Conversion to conventional from FHA even after FHA repairs were performed.

[Trihard]

The lender has ordered a conversion from FHA to conventional. I originally inspected this property in late October and completed two 1004D certification of completion reports within the past three weeks to verify repair completion for a missing kitchen sink, missing drywall, and scraping/painting. The drywall and sink were repaired, but obviously after the original inspection in October. Should the inspection date now reflect the date of the most recent 1004D since the repairs were done, or should it remain as the original inspection date in October? The lender has ordered this as a conversion and does not want a brand new full inspection completed. I am considering this a new assignment, but I am uncertain whether to use the original effective date date from October with a new 1004D or the latest 1004D date as the inspection date. Any guidance would be appreciated. Thanks!

 

[Dublin ohio]

Without getting into the various potholes. New assignment and new inspection, save yourself a myriad of headaches and liability

 

[Trihard]

Without getting into the various potholes. New assignment and new inspection, save yourself a myriad of headaches and liability

I can just make the extraordinary assumption that the condition is similar to the inspection date. No?

 

[TerryRohrer]

From the 1004.

"Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal."

 

[TerryRohrer]

From 1004:

SCOPE OF WORK: The scope of work for this appraisal is defined by the complexity of this appraisal assignment and the reporting requirements of this appraisal report form, including the following definition of market value, statement of assumptions and limiting conditions, and certifications. The appraiser must, at a minimum: (1) perform a complete visual inspection of the interior and exterior areas of the subject property, (2) inspect the neighborhood, (3) inspect each of the comparable sales from at least the street, (4) research, verify, and analyze data from reliable public and/or private sources, and (5) report his or her analysis, opinions, and conclusions in this appraisal report.

"Finally, the inspection must be performed as part of the scope of work for the assignment. For example, if an appraiser had made a personal inspection of a property six months ago and is subsequently engaged to perform a new appraisal on the property, the appraiser cannot certify that they made a personal inspection of the property unless they inspected it again as part of the scope of work for the new assignment."

Thread '2024 USPAP - "Personal Inspection" definition revised'

Dec 27, 2023

Working RE: "Finally, the inspection must be performed as part of the scope of work for the assignment. For example, if an appraiser had made a personal inspection of a property six months ago and is subsequently engaged to perform a new appraisal on the property, the appraiser cannot certify that they made a personal inspection of the property unless they inspected it again as part of the scope of work for the new assignment."

Curiosity has me wondering about several particular past cases and how they would be handled with the new definition, if indeed it changed the way the...

• Ricky LaFleur
• Replies: 66
• Forum: Fannie Mae, Freddie Mac, USPAP

 

[Trihard]

From the 1004.

"Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal."

Makes sense, since the comps would change if the inspection date is moved. So the effective date has to stay the original appraised date. So would I have to make the appraisal subjet to again even though I know that the repairs are done and I have the photographs??

 

[TerryRohrer]

Makes sense, since the comps would change if the inspection date is moved. So the effective date has to stay the original appraised date. So would I have to make the appraisal subjet to again even though I know that the repairs are done and I have the photographs??

I think you need to study the issue more. Read the thread I just posted above. I haven't taken the new USPAP update yet, but it appears that the new USPAP precludes reliance on the inspection from a prior assignment as satisfaction of the current scope of work that requires an inspection.

 

[Tom4value]

The lender has ordered a conversion from FHA to conventional. I originally inspected this property in late October and completed two 1004D certification of completion reports within the past three weeks to verify repair completion for a missing kitchen sink, missing drywall, and scraping/painting. The drywall and sink were repaired, but obviously after the original inspection in October. Should the inspection date now reflect the date of the most recent 1004D since the repairs were done, or should it remain as the original inspection date in October? The lender has ordered this as a conversion and does not want a brand new full inspection completed. I am considering this a new assignment, but I am uncertain whether to use the original effective date date from October with a new 1004D or the latest 1004D date as the inspection date. Any guidance would be appreciated. Thanks!

Since the client have changed (FHA/HUD is no longer a client), it is technically a new assignment. Now, the lender, if they don’t want a new “appraisal”, which it actually is, has the right to tell you that the effective date of the of the “new” appraisal is the same as the original appraisal.

But, and this is a big BUT, you did the original appraisal “subject to” so the original value was based on the repairs made. Therefore, ask them to make the effective date the same as your 1004D date and you wil be fine. For the new appraisal, say what happened and note that you appraised it before in your 3 year history comment. This assumes that the market has not changed from your October appraisal and the 1004D date.

 

[Dublin ohio]

Therefore, ask them to make the effective date the same as your 1004D date

As long as the OP made a complete inspection when they did the 1004D and if they didn't you run into the date of inspection/effective date thingy

 

[Trihard]

As long as the OP made a complete inspection when they did the 1004D and if they didn't you run into the date of inspection/effective date thingy

The full inspection was done in late October. There was no full inspection done during the 1004D three weeks ago. For the 1004D, I went and only looked at the repairs that were subject to from the October appraisal. If I were to use the late October effective date for the conversion, the report would still have to be made subject to, even though the repairs were completed this January and I already verified that they were done.