Here Is Why FHA Fees Go Up $150

[CANative]

I think if I were to do an FHA appraisal, I'd simply add in my report:

FHA has re-emphasized to the lenders of the importance of recommending to the borrower that they obtain a home inspection. FHA has done this as it recognizes the appraisal report is not a substitute for a home inspection and the appraisal report shouldn't be relied upon as such. Consistent with the FHA directive, I advise my client and all intended users that my appraisal has been completed per the FHA protocol which clearly recognizes it is not a substitute for a home inspection, and consistent with that, recognizes that appraisers are not home inspectors, and the appraisal inspection is distinctly different from a home inspection.​

Or something like that.

Note that the "For your protection..." flyer is only required for prospective buyers. For refi's it's not a requirement. I suppose the rationale is that a homeowner is responsible for knowing his or her property.

 

[kevco]

There will be plenty of appraisers willing to do FHA appraisals at whatever price the AMC is paying. If you think the fees for FHA appraisals are going up, you are dreaming. Remember the 1004MC?

 

[GWISC]

I don't think fees will go up comsurate with added toil. They will go up some. I think far fewer will be willing to complete FHA's. CAN, you forgot the other time waster for FHA; the new requirement to research and comment on comparables sales history going back not one, but 3 years.

I report past transfers and sales anway regardless of the timeframe and only comment on those which occurr within the 1 year portion for Fannie work. This now will add more time with commentary as well as reconciling an old sales price to the current.

 

[KeyWhiz]

I have decided that FHA is not going to be something I do anymore because I believe soon AMC's are going to want multiple pictures of all areas of the crawl space and attic. And I am not crawling into an attic with 30 to 40 inches of insulation. Nor am I going to crawl around in a crawl space that is 18 inches and on dirt. I'm 60. I don't need it anymore. I say if FHA wants a building inspection then get a building inspector. And besides that I know of many scuttle doors that are so hard to get into that I can't even do a head and shoulders. That's because they put 40 inches of insulation over the scuttle. So FHA can take a hike. I think their scope is idiotic and I'm not doing it anymore.

It says that if it a scuttle entrance, you still only have to do the head and shoulders.

The more full attic inspection would be for attics that are more like actual rooms. Which, I would presume you have been more fully inspecting anyway---FHA appraisals or not.

 

[Deleted member 128537]

It says that if it a scuttle entrance, you still only have to do the head and shoulders.

The more full attic inspection would be for attics that are more like actual rooms. Which, I would presume you have been more fully inspecting anyway---FHA appraisals or not.

It doesn't say that. I just took the course. The assumption is that if the scuttle is big enough you are to get your entire body into the attic. I have a newer home and I could easily get my entire body through that door. But even at that, in most newer construction or if the house has been newly insulated you will never get that scuttle open. They are not meant to be opened and closed. The primary purpose of a scuttle door is for accessing the attic only if necessary for fire or wiring if necessary. It is not meant to be opened and closed just to look into the attic.

 

[Doug DeMars]

I was thinking a $150 hike is about right.

FHA fees will be going up for myself because I simply don't want to do them anymore. If I'm busy with other work...better paying work...I'm not going to bother.

As noted by CAN (and others), the general inspection requirements haven't changed all too much. The biggest new hassle will be the additional sales/transfer history for the comps. But besides that...I'm simply tired of the FHA grind. For the first 11 years of my career I never did one. The additional inspection requirements never appealed to me. I didn't become an appraiser to take pictures of crawl-spaces and attics. I didn't become an appraiser to test appliances and check outlets. I didn't become an appraiser to look for peeling paint and play "Where's Waldo" hunting around for carbon monoxide devices.

But I needed the work. So I learned the ropes. I follow the guidelines to the best of my understanding. But now I rather not do it anymore. No thank you. Well...OK...you twisted my arm. You really want to me to do an FHA appraisal? Let me give you my "I don't want to do this" quote and let's see if it sticks.

Besides the additional SOW, FHA is feeling too risky now. Borrower's contracts push the upper limit of value. Minimal skin in the game presents an additional layer of risk. Market appreciation is not so obvious in the foreseeable future. FHA work is just not as attractive as it used to be. I didn't become an appraiser to provide the fastest and cheapest compliance report available. I'd rather spend more time developing a value opinion than seeing if a water heater is properly strapped.

 

[CANative]

I'm starting to have a change of heart in FHA fees. Not because of the inspection requirements... those are trivial and have not changed much.

But the new handbook is directing us to do all three approaches. I'm fine with the cost approach and not charging more. I almost always do that anyway. But now they want the Income Approach for SFRs. That means a lot of research and a rent survey for SFRs in all cases. This is a lot of work that is not NECESSARY in the USPAP sense of the word.

(2) Income Approach to Value for Residential Properties

(a) Standard

The Appraiser should apply the income approach to a Single Family
residential Property when there is evidence of recently rented and then sold
data pairs.

The Appraiser must verify if the subject or the comparable rentals and sales
are subject to rent control restrictions. If comparable sales do not have rent
control restrictions similar to those of the subject, an appropriate adjustment
should be applied.

(b) Required Analysis and Reporting

The Appraiser must analyze rental data and provide support for the estimated
market rents and adjustments applied to the comparable rentals in the
reconciliation of this approach.

The Appraiser must derive the Gross Rent Multiplier (GRM) factor from
market data and support it prior to applying it to the market rent for the
subject.

So, $500 for the basic appraisal. $100 (at least for the rent survey) and another $150 for the research necessary to identify, collect, analyze and reconcile.

$750 minimum. There is going to be a lot of howling.

 

[KeyWhiz]

It doesn't say that. I just took the course. The assumption is that if the scuttle is big enough you are to get your entire body into the attic. I have a newer home and I could easily get my entire body through that door. But even at that, in most newer construction or if the house has been newly insulated you will never get that scuttle open. They are not meant to be opened and closed. The primary purpose of a scuttle door is for accessing the attic only if necessary for fire or wiring if necessary. It is not meant to be opened and closed just to look into the attic.

Well, if you can't get in, then you can't get in.

But I guess we will just have to see how this plays out. A lot of regulations sound good on paper, only to be relaxed once the regulating body finds they are not practical on the user end.

I don't see many appraisers crawling all across the beams of a 3 ft high attic space filled with insulation just to take pictures of every nook and cranny on a 100 degree day nor do I see them spending 3 hours at a house waiting for the dishwasher to cycle through.

FHA and lenders will have to decide how strictly they really want to enforce these thing and to what degree they will decide, "well, we didn't really mean THAT...."

 

[nstanbru]

But now they want the Income Approach for SFRs. That means a lot of research and a rent survey for SFRs in all cases. This is a lot of work that is not NECESSARY in the USPAP sense of the word.

Maybe I'm just misunderstanding section (a). But, my interpretation is it only applies if the subject has a rental history. Plus, we have the additional ambiguity of the use of the word "should" instead of "must". Again, maybe I'm wrong.

 

[Peter LeQuire]

About the transfer history: it's probably different other places - else there would be less mention of it - but in this area we get transfer information from the Assessor's property card (and/or from MPC in one county). It seems a very minor matter to simply report the most recent transfer, since the research is already done, whether it occurred in the past 12 or past 36 months. Of course, multiple transfers would require more reporting. I don't see it as a particularly onerous imposition.