FHA "As Is" Box - Repairs not required etc.

[Joe Sloan]

For purposes of my questions and comments in this post I am talking about regular FHA Appraisals, and Streamline FHA to FHA Refinance. You are welcome to talk about 203K and REO but prefereably in a separate post so as to not confuse me.

I was told the only time you check the "As Is" Box on FHA appraisals is if the property is rejected. Assuming the property is not rejected, do you always check the middle box (Subject to repairs, ...) on an existing FHA home being streamline refinanced?

Getting ready to do FHA Streamline NO cash-out refinances on existing FHA loans. I have to complete the VC Form, however FHA does not require repairs, (except for lead based paint repairs). If lender requires the repairs as a condition of the appraisal, should I condition my report on the completion of the items on the VC form, or just stand pat with "FHA does not require repairs" after noting the usual items on the VC.

The better question is probably, "Are the lenders requiring VC repairs to be completed, or are they letting the loan close without requiring repairs?"

I know we have covered some of this before but repetition helps those of us afflicted with ...

Thanks,


Joe Sloan

 

[rtubbs]

I always check the "Subject To" and state in the comments that the appraisal is subject to the attached Valuation Conditions. For the streamline refis, let the lender make the choice regarding repairs.

 

[Jo Ann Meyer Stratton]

Always mark FHA as subject to and then list everything that might be necessary on the VC sheet, even when it is a streamline. The underwriter (not the appraiser) then makes a decision of whether to do the streamline refinance without the repairs being completed or requiring the repairs to be completed.

 

[Pamela Crowley (Florida)]

http://www.HUD.gov/offices/hsg/sfh/ref/sfhp1-04.cfm

Chapter 1
Appraisal & Property Requirements
Page 1-04

Appraising Refinances - Definitions of both Refinances and Streamline Refinances can be found in HUD Handbook 4155.1 REV-4 CHG 1, Chapter 1, Section 4.

Refinance - A standard requires a complete appraisal with repair conditions, while a streamline refinance may be insured with or without an appraisal. The Valuation Condition (VC) form and the Homebuyer Summary apply to refinances from conventional financing and on cash-out FHA to FHA refinances. Lenders must ensure that the appraiser is fully informed on the type of appraisal that is being ordered. Appraisers may routinely wish to complete both the VC form and the Homebuyer Summary.

Streamline Refinance - Streamline refinances are designed to lower the monthly principal and interest payments on a CURRENT FHA-insured mortgage and must involve no cash back to the borrower except for minor adjustments at closing not to exceed $250. Streamline refinances can be insured with or without an appraisal. Streamline refinances with an appraisal, the (VC) form is required, the Homebuyer Summary is not required. FHA does not require repairs (except for lead based paint repairs) on streamline refinances with appraisals, however the lender may require completion of repairs as a condition of the appraisal.

Additionally, FHA does not require an appraisal on streamline refinances, however, if the lender is required by law or banking regulations (e.g., FIRREA) or its investors to obtain an appraisal on a mortgage that will be processed as if no appraisal was made, the appraisal fee may be paid by the borrower out-of-pocket (i.e., not financed).

Ref. Handbook 4155.1, Rev. 4 Chpt. 1, and Mortgagee Letter 96-10

Content updated August 20, 2000