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FHA Reverse Mortgage

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Wyoming

Sophomore Member
Joined
Jun 10, 2006
Professional Status
Certified Residential Appraiser
State
Wyoming
Lender is doing FHA Reverse Mortgage on 100+ year old home that is mostly paid off. The roof has a minor leak and the lender wants me to do "as-is" and then include a cost to cure.
Looking at the HUD Appendix D, it reads "Attic – Enter the attic and observe the interior roofing for insulation, deficient materials, leaks or readily observable evidence of significant water damage, structural problems, previous fire damage, FRT sheathing, exposed and frayed wiring and adequate ventilation by vent, fan or window. If any of these deficiencies exist, condition the appraisal on their repair and prepare the appraisal “subject to repairs” and/or “subject to inspection”.

So... Can I do it "as-is" as requested or do I have to do it "subject to repairs"?

I know the answer seems obvious but I don't want to PO my only client this week.

Thank you for any help you can give me relating to this question.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Subject to the roof repair. No ifs, ands, or buts because the people are old, poor, hard of hearing and hardly notice the dripping sounds etc. or whatever hard luck story the mortage borker sleazebag gives you.
 

Marcia Langley

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

Your client has given you two conflicting instructions. One, to perform in adherence to FHA guidelines, and another to violate those guidelines.

You simply can't meet both requirements. It is impossible and an unacceptable assignment condition.

You could tell him that you will be happy to do one or the other but that would probably **** him off more than just sticking to the FHA rules and completing the report.

You could also remind him that an "as is" appraisal that was not conforming to FHA/GSE guidelines would require that your opinion of value be based on comparable sales that also had leaky roofs and that would likely cause the value to be lower.

And why in the heck would he need a c2c on an "as is" appraisal?

On an "as is" appraisal there is nothing to cure. A "cure" only has meaning for what it would cost to bring a property up to the appraised value. An "as is" appraisal is already at appraised value.
 

Wyoming

Sophomore Member
Joined
Jun 10, 2006
Professional Status
Certified Residential Appraiser
State
Wyoming
Thank you both.
I am also looking at the 203 (k) requirements if that is the direction the lender is going.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
203 (k) has to have repairs of more than $5,000. There is a lot to a 203 (k) loan deal. The appraisal is pretty much the same but you do an as is appraisal and a subject to appraisal in the same report from what I have read.

You cannot do an as is appraisal for FHA if there is a roof leak. Everyone on this thread has it correct.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Thank you both.
I am also looking at the 203 (k) requirements if that is the direction the lender is going.

There is no such thing as 203K for a reverse mortgage.....what the stupid mortgage broker does not realize, however, is underwriters have very wide discretion in waiving conditions on reverse mortgages and I have even seen one company close loans on reverse mortgages and escrow large repair costs at settlement......I know this to be the case since I can think of two compliance inspections that I did on these types of loans months after the borrowers went to settlement. Remember, on an FHA appraisal report, including for a reverse mortgage, that is performed "subject to" you need to provide an estimate of the cost of the required repairs.
 

TITAN1

Sophomore Member
Joined
Jan 2, 2008
Professional Status
Certified Residential Appraiser
State
Florida
"I know the answer seems obvious but I don't want to PO my only client this week. "

Matt: You don't have to **** off your only client this week, just send him/her a copy of the HUD requirement. I'm sure he/she knows what the correct procedure is in conditioning an FHA appraisal for a leaky roof. If not, you just taught them something this week!
 
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