I still have a question

[Mike Seward]

" By adopting and requiring the use of updated appraisal reporting forms and relaxing its repair and inspection requirements for existing properties, FHA has
ensured that an appraisal of a property that is to be the security for FHA-insured financing is not materially different from an appraisal of the same property performed for conventional financing. "

If the two appraisals are "not materially different", are we still expected to flush toilets and turn on the heat, etc?

 

[Marcia Langley]

Mike,

Yes. The quoted statement in and of itself does not change their existing guidelines.

 

[Greg Bell]

Don't forget to peek in the attic and crawl under house.Seems like an inspector to me....

 

[Jo Ann Meyer Stratton]

Just attended a seminar presented by the Santa Ana HOC Thursday and had a discussion with the chief underwriter about that. He and the other speaker mentioned several times that in the future an appraisal could be completed that would be usable for either FHA or conventional. I told him that could not happen. In an appraisal report the appraiser must state the intended use and the intended user also FHA has several requirements that conventional loans do not have (for example FHA requires an engineer's verification that the foundation, perimeter enclosure, installation, etc meet their guidelines) therefore an appraisal report is not interchangeable. FHA is one of the intended users and intended use is to determine if the property is eligible for FHA insurance. Conventional appraisal reports only have the lender as the intended user and the loan is not insured.

 

[Mike Seward]

So, it sounds like the above quoted statement is incorrect. An FHA appraisal IS (still) materially different from a conventional appraisal.

 

[Don Clark]

So, it sounds like the above quoted statement is incorrect. An FHA appraisal IS (still) materially different from a conventional appraisal.

Yes, as usual Jo Anne is right

 

[CANative]

Why can't a conventional lender use an appraisal report prepared under FHA requirements? It would be like opening up v3.0 with v.3.1. It's just that you can't open 3.1 with 3.0.

 

[Tim Hicks (Texas)]

Why can't a conventional lender use an appraisal report prepared under FHA requirements? It would be like opening up v3.0 with v.3.1. It's just that you can't open 3.1 with 3.0.

We are on v3.1 already? Dang it, time to upgrade!

 

[Marcia Langley]

I'm sure a conventional loan package could include an appraisal performed to FHA standards as long as they were willing to accept FHA as an additional user. But of course the reverse is not true. An FHA loan package could not be based on an appraisal that does not conform to FHA guidelines.

In the past, the GSEs have said they securitize loans that have been insured by FHA.

That "interchangeable" language is not correct.

In any case, the appraiser must identify the intended users, intended uses, and client requirements at the time of the assignment. If the client uses it differently after the fact, the appraiser wouldn't know.

 

[TJSum]

I agree that FHA appraisals have been used for conventional loans, lenders have admitted as much, even from the VC sheet days.

I have no first or second hand knowledge of this, but in one class the instructor told us she heard of an appraiser getting a very bad review from HUD for a report that was written for a conventional appraisal assignment. The lender switched it to FHA after the fact and just tried using the conventional report. Whether it is true or not, it is a very good idea to write on all of your conventional appraisals that the report can not be utilized for FHA or VA financing as it was written to conform to conventional guidelines only.