Conversion From Conventional To FHA

[Deanie]

An appraisal I completed 2 weeks ago for a conventional loan is now going to be FHA. My client has asked for a conversion of the report to FHA. At first I told them this was a new assignment since it wasn't inspected to FHA guidelines and would require a new effective date etc. I was sent a copy of Mortgagee Letter 2010-15 that states:
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.

I could not find anything more recent so I called the FHA Resource Center. Originally the woman I talked with said it was a new assignment with a new effective date but when I referred her to this ML she changed her tune and said it would be ok to to re-inspect but use the original effective date. If anyone has experience with this or an opinion I would greatly appreciate it. The last line in the ML leads me to think that this is acceptable but since the FHA resource person seemed unsure I am having second thoughts about doing this. I do believe it is a new assignment but am unsure if the effective date can stay the same.

 

[timd354]

An appraisal I completed 2 weeks ago for a conventional loan is now going to be FHA. My client has asked for a conversion of the report to FHA. At first I told them this was a new assignment since it wasn't inspected to FHA guidelines and would require a new effective date etc. I was sent a copy of Mortgagee Letter 2010-15 that states:
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.

I could not find anything more recent so I called the FHA Resource Center. Originally the woman I talked with said it was a new assignment with a new effective date but when I referred her to this ML she changed her tune and said it would be ok to to re-inspect but use the original effective date. If anyone has experience with this or an opinion I would greatly appreciate it. The last line in the ML leads me to think that this is acceptable but since the FHA resource person seemed unsure I am having second thoughts about doing this. I do believe it is a new assignment but am unsure if the effective date can stay the same.

If your original appraisal inspection met FHA requirements there is no need to go back out to the property and you may use the same effective date although it is a new assignment. If you have to revisit the property, then there should be a new effective date.

 

[Deanie]

If your original appraisal inspection met FHA requirements there is no need to go back out to the property and you may use the same effective date although it is a new assignment. If you have to revisit the property, then there should be a new effective date.

That is what I was thinking also but the FHA Resource Center in Denver and also my client are saying that I can use the same effective date, re-inspect to FHA guidelines (which i did not do at the original inspection), add the FHA required statements and then re-submit the report. The ML does state that a re-inspection may be required. This just makes me nervous as it does not seem quite right. Has anyone actually done this with a report?

 

[Mike Garrett RAA]

Another fine reason.....

Oh, wait...I say that all the time. I don't do FHA appraisals any more but, if I did, I would always do the same inspection routine so that my appraisal could be converted without a re-inspection.

 

[timd354]

That is what I was thinking also but the FHA Resource Center in Denver and also my client are saying that I can use the same effective date, re-inspect to FHA guidelines (which i did not do at the original inspection), add the FHA required statements and then re-submit the report. The ML does state that a re-inspection may be required. This just makes me nervous as it does not seem quite right. Has anyone actually done this with a report?

If you need to reinspect to FHA guidelines, then the effective date of the appraisal report needs to be the date of the re-inspection if reported on Fannie Mae form 1004 (which it will be)....I don't care if anyone tells you different. I also don't believe that anyone will object if you include a new effective date.

 

[CANative]

It's a disgrace that the Colorado HOC disseminates inaccurate information.

Don't talk to the phone staff - they're contractors with a 3 ring binder. Talk to a a real appraiser.

 

[Tom D]

i inspect every property like it was FHA (i do a lot of sales, many easy rehabd houses), however, i don't take certain pictures if it's conventional. if this is a regular client, that you like, then you might have to go out to take extra photos. i've had this happen, you should get some extra compensation for the extra work needed to convert to the required comments/wording needed.

the scope of work has changed, not the value. i would just go with a new signature date, but i wouldn't argue with a new effective date either.

 

[RSW]

I have been asked to convert many conventional appraisals to FHA. I go back out and do the FHA protocol part and I add my prior service comment that I provided a appraisal for conventional financing and the effective date is the same as the original report.

 

[Peter LeQuire]

When I've done this I've reinspected to determine the properties' compliance with FHA's property requirements, and I also change the effective date - not because it's necessarily more correct to do it that way, because I think there is - at least in my view - the technical point that, since the FHA-related inspection would have been made after the effective date of the appraisal sounds like it makes it a retrospective appraisal.

 

[Tom D]

peter makes sense, especially if they got the FHA case number after you did the appraisal. can't be an FHA appraisal before they have that number. well, at least some extra fee for some easy work