FHA driveby

[timd354]

There may be some variations in how these rules are being interpreted in the lending community. None of these FHA 2nd appraisals I have seen lately have had loan amounts anywhere near $417,000. All loan amounts were less than $300,000; most less than $200,000.

FHA issued another mortgagee letter that came out at towards the end of 2008 that requires 2 appraisals to be done on any cash out FHA loan where the LTV exceeds 85%, regardless of the loan amount:

From Mortgagee Letter 2008-40

• Second Appraisal Requirements/Loan-to-Value Limits for Cash-Out Refinances: The instructions in ML 2008-09 regarding when a second appraisal is needed, and the requirements for that second appraisal, as well as the 85 percent limitation on cash-out refinances when the loan balance will exceed $417,000, remain in effect.

In addition, FHA will now require a second appraisal for all cash-out refinances where the LTV, exclusive of the UFMIP, will exceed 85 percent of the appraiser’s estimate of value. This second appraisal requirement applies regardless of the loan amount or the location of the property, i.e., whether the property is in a “declining area” or is not. This second appraisal requirement for cash-out refinances is effective for all case number assignments on or after January 1, 2009 and is to adhere to the instructions set forth in ML 2008-09. Please also note that cash-out refinances with LTVs exceeding 85 percent will be over-selected for post-endorsement technical reviews (PETR) to assure the quality of the underwriting.

 

[Don Clark]

I did an FHA EXTERIOR ONLY(it is not a drive by as I did stop and look at the property from the exterior). There were 5 comparable sales in the subject neighborhood, similar to the subject(a 2 story). The subject site is on a small lake that was origninally a borrow pit. 2/3rd of the subject site is in the lake. The highest sale was $250,000. My opinion of value, due to lake front, site size, and sq ft was $255,000. This was a 2nd appraisal situation. I soon got a phone call and e-mail from the lender. seems the original FHA Appraiser who did an interior inspection, used absolutely no sales from the subject neighborhood but went 2 miles for comp 1, 3.6 miles for comp 2, and 2.3 miles for comp 3 and used all Ranch 1 story brick sided sales. Subject is vinyl sided. None of these sales, in superior neighborhoods were even similar in square footage. The reasoning apparentlt was to find sales on a lake. The opinion of value was $305,000. Not one of the sales came from the 5 available in the subject neighborhood. Now everyone is ****ed with me, and I have the ethical dilemna of whether to report this to FHA and the state. I would guess that the lender may find another appraiser who will hit their number. Also, it appears that all the comps sq ft was rounded rather than using the sq ft in the public record. I am still checking on that.

 

[Michael Tipton]

I did an FHA EXTERIOR ONLY(it is not a drive by as I did stop and look at the property from the exterior). There were 5 comparable sales in the subject neighborhood, similar to the subject(a 2 story). The subject site is on a small lake that was origninally a borrow pit. 2/3rd of the subject site is in the lake. The highest sale was $250,000. My opinion of value, due to lake front, site size, and sq ft was $255,000. This was a 2nd appraisal situation. I soon got a phone call and e-mail from the lender. seems the original FHA Appraiser who did an interior inspection, used absolutely no sales from the subject neighborhood but went 2 miles for comp 1, 3.6 miles for comp 2, and 2.3 miles for comp 3 and used all Ranch 1 story brick sided sales. Subject is vinyl sided. None of these sales, in superior neighborhoods were even similar in square footage. The reasoning apparentlt was to find sales on a lake. The opinion of value was $305,000. Not one of the sales came from the 5 available in the subject neighborhood. Now everyone is ****ed with me, and I have the ethical dilemna of whether to report this to FHA and the state. I would guess that the lender may find another appraiser who will hit their number. Also, it appears that all the comps sq ft was rounded rather than using the sq ft in the public record. I am still checking on that.

Is the value being questioned by the originator (MB,etc)?

The second independent appraisal must be completed by a FHA roster appraiser selected by the Direct Endorsement lender that is underwriting the mortgage. The lender independently engages the appraiser and is not to request a second case number through FHA Connection. The fee for the appraisal may be passed onto the borrower as any other closing cost.

http://www.HUD.gov/offices/adm/hudclips/letters/mortgagee/files/08-09ml.doc

 

[Don Clark]

Is the value being questioned by the originator (MB,etc)?

The second independent appraisal must be completed by a FHA roster appraiser selected by the Direct Endorsement lender that is underwriting the mortgage. The lender independently engages the appraiser and is not to request a second case number through FHA Connection. The fee for the appraisal may be passed onto the borrower as any other closing cost.

http://www.HUD.gov/offices/adm/hudclips/letters/mortgagee/files/08-09ml.doc

Michael,

Hell yes they are questioning my appraisal. Why else would I say they are all ****ed off at me? They said "You came in below the value". i said, no, I gave you my opinion of market value based on closed sales in the subject neighborhood.

Don't know why you posted about fees. That is not the issue here. if I don't get paid I will go to FHA and the OCC as I have in the past, and I will get paid.

 

[Jim Manley]

I'm confused. I've only completed two of these 2nd appraisals. My wife is a processor and she is the one who told me that the 2nd one can't be FHA. On both assignments I received I informed the client that the 2nd one can't be FHA. They said they would check and call me back. They called back and said I was correct. I also have another client who has informed that they ordered 2nd appraisals on some of mine. They also told me that they were not FHA 2nd appraisals.
Seems like there is rampant confusion regarding this matter.


I have not received any requests to change my reports as of yet.

 

[Michael Tipton]

Michael,

Hell yes they are questioning my appraisal. Why else would I say they are all ****ed off at me? They said "You came in below the value". i said, no, I gave you my opinion of market value based on closed sales in the subject neighborhood.

Don't know why you posted about fees. That is not the issue here. if I don't get paid I will go to FHA and the OCC as I have in the past, and I will get paid.

The fee statement is from the Mortgagee Letter from last year. If the question is coming from the funding lender I would be contacting the appropriate HOC. The value issue you have raised brings into question the funding lender's regard for due diligence.

 

[Jim Manley]

( I copied most of this from my post on another thread on this matter )

I just called the Atlanta office and talked to a real pleasant lady ( humor ) and was told that the 2nd appraisal is to be an FHA appraisal and that there is to be no case number on the report. She said "one case number per appraiser ".
There...that clears things up ( again...humor ).

 

[Phil Snyder]

So, dumb question here then:

Is the "second" Appraiser supposed to be FHA, or doesn't it matter considering nothing of any FHA concern (i.e; hvac, plumbing, etc., etc.) can or will be checked from the street?

We just got our first request for a "FHA 2055" today, and are somewhat perplexed by it.

 

[Alan H]

I've done several of the 2055 2nd appraisals. All for Cash out refis 85% LTV or higher.
The lender contacted me to do these because he needed another FHA appraiser and I was on the FHA Roster.
I was given the case # to put on them and did so.
No problems so far.

My biggest concern is about additional SOW statement covering the fact that I didn't inspect some things FHA specifically requires (attic, basement, interior, utilities, etc.) due to the scalled-back nature of a 2055 assignment. I emailed fhaoutreach about 3 weeks ago and they kicked it up to the HOC, now I'm waiting for a response from them.

Since the 2055 is an Exterior Only inspection, FHA could still expect the 2nd appraisal to have front & rear photos and all of the exterior measurements (of the building and of things like between the well and septic, etc) completed. I'm guessing that they don't want all of that, but I'd like to hear it from FHA directly.

 

[Phil Snyder]

The second independent appraisal must be completed by a FHA roster appraiser selected by the Direct Endorsement lender that is underwriting the mortgage. The lender independently engages the appraiser and is not to request a second case number through FHA Connection. The fee for the appraisal may be passed onto the borrower as any other closing cost.

http://www.HUD.gov/offices/adm/hudclips/letters/mortgagee/files/08-09ml.doc

Guess this answers my question.