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FHA mh cost approach verbiage

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CANative

Thread Starter
Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Fannie requires the CA for all manufactured home properties. HUD/FHA does not if the improvements are more than a year old. I usually don't develop the CA for MH's for FHA but because the appraisal must be reported on the FannieForm there is a conflict with certification #4 where the pre-printed verbiage states that the CA has been developed. I include the below verbiage in the large comment addendum on page 4 under my expanded scope of work comments.

Note on Item #4 of the pre-printed Appraiser's Certifications contained in this report. The form and certifications were designed by Fannie Mae which requires the completion of the cost approach in all cases when the property improvements consist of a manufacture home. This appraisal has been developed and reported to meet the requirements and underwriting guidelines for FHA which does not require a cost approach when the improvements are more than one year old. The appraiser has determined that the cost approach would not be meaningful or reliable for this assignment and has not developed the cost approach. The pre-printed verbiage in Item #4 of the attached certification stating that the cost approach has been developed should be disregarded.

This seems to make sense to me but I suddenly had the brain storm that it might conflict with the pre-printed statement on the first page of the certs which states that modifications or deletions to the certifications are prohibited.

Any comments? Is this issue covered in Appendix D?
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Well, I'd say it's about time that FHA design its own form to satisfy their needs ! The intermediary client should have no difficulty asking their borrower beforehand about the actual age of the home, and back that up with the client's research of local county records showing such age......and then have their order nail it down tight with one such aspect of stated S.o.W. that the appraiser would (not need to) fulfill.

Why the second thoughts now when your earlier reports with no C.A. did not cause any stir ? Does FHA sell their loans to Fannie ? I don't know, for sure. Do they ? If not.....then I think your addendum paragraph is sufficient to.....

.....supplement and clarify.....which we are always permitted, and expected, to do ! You would not truly be "modifying or deleting" Cert #4. You left it alone, as so already pre-printed.....and you supplemented and clarified, what needed to be supplemented and clarified, elsewhere in the report. And, you gave direct reference to WHY you had to add such clarification !
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
FHA never buys any loans.It insures the loans in place and promises to buy them back if they go south.It's a pretty good deal for the bank.At least FHA recognizes how silly the cost approach is in most cases.Well ,silly is as silly does.
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
greg,

I take the position that FHA guidelines replace the GSE guideline, not just add to them.

When FHA guidelines are part of my scope of work, I do not worry about the GSE guidelines. FHA is the one case where I am willing to add verbaige explaining why certain pre-printed items are applied differently than written.

The reason I am willing to do that is first, because the FHA guidelines are published and well documented, and second, because both Fannie and Freddie are willing to buy loans that have appraisals prepared to FHA guidelines.

I state in my report which guidelines I am following but would never claim to be following more than one set of guidelines.
 
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