FHA - REO to purchase appraisal changes

[Ted Martin]

I did an FHA REO a couple of months ago with less than $5000 in repairs, the report was based on "AS IS" condition.

The property is now under contract, with a new FHA loan, and escrow for the repairs. Do I add an amendment to the original report or just do a new report since it will now be done "SUBJECT TO" condition. Most of the comparable sales will change. I called the HUD tech line and they didn't seem to know which way I should do the report. Because of the change from AS IS to SUBJECT TO change there will be a change in value.

 

[Pamela Crowley (Florida)]

My opinion: New Appraisal and Report.

 

[Ted Martin]

Finally got a call back from HUD.

These are treated as a reconsideration.

The format of the reconsideration is up to the appraiser. Since all the comps change I think I'll do a new form (1004) report which will be identified as a reconsideration of the original report with reference to the original report.

 

[Ted Martin]

Just spoke to a HUD tech support person and the correct answer is I'm NOT to do a reconsideration. There are very specific instructions in HUD mortgage letter 00-27 that say the lender is to use the original REO AS-IS appraisal and can't order another appraisal for six months.

 

[Pamela Crowley (Florida)]

Ted,

Thanks for the real answer!