FHA Approved Condo Project. What's My Responsibility Ii

[samc6782]

This question was (briefly) discussed here a while ago:
http://appraisersforum.com/forums/threads/FHA-approved-condo-project-whats-my-responsibility.206809/

The FHA Single Family Housing Policy Handbook says we should now be checking for this:

4000.1: FHA Single Family Housing Policy Handbook
II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
B. APPRAISER AND PROPERTY REQUIREMENTS FOR TITLE II FORWARD AND REVERSE MORTGAGES (09/14/15)
6. Condominium Projects
c. Required Analysis and Reporting

Effective for case numbers assigned on or after September 14, 2015
The Appraiser must check if the Condominium Project is on the list of FHA-approved condominiums.

So what would you do? Just complete the assignment and put in a "BTW it isn't FHA approved lol" in there somewhere, or notify the client?

ETA If this thing has been assigned a number by FHA, is that any reason to believe someone has vetted it and it's actually approved despite not appearing on the list?

 

[RSW]

The lender has already checked to see if it is an approved condominium. I really don't know why they want us to check it too. I haven't done any FHA condo appraisals since then 4000.1 came out. I would just state in the addendum that it is or is not an approved condominium.

 

[Randolph Kinney]

This question was (briefly) discussed here a while ago:
http://appraisersforum.com/forums/threads/FHA-approved-condo-project-whats-my-responsibility.206809/

The FHA Single Family Housing Policy Handbook says we should now be checking for this:

4000.1: FHA Single Family Housing Policy Handbook
II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
B. APPRAISER AND PROPERTY REQUIREMENTS FOR TITLE II FORWARD AND REVERSE MORTGAGES (09/14/15)
6. Condominium Projects
c. Required Analysis and Reporting

Effective for case numbers assigned on or after September 14, 2015
The Appraiser must check if the Condominium Project is on the list of FHA-approved condominiums.

So what would you do? Just complete the assignment and put in a "BTW it isn't FHA approved lol" in there somewhere, or notify the client?

ETA If this thing has been assigned a number by FHA, is that any reason to believe someone has vetted it and it's actually approved despite not appearing on the list?

That section of the manual is left blank: Condominium Project Approval requires formal rule making

My take is that it is the mortgagee responsibility to make sure the condo meets the FHA requirements for loan guarantee.

 

[samc6782]

Thanks for the replies. I think the blank part you're referencing is something else. The thing I put in my original post is in the manual already.

I'm just going to note it in the report and let them worry about it.

 

[Marty Boone]

Check and see if any other units in the project have gone FHA.

 

[Peter LeQuire]

While the FHA approved mortgagee is responsible for what goes to HUD, the 4000.1 has this nugget on p. 514:

"c. Required Analysis and Reporting
The Appraiser must check if the Condominium Project is on the list of FHA-approved condominiums."

"The Appraiser must check...." doesn't sound like there is an option. I would think that the possibility (probability?) that the appraisal won't be reviewed by a knowledgeable DE underwriter until the entire loan submission is presented is pretty high. I don't believe that I would risk not complying with plain language requirement.

 

[glenn walker]

THE LENDER checks to see if the project is approved , If not approved NO FHA loan , the appraiser does not need to be concerned because It's a lender issue. The appraiser is not employed by FHA because FHA/HUD only insures loans.. No lender orders an FHA appraisal until they have checked to see if the project is approved and if the development or project is not approved that's not your problem . As long as you have a case number and a scope of work just do it !

 

[Peter LeQuire]

THE LENDER checks to see if the project is approved , If not approved NO FHA loan , the appraiser does not need to be concerned because It's a lender issue. The appraiser is not employed by FHA because FHA/HUD only insures loans.. No lender orders an FHA appraisal until they have checked to see if the project is approved and if the development or project is not approved that's not your problem . As long as you have a case number and a scope of work just do it !

In a general sense, it is correct that the Mortgagee is the focus of responsibility for assuring that FHA mortgages conform to to FHA requirements.

However, the 4000.1 is unequivocal: "...the appraiser MUST (emphasis added)....check..." the status of a condominium project, Whether the mortgagee has checked or not, the appraiser is not excused from performing that check. Since the appraiser MUST check project status, it follows that checking the status is part of the SOW for FHA condo appraisals.

Perhaps lenders a supposed to check the status of projects before they request the appraisal, but if they don't the appraiser still is required to do so. And, if an appraiser were to complete an appraisal in an unapproved project and certify that the property conforms to HUD requirements, it very much would be the appraiser's problem. Further, assuming that the loan proceeded to closing, funding, and investor delivery, and it were discovered that the project was unimproved, the appraiser would have bought a bundle of trouble out of proportion to any fee she got for the assignment.

 

[bnmappraisal]

Perhaps lenders a supposed to check the status of projects before they request the appraisal, but if they don't the appraiser still is required to do so. And, if an appraiser were to complete an appraisal in an unapproved project and certify that the property conforms to HUD requirements, it very much would be the appraiser's problem. Further, assuming that the loan proceeded to closing, funding, and investor delivery, and it were discovered that the project was unimproved, the appraiser would have bought a bundle of trouble out of proportion to any fee she got for the assignment.

I tend to agree with Peter on this. A lot of liability and it can't be simply passed on to the lender if they didn't "check"

 

[RSW]

In a general sense, it is correct that the Mortgagee is the focus of responsibility for assuring that FHA mortgages conform to to FHA requirements.

However, the 4000.1 is unequivocal: "...the appraiser MUST (emphasis added)....check..." the status of a condominium project, Whether the mortgagee has checked or not, the appraiser is not excused from performing that check. Since the appraiser MUST check project status, it follows that checking the status is part of the SOW for FHA condo appraisals.

Perhaps lenders a supposed to check the status of projects before they request the appraisal, but if they don't the appraiser still is required to do so. And, if an appraiser were to complete an appraisal in an unapproved project and certify that the property conforms to HUD requirements, it very much would be the appraiser's problem. Further, assuming that the loan proceeded to closing, funding, and investor delivery, and it were discovered that the project was unimproved, the appraiser would have bought a bundle of trouble out of proportion to any fee she got for the assignment.

I hate it when I have to agree with you, but you are correct.