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FHA Case With A New Borrower

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PhysicalDepreciation

Thread Starter
Junior Member
Joined
Jun 6, 2008
Professional Status
Certified Residential Appraiser
State
Rhode Island
So I'm aware of the deal when a borrower switches lenders, but what is the protocol in regards to a new borrower? Case in point, I performed an FHA appraisal for a sale. The deal fell apart and a new buyer is making an offer and wants to go FHA as well. The realtor wants to know if they will be able to order a new FHA appraisal or if mine is locked into the property regardless of the borrower? Thanks in advance.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
No need to change the borrower name. The new borrower pays the appraisal fee and the former "borrower" is refunded the same.

4-2 Transfers of Case Numbers Between Lenders

A. New Lender. Lenders are expected to cooperate in the transfer of case numbers. At the request of a borrower, the case number is to be assigned to the new lender using the Case Transfer function in the FHA Connection. The transferring lender is not entitled to a fee for the transfer of a streamline refinance case number, regardless of the stage of processing the loan is in. The transferring lender may be entitled to any lock-in fee collected from the borrower at the time of application. The transferring lender is required to provide the new lender with the appraisal but is not required to provide any processing documents. If processing documents are transferred, the fee for providing these documents is to be negotiated between the lenders. No separate charge to the borrower is authorized for this transfer.


B. New Borrower Using an Existing Appraisal. If the transfer is made for a new borrower to use an existing appraisal, the new lender is to collect an appraisal fee from the new borrower. The appraisal fee is sent to the original lender who, in turn, is to refund the fee to the original borrower.

Next, in the HUD Handbook 4155.2: 1.D.5, there is a FAQ. Dealing with the issue of transferrence:

Question:

When a case number is transferred with a completed appraisal, may a new appraisal be requested?

Answer:

Under the Uniform Standards of Professional Appraisal Practice (USPAP), a lender may send an existing appraisal to another lender, and the receiving new lender may accept an appraisal prepared for another lender/client. However, the new lender may not ask the appraiser to transfer the appraisal, i.e. readdress the name of the client or lender on the appraisal itself. If the appraiser is requested to change the name of the lender/client on the appraisal, the appraiser would be required to prepare another appraisal to comply with USPAP. FHA does not require the appraiser to transfer (as defined by USPAP) the appraisal, change the name of the client/lender, or the name of the borrower on FHA appraisal. When a case number is transferred, and the appraisal has been completed and is still effective, the new lender must use the existing FHA appraisal and may not requiest a new appraisal or ask the appraiser to transfer the appraisal by changing the name of the lender/client or borrower on the appraisal.

So, I hope this eliminates some of the confusion. I'm going to repeat that one line in the Answer section again for good measure: "...the new lender may not ask the appraiser to transfer the appraisal..."

I get this request about once a month. Lenders, you're not supposed to ask this question.

Conventional appraisals still follow the previous USPAP line. That is, if the effective date, client, or intended user change, it demands a new apppraisal.

By the way, a new appraisal doesn't mean a new fee. USPAP says nothing about fees.

Another ActiveRain author wrote the following:

http://activerain.com/blogsview/1267632/FHA-appraisal-transfer-changes-effective-january-1-2010
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I think CANative just about covered it all.
 

PhysicalDepreciation

Thread Starter
Junior Member
Joined
Jun 6, 2008
Professional Status
Certified Residential Appraiser
State
Rhode Island
Thanks for the reply. So what happened is I "killed the deal" by coming in under purchase price. They now have a new offer(still above my estimate of value) from a different buyer, but the new buyer will also be going FHA. So you're saying the new borrower will be stuck with my FHA appraisal from the other borrower? Hence, the new offer will also be nixed?
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
The original case # and appraisal stay with the property for 4 months. Otherwise it's considered appraisal or appraiser "shopping." See the 2009 Mortgagee Letters.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Mortgagee Letter 2009-29.
 

Dan Umstead

Senior Member
Joined
May 26, 2006
Professional Status
Certified Residential Appraiser
State
Georgia
Your appraisal is the appraisal of record for FHA for 120 days.

One question......is the inventory very low in the market area? Why do they have another offer above the appraised value? As an appraiser, I always like to ask questions, especially in difficult markets.
 

sheryl legg

Freshman Member
Joined
Aug 4, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
No need to change the borrower name. The new borrower pays the appraisal fee and the former "borrower" is refunded the same.

4-2 Transfers of Case Numbers Between Lenders

A. New Lender. Lenders are expected to cooperate in the transfer of case numbers. At the request of a borrower, the case number is to be assigned to the new lender using the Case Transfer function in the FHA Connection. The transferring lender is not entitled to a fee for the transfer of a streamline refinance case number, regardless of the stage of processing the loan is in. The transferring lender may be entitled to any lock-in fee collected from the borrower at the time of application. The transferring lender is required to provide the new lender with the appraisal but is not required to provide any processing documents. If processing documents are transferred, the fee for providing these documents is to be negotiated between the lenders. No separate charge to the borrower is authorized for this transfer.


B. New Borrower Using an Existing Appraisal. If the transfer is made for a new borrower to use an existing appraisal, the new lender is to collect an appraisal fee from the new borrower. The appraisal fee is sent to the original lender who, in turn, is to refund the fee to the original borrower.

Next, in the HUD Handbook 4155.2: 1.D.5, there is a FAQ. Dealing with the issue of transferrence:

Question:

When a case number is transferred with a completed appraisal, may a new appraisal be requested?

Answer:

Under the Uniform Standards of Professional Appraisal Practice (USPAP), a lender may send an existing appraisal to another lender, and the receiving new lender may accept an appraisal prepared for another lender/client. However, the new lender may not ask the appraiser to transfer the appraisal, i.e. readdress the name of the client or lender on the appraisal itself. If the appraiser is requested to change the name of the lender/client on the appraisal, the appraiser would be required to prepare another appraisal to comply with USPAP. FHA does not require the appraiser to transfer (as defined by USPAP) the appraisal, change the name of the client/lender, or the name of the borrower on FHA appraisal. When a case number is transferred, and the appraisal has been completed and is still effective, the new lender must use the existing FHA appraisal and may not requiest a new appraisal or ask the appraiser to transfer the appraisal by changing the name of the lender/client or borrower on the appraisal.

So, I hope this eliminates some of the confusion. I'm going to repeat that one line in the Answer section again for good measure: "...the new lender may not ask the appraiser to transfer the appraisal..."

I get this request about once a month. Lenders, you're not supposed to ask this question.

Conventional appraisals still follow the previous USPAP line. That is, if the effective date, client, or intended user change, it demands a new apppraisal.

By the way, a new appraisal doesn't mean a new fee. USPAP says nothing about fees.

Another ActiveRain author wrote the following:

http://activerain.com/blogsview/1267632/FHA-appraisal-transfer-changes-effective-january-1-2010
 

sheryl legg

Freshman Member
Joined
Aug 4, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
No need to change the borrower name. The new borrower pays the appraisal fee and the former "borrower" is refunded the same.

4-2 Transfers of Case Numbers Between Lenders

A. New Lender. Lenders are expected to cooperate in the transfer of case numbers. At the request of a borrower, the case number is to be assigned to the new lender using the Case Transfer function in the FHA Connection. The transferring lender is not entitled to a fee for the transfer of a streamline refinance case number, regardless of the stage of processing the loan is in. The transferring lender may be entitled to any lock-in fee collected from the borrower at the time of application. The transferring lender is required to provide the new lender with the appraisal but is not required to provide any processing documents. If processing documents are transferred, the fee for providing these documents is to be negotiated between the lenders. No separate charge to the borrower is authorized for this transfer.


B. New Borrower Using an Existing Appraisal. If the transfer is made for a new borrower to use an existing appraisal, the new lender is to collect an appraisal fee from the new borrower. The appraisal fee is sent to the original lender who, in turn, is to refund the fee to the original borrower.

Next, in the HUD Handbook 4155.2: 1.D.5, there is a FAQ. Dealing with the issue of transferrence:

Question:

When a case number is transferred with a completed appraisal, may a new appraisal be requested?

Answer:

Under the Uniform Standards of Professional Appraisal Practice (USPAP), a lender may send an existing appraisal to another lender, and the receiving new lender may accept an appraisal prepared for another lender/client. However, the new lender may not ask the appraiser to transfer the appraisal, i.e. readdress the name of the client or lender on the appraisal itself. If the appraiser is requested to change the name of the lender/client on the appraisal, the appraiser would be required to prepare another appraisal to comply with USPAP. FHA does not require the appraiser to transfer (as defined by USPAP) the appraisal, change the name of the client/lender, or the name of the borrower on FHA appraisal. When a case number is transferred, and the appraisal has been completed and is still effective, the new lender must use the existing FHA appraisal and may not requiest a new appraisal or ask the appraiser to transfer the appraisal by changing the name of the lender/client or borrower on the appraisal.

So, I hope this eliminates some of the confusion. I'm going to repeat that one line in the Answer section again for good measure: "...the new lender may not ask the appraiser to transfer the appraisal..."

I get this request about once a month. Lenders, you're not supposed to ask this question.

Conventional appraisals still follow the previous USPAP line. That is, if the effective date, client, or intended user change, it demands a new apppraisal.

By the way, a new appraisal doesn't mean a new fee. USPAP says nothing about fees.

Another ActiveRain author wrote the following:

http://activerain.com/blogsview/1267632/FHA-appraisal-transfer-changes-effective-january-1-2010
 

sheryl legg

Freshman Member
Joined
Aug 4, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
Follow up question....FHA appraisal assigned to new lender for new borrower - new lender request copy of "paid invoice" and specific language to added to appraisal..." FHA REQUIRED SPECIFIC" statement i.e head and shoulders...to my knowledge the statement is not required by FHA but the action is. Does the new lender have the ability to require changes to the assigned report? This is a new one for me.

Thank you
 
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