FHA requirements for contents or verbiage in the appraisal report

[spittman]

When they first did away with the VC sheets, I still used them for reference when inspecting the properties. You may want to rewrite the list in away that aligns with your inspection routine so that you can just check each item off as you walk along the property. Anything you are not sure of then make sure take plenty of pictures and notes and refer to the handbook when you get back to your office. It's always best to take more pictures than you need than not enough. Before you know it you won't need the list anymore and you will be able to go directly to the section you need in the handbook to quote any specific comments.

You don't have to comment on every single thing that meets MPR. Better to just comment if it doesn't BUT ...
in my experience client's look for these specific comments:

"Property meets (or does not) FHA's MPR/MPS"
"property was inspected in accordance with HUD Handbook and all current ML referendum"
"utilities were on (or off) at the time of inspection"
"a representative number of appliances were observed to be functioning"
"attic was inspected at head & shoulders level"
"FHA is the intended user of this appraisal. The intended use of the appraisal is to assist FHA in assessing risk while securing an FHA insured loan."

Look in your engagement letter. They will likely tell you what specific comments they look for. The more FHA appraisals you do the more you will learn what to look for and what to comment. After awhile I just started doing all my FHA appraisal reports the same instead of trying to remember which comments each AMC/client wanted.

 

[JTip]

Checklist #79: Make sure the TPR valve has the appropriate discharge pipe, and don't forget a picture.

 

[Tom D]

under verification on grid you need 2 sources. MLS is not a considered a source. so if you have a recorded number, very good, and i also say listing agent.

 

[Tom4value]

I'm completing my 1st FHA appraisal in 15 years. I need suggestions for what verbiage that I need to include in the appraisal. I remember that there's special verbiage that I need to state regarding HUD Handbook 4000.1. Do I have to say that the appraisal is in compliance with HUD Handbook 4000.1?

Also, I am told that I need to insert a statement into the appraisal that relates to the old VC forms. Something that states if there were any issues with the residence regarding heat, water pressure, hot water, appliances, earth wood contact, adequacy of crawl space, roof, etc. I'm guessing at the points, but there's got to be something that simply states that all systems are fine without listing every single component of the house. Please provide any suggestions that you have.

If you have any other suggestions for the FHA, that I don't already do for the VA or conventional appraisals, please suggest.

What do they require now for measuring set-backs from property lines? Do they have any requirements about showing the drain field on the sketch? I've heard not.

thanks for your time.

Question 1- yes.
question 2- You don't need to mention the VC sheets (wow, I guess it has been a long time since you did one!). However, you should be looking at all of the items on them (good to carry a copy of them for reference) during your inspection and note any issues in the verbiage regarding the improvements. I also mention that I observed the function of all of the components and found no issues. I also mention I inspected the basement and attic and you need to provide photos of each. When doing a multi-family, you also need photos of the stairwells.

FHA does not require a map showing the location of the well and leachfields (however, some lenders require them). Still, you are required to find out if they meet the minimum distances between the two and from the lot lines.

 

[Michael Klinger]

When they first did away with the VC sheets, I still used them for reference when inspecting the properties. You may want to rewrite the list in away that aligns with your inspection routine so that you can just check each item off as you walk along the property. Anything you are not sure of then make sure take plenty of pictures and notes and refer to the handbook when you get back to your office. It's always best to take more pictures than you need than not enough. Before you know it you won't need the list anymore and you will be able to go directly to the section you need in the handbook to quote any specific comments.

You don't have to comment on every single thing that meets MPR. Better to just comment if it doesn't BUT ...
in my experience client's look for these specific comments:

"Property meets (or does not) FHA's MPR/MPS"
"property was inspected in accordance with HUD Handbook and all current ML referendum"
"utilities were on (or off) at the time of inspection"
"a representative number of appliances were observed to be functioning"
"attic was inspected at head & shoulders level"
"FHA is the intended user of this appraisal. The intended use of the appraisal is to assist FHA in assessing risk while securing an FHA insured loan."

Look in your engagement letter. They will likely tell you what specific comments they look for. The more FHA appraisals you do the more you will learn what to look for and what to comment. After awhile I just started doing all my FHA appraisal reports the same instead of trying to remember which comments each AMC/client wanted.

thanks for your time. This does help.

 

[Michael Klinger]

Question 1- yes.
question 2- You don't need to mention the VC sheets (wow, I guess it has been a long time since you did one!). However, you should be looking at all of the items on them (good to carry a copy of them for reference) during your inspection and note any issues in the verbiage regarding the improvements. I also mention that I observed the function of all of the components and found no issues. I also mention I inspected the basement and attic and you need to provide photos of each. When doing a multi-family, you also need photos of the stairwells.

FHA does not require a map showing the location of the well and leachfields (however, some lenders require them). Still, you are required to find out if they meet the minimum distances between the two and from the lot lines.

thanks for your time. You were a help. Now, one last clarification: Does the FHA still expect us to measure the distance between the house and 2 property lines?

 

[Michael Klinger]

i will help you
UTILITIES WERE ON, FUNCTIONING. NO APPARENT STRUCTURAL DEFECTS. MECHANICAL SYSTEMS VISUALLY ARE IN WORKING ORDER, FUNCTIONING. APPLIANCES ON, BUILT-INS & KIT CABINETS FUNCTIONING. ADEQUATE ELECTRIC SERVICE. HEAT SOURCE IS PERMANENTLY ATTACHED, VENTED TO OUTSIDE, CAN HEAT ALL AREAS W/PLUMBING TO MINIMUM 50 DEGREES, MEETS LOCAL CODE & ALL FHA/HUD REQUIREMENTS FOR HEAT SOURCES. THE FLAT ROOF AREA COULD NOT ADEQUATELY BE OBSERVED VISUALLY. NO LEAKS WERE NOTED INSIDE THE DWELLING. Smoke and carbon monoxide detectors were present the time of inspection.

The subject property meets the requirements of Handbook 4000.1.

need all the lot measurements on the front page, or a plat plan with them on it
you better catch any peeling paint, or safety hazard like no handrails.. they use magnifying glasses, i swear, when HUD does a post closing review
better mention the availability of schools, a map showing shopping, golf course, things of interest if there are any
if a flat roof, say you couldn't see it
every extra porch, patio, etc show measurements on the drawing
'uncovered patio' is their phrase, not mine
pictures of systems to prove that you actually may have looked at them
you really should read the parts of what they want in an appraisal. more like a narrative added to the 1004 form.
real comp photos you took
if a sale, they like you better if your have more repairs and just tell the home owner up front, it's easier that way. verbal note 'i don't make these rules, i just enforce them'

The intended use of the appraisal is solely to assist FHA in assessing the risk of the Property securing the FHA-insured Mortgage (24 CFR § 200.145(b)). FHA and the Mortgagee are the intended users of the appraisal report. THE INTENDED USE IS TO EVALUATE THE PROPERTY, THAT IS THE SUBJECT OF THIS APPRAISAL, FOR FHA TO SUPPORT THE UNDERWRITING REQUIREMENTS FOR A FHA-INSURED MORTGAGE. NO ADDITIONAL INTENDED USERS ARE IDENTIFIED BY THE APPRAISER. ANY OTHER PARTY RECEIVING A COPY OF THIS REPORT FOR ANY REASON IS NOT AN INTENDED USER; NOR DOES RECEIVING A COPY OF THIS REPORT RESULT IN AN APPRAISER-CLIENT RELATIONSHIP. USE OF THIS REPORT BY ANY OTHER PARTY(IES) IS NOT INTENDED BY THE APPRAISER.

FHA Appraiser Roster Definition:
"Appraiser refers to an FHA Roster Appraiser who observes, analyzes, and reports the physical and economic characteristics of a Property and provides an opinion of value to FHA. An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector."

thanks for the extra effort you put into this answer. You did help. Does the FHA still expect us to measure the distance between the house and the property lines?

 

[Tom D]

only the measurements of all the property lines are required on the appraisal, or a legal description, or a detailed plat plan.

 

[ramrcdk]

Modify this to "your" observations. These are minimal 'acceptable inclusions' typically found on FHA assignment orders.

*********************************
FHA-HUD APPRAISAL INSPECTION GUIDELINES & REPORTED CHECK-LIST OBSERVATIONS

**FHA-HUD Inspection Comments for the Subject Property are included below. Reference applicable photos.
1. FHA Case # must be noted in the upper right hand corner of all pages. Yes
2. “The Intended User of the report is FHA and the Mortgagee”. Yes
3. “The subject property meets minimum property standards per HUD/FHA handbook 4000.1 and all applicable Mortgagee Letters”. Yes, included verbiage.
4. A representative sample of the mechanical elements must be tested; toilets flushed, lights turned on and off, faucets working, heating/air conditioning checked, etc. A statement to this effect must be present in the appraisal. All appliances must be tested. The following must be included in the appraisal report: Yes, representative samples of the mechanical elements were tested & applicable photos are attached.
1. A head and shoulders inspection of the attic and crawl space must be performed. Yes
2. Not Vacant. If the property is vacant, the appraiser should note, in the “Improvements” section under “condition of the property,” whether the utilities were on or off at the time of inspection. If either water or power is off, the appraiser must condition the appraisal on a satisfactory re-inspection (complete the appraisal subject to).
3. Listed Repairs Needed. Required repairs are to be limited to necessary requirements. Remember the three “S’s”, Safety, Security and Soundness. No adverse conditions were observed.
4. Include a building sketch showing the Gross Living Area above grade, including all exterior dimensions of the house. Include on the sketch the outline of patios, porches, garages, breezeways and other offsets. State “covered” or “uncovered” to indicate a roof or no roof (such as over a patio). Yes
5. Subject photos must be taken of the front and rear at opposite angles to show ALL SIDES of the dwelling. Additional photos are required for any improvements with contributory value that are not captured in either the front or rear photograph. Yes
6. Street scene photo must include a portion of the subject site – street views/photos in both directions must be included. Yes
7. Comparable photos must be current/original; MLS photos are not acceptable. Yes
8. Active listings required with all appraisal reports when market is changing (increasing or decreasing). Listing Example Yes.

AND/OR

Typical Report Inclusions
**FHA ADDITIONAL COMMENTS
Per Handbook 4000.1 & all applicable Mortgagee Letters.
FHA/HUD is a named Intended User.
Subject Property inspection (or necessary Re-Inspection/Final inspection) process included in the report will include the requirements of HUD/FHA per inspection of the property.
The subject property meets minimum property standards per HUD/FHA Handbook 4000.1 and all applicable Mortgagee Letters.
Inspection(s) included: representative sample of the following tests & including applicable photos: Utilities/Systems/Appliances ON. Mechanical Elements (lights, toilets, faucet, heat/air systems, etc.) were operating for their respective intended uses.
Attic "head & shoulders inspection" was completed. The drop-stair & not floored attic limited access to all areas of the attic: "head & shoulders" view.
The roof shingles appear to have > 2 years remaining & estimated _____+- years of typical remaining life expectancy. (EA: A ground level view would not allow for an inspection of each roof elevation or shingle with those not observed EA-assumed to be similar in condition to the shingles that were observed during the normal course of an appraisal inspection.)