FHA refinance-repairs?

[Neil Melby]

Am starting to do a lot of FHA again. I have an FHA refinance. Back in the day, I remember that I think we called for repairs only on flaking paint on an FHA refinance. Is that correct, and is it still true. I have some worn and missing shingles on this property, I could address them under the marketability issue.

 

[RSW]

Everything in the 5140.2 Handbook, revised Appendis D, Mortgagee Letters 2005-34 and 2005-48 apply to a refi as well as a purchase. There is no difference. How long has it been since you have done an FHA appraisal? Flaking paint is to be conditioned if the house was built prior to 1978. Missing roof shingles should be addresses as a repair item anytime. How worn are the shingles? Remember two years REL for a roof. If there are three layers of shingles, then all three layers have to be removed. You really need to read HB 4150.2 and the revised Appendis D several times before you do another FHA appraisal.

 

[Neil Melby]

Thank you so much for pointing out my shortcomings. To answer your question, I have been doing FHA appraisals since 1992. Just to show you I am not hallucinating, I did find what I was looking for, though it does not apply in this case. I was thinking of an FHA STREAMLINED refinance, which this is not, it would have needed to be an FHA loan already, the streamline is designed to lower the monthly P & I on a current FHA insured mortgage. In the streamline, if an appraisal is required FHA does not require the repairs (except for lead based paint) to be completed, although the lender may require repairs beyond LBP. I used to do quite a few of these, and that is what I was thinking of (Ref Hdbk 4155.1, Rev. 4 Chapter 1, and Mortgagee Letter 1996-10. I have gone years without doing an FHA refinance, now it seems that the FHA refinance may be back in favor. I think that this was a good question, as many of us may start to see both FHA streamlined refinances and refinances into the FHA program as FHA is back in business after years of very low volume, at least in my practice area

 

[Mr Rex]

Neil, FHA made some fairly significant changes to protocol in 2005, via the mortgagee letters that RSW mentioned 2005-34 and 2005-48 which includes the revised Appendix D as an attachment. Here is another tid bit I found via a google search, a FAQ from 1/2007: http://www.HUD.gov/offices/hsg/sfh/appr/aprval.pdf

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[CANative]

All this time you've been telling us that you have the Appendix D engraved on your contact lense and now we find out you've been getting crib notes from Jerry Mayer?

 

[Mr Rex]

I call him J. He calls me X.

 

[Neil Melby]

Mr. Rex,

I do have the HUD site on my desktop, and have copies of 2005-34 and 48 handy. See my post above and note the two types (streamlined FHA refinance and into the FHA program refinance) and I think you'll understand what my fogged 46 year old brain was trying to remember.

 

[Mr Rex]

Mr. Rex,

I do have the HUD site on my desktop, and have copies of 2005-34 and 48 handy. See my post above and note the two types (streamlined FHA refinance and into the FHA program refinance) and I think you'll understand what my fogged 46 year old brain was trying to remember.

4155.1 and 1996-10 are lender directed and shouldn't affect the way an appraiser reports his/her findings IMHO. Am I missing something?

 

[RSW]

Thank you so much for pointing out my shortcomings. To answer your question, I have been doing FHA appraisals since 1992. Just to show you I am not hallucinating, I did find what I was looking for, though it does not apply in this case. I was thinking of an FHA STREAMLINED refinance, which this is not, it would have needed to be an FHA loan already, the streamline is designed to lower the monthly P & I on a current FHA insured mortgage. In the streamline, if an appraisal is required FHA does not require the repairs (except for lead based paint) to be completed, although the lender may require repairs beyond LBP. I used to do quite a few of these, and that is what I was thinking of (Ref Hdbk 4155.1, Rev. 4 Chapter 1, and Mortgagee Letter 1996-10. I have gone years without doing an FHA refinance, now it seems that the FHA refinance may be back in favor. I think that this was a good question, as many of us may start to see both FHA streamlined refinances and refinances into the FHA program as FHA is back in business after years of very low volume, at least in my practice area

That's exactly why you should read the documents.

 

[Neil Melby]

I think I see what you are saying. Even if an appraisal assignment is identified as an FHA streamlined refinance, you would call ANY repairs based on your understanding of 05-34 and 48, and then the lender would decide which to require, as FHA only requires LBP, but the regs say that the lender may require repairs to be completed, which they may if there is a safety or marketability issue which could be improved by completion of repairs.