but the client requires an as-is report along with repairs estimate and as-repaired value. These properties have an FHA # of course as they are reverse mortgage but as they are for market value only I believe that the reports can be completed as-is even thought they do not meet FHA minimum requirements but I cannot find any documentation confirming this.

I have looked everywhere, and I am waiting for a reply from FHA Connection but thought I would ask if anyone has come across any documentation regarding this question.

Thanks as always.

You have your answer right there in the assignment conditions.

AS IS, with a second value as repaired. If the current assignment does not have its own FHA case number, then FHA standards do not apply. The fact that a prior loan had an FHA case number means squat, though you can mention it.

If your assignments has its own new FHA case number, then it has to meet FHA min starnds.

 

[Digger88]

Is this a nationwide thing or a 1 off?

 

[Mike Ault]

Your client could be needing an appraisal for the HUD "Claims Conveyance Without Title" program. Perfectly fine to do those "as is" and many of them are done on "exterior only basis" due to hostile occupancy issues. Here is how it works.

https://www.HUD.gov/sites/documents/43304C6HSGH.PDF

 

[Sadie]

If you do an interior inspection, yes you need to confirm that the home meets FHA MPR and if not cost to cure. If the cost to cure is greater than $5k the home is considered non insurable. There should be something in your engagement letter for the verbiage they want. Also, sometimes they are not "Claims Conveyance Without Title (CWCOT)" check to make sure you have the correct intended use. There should be some sort of decision tree for you.

 

[J Grant]

If you do an interior inspection, yes you need to confirm that the home meets FHA MPR and if not cost to cure. If the cost to cure is greater than $5k the home is considered non insurable. There should be something in your engagement letter for the verbiage they want. Also, sometimes they are not "Claims Conveyance Without Title (CWCOT)" check to make sure you have the correct intended use. There should be some sort of decision tree for you.

That will only apply if hte current assignment has its own, new, FHA case number (not that the prior appraisal or loan was for FHA)

I don't know why half the questions posedused vague language, but they do.

The OP said, "The property has an FHA case number." LOANS have FHA case numbers. Properties do not.

 

[Bobby Bucks]

I do a lot of FHA Reverse mortgage closeouts.. If you post a screen shot of the engagement letter with the address and case numbered removed it will help. Most of the FHA reverse mortgage closeout assignments are very similar but there are a couple clients that require a little more. I recently had one where they required the REO addendum, the first time ever for an FHA Reverse closeout for me. Another one required the cost approach for an exterior pre-foreclosure. For exteriors I request a copy of the original appraisal, they usually have one available. I also noticed they are much more finicky with their reviews lately due to idle time on their end. They have to justify their jobs and they use a fine tooth comb. Had one recently with over $30,000 in repairs My "as is" was $215,000 As Repaired $305,000. They didn't do any repairs, it sold after 26 days on the market for $210,000. The listing agent asked me if I was always that much higher than the closed sale price.