HUD Says, Nope, But Let's Talk

[Pamela Crowley (Florida)]

Red Blumenstock sent this to me. After asking him about posting it, here it is. Looking forward to responses.

The following article is from "The Plan" as issued by Bill Garber, Washington, DC , V.P. of the Appraisal Institute.

HUD Says, Nope, But Let's Talk

On August 19, the Department of Housing and Urban Development Office of Single Family Program Development responded to the Appraisal Institute and the American Society of Home Inspectors on the differentiation between real estate appraisals and home inspections. That letter sent July 17, 2001, made two suggestions regarding appraisals and home inspections: 1) Eliminate the Homebuyer Summary Sheet and 2) Revise HUD documents to clearly define the distinction between appraisal and home inspections in terms of purpose, scope and their respective meanings for homebuyers.

HUD formally rejected the suggestion to eliminate the Homebuyer Summary Sheet saying, "We are aware that some individuals may believe that the appraisal constitutes a home inspection, despite those documents that explain the difference and encourage the homebuyer to obtain an inspection by a qualified home inspector. Nevertheless, we believe there is considerable value in the Homebuyer's Summary sheet since it does provide a disclosure to prospective homebuyers outlining the repair conditions as observed by the appraiser and noted on the Valuations Condition Form."

HUD was more open to the second suggestion: revising documents to clearly differentiate between an appraisal and home inspection. The letter states, "We are quite willing to consider revisions to FHA documents that enhance the ability of the homebuyer to understand the differences between appraisal and inspections. However, since no specific recommendations were made in your letter, we will defer changes until we have an opportunity to review your suggested language."

HUD has delegated staff member to work with the Appraisal Institute and ASHI on this issue. For further information, contact Bill Garber at 202-298-5586 or bgarber@appraisalinstitute.org.

 

[Larry Lyke]

The way the FHA pruchase is structured now (since July '99), the buyer gets two bites at the apple.

At time of agreeing to purchase the property, she signs among the documents a CN form. After the appraisal is done, she gets to see what the appraiser is doing about the condition of the property.

If the Realtor cared for anything more than her commission check, she would make sure the buyer understands what's going on.

 

[Farm Gal]

Hunh?

Larry I have to admit my TOTAL ignorance about the buyer end of the FHA stick I only know our end is the one tha stirs up all the errrr 'stuff'

: what the heck is a CN form?

LOL what the APPRAISER is doing about the property

tee hee, hoo hoo HAA HAA HHAAA HA!

or is that bawww?!?!? :?

 

[Brad Pack]

Does the HBS state, "Appraisals are different from home inspections"?

Does the HBS encourage the borrower to contact their lender if they have any questions?

Does the HBS give a toll free (HUD) number for questions?

Is the home buying public in an uproar about this?

Does HUD sanction appraisers for missed property dificiencies that go beyond "readily observable"?

OR

Could it be the AI is confused about HUD appraisal policy and procedures?

Just curious.

 

[Larry Lyke]

Lee Ann --

I'm responding to you while skipping over Brad, simply because he raises questions which would compound my answer to you and questions to which I don't know the answer(s), resp.

"CN form" is what I lovingly call the "Consumer Nanny" form, the one the buyer is obliged to sign as part of the FHA purchase agreement package at the time of making an FHA offer to purchase the property:

The CN form is aka HUD-92564-CN (6/99), "For Your Protection: Get A Home Inspection."

As you know -- or may not know -- the FHA purchase package, CVP, has 3 parts: HUD-92564 (6/99)-CN, HUD-92564 (6/99)-VC, and HUD-92564 (6/99)-HS.

The appraiser is typically familiar with the latter 2, because they are both part of the appraisal package submitted by the appraiser to the lender.

The former is the 1st part of the Comprehensive Valuation Package, which the Realtor gets the buyer to sign. It goes to the lender with the Purchaase Agreement but doesn't get passed through to the appraiser. Nor does the appraiser have to/need to do anything with it. But it's nice to know that the buyer had to sign such a form and had the opportunity to reject a formal home inspection, but had the opportunity to consider it -- considering the fact that the home inspection fee can be rolled into the mortgage amount without having to qualify to do so credit-wise or property-appraisal-wise.

The home inspection fee and MIP on an FHA loan can be added to the top of an FHA loan. But because Realtors often don't understand either of these latter items, they typically pad the selling price to accomplish the latter. This can create a cycle of 'deception in perpetuity' of expotential smoothing in the marketplace [more so than ordinary expotential marketplace price inflation when using FHA-sold properties as Comps, especially on new FHA sales].

"tee hee, hoo hoo HAA HAA HHAAA HA!" ... As they say in German, "Gleichfalls." That's a polite equivalent 'back at you,' without a need to understand the original.

 

[Farm Gal]

Thanks Larry!

I '***-umed' that it was the form I lovingly call The Homebuyers Direct Connection to MY Pocket :evil:

But I wanted to know for sure, oddly had never twigged to the CN at the bottom, as I read of some other acronym or number and figured I knew it all

Thanks for the lesson! that was a lot of work, but now I'm going to have to go and re-read the fine print on those forms we fill (something all of us should do periodically in the time we MAKE not 'take'.

I KNOW I am not the only one who wondered, but it figures I'm the only one to ask

 

[Larry Lyke]

Lee Ann et all --

By now you've all learned a new word in the next to the last paragragh of my above post. A word that doesn't mean anything [Yet!].

"expotential smoothing" ... and ... "expotential marketplace" ...

Although it doesn't make any sense, it sounds pretty good to my musical ear, but the correct word my MS Word spellcheck probably caught -- but I clicked right through --

is "exponential."

 

[Farm Gal]

Snicker-

Larry: Being the queen of fumblefingers , and lacking the time (or interest) in seperately running an offsite spellcheck on my postings on this forum, I simply make a standard assumption (no caps required on THIS one)

that my fellow brilliant appraisers have a simliar "digital disconnect". :lol:

I read that as originally intended, and marveled at your ability to mispell in the same manner twice in the same paragraph !

I HATE picking up reports that I reviewed, and spellchecked at any point after a week - Suddenly ALL the poorly phrased, mispelled and otherwise syntactically incorrect or mangled incedents jump off the page :evil: and I didn't SEE them when I reviewed!!! 8O