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Is HUD secretary serious about FHA insured loans or there is going to be business as

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moh malekpour

Thread Starter
Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
Several years ago when HUD was concerned about taxpayers money, it used to assign appraisals for all of their insured loans. This policy made appraisers independent from originators influence. Due to the downsizing and the pressure from government to cut costs and from lenders to let them have their own choice of appraisers selections, HUD gave up that responsibility and let the originators to select their own appraisers as long as appraisers were on FHA roster. But the roster is a joke. Practically any appraiser can apply to be placed on the FHA roster as long as the appraiser is licensed. There is no scrutiny, experience, and geographical or practical competency requirements. When HUD let originators to select their own appraisers for their loans, they consciously or unconsciously selected appraisers who inflated values and gave them any value they needed to close their loans because as soon as FHA insured the loan, it was FHA problem. To let originators selecting appraisers for FHA insured loans was like to let the fox guarding the henhouse.
If FHA is serious about its insured loans and is concerned about taxpayers money, it should take the appraisers selection responsibility back from originators and do the same thing that used to do several years ago. One clerk can handle this responsibility in any HUD center.
 

Wendy

Senior Member
Joined
Feb 23, 2004
Professional Status
Certified Residential Appraiser
State
Florida
I'm seeing all of the pressure and low tactics of the worst of the sub-prime sharks in FHA orders now.

There are a few good guys out there, but they are getting drowned out just like the good appraisers. I predict that the next crisis will be FHA and we will all be pointing back to threads like this saying "I told you so!".
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I did a lot of FHA appraisal reviews back in early 2000-2001 for REAC. The things that I found back then were nuts. That wasn't too long after the FHA required the 50 question test. We had bad FHA appraisers back then too. So, it is not limited to the new appraisers getting on the roster now. It is only magnified by the number of new appraisers being accepted. We will see the fallout of these decisions in about 5-10 years and it will be the appraiser's fault not the FHA. Just wait and see!
 

moh malekpour

Thread Starter
Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
I did a lot of FHA appraisal reviews back in early 2000-2001 for REAC. The things that I found back then were nuts. That wasn't too long after the FHA required the 50 question test. We had bad FHA appraisers back then too. So, it is not limited to the new appraisers getting on the roster now. It is only magnified by the number of new appraisers being accepted. We will see the fallout of these decisions in about 5-10 years and it will be the appraiser's fault not the FHA. Just wait and see!
FHA roster started in 1998-1999. Prior to that, HUD was responsible for their appraisers selections. They had Appraisers trainees, seminars, classes and appraisers had Chums numbers. It was very difficult to get on their approved lists. HUD gave up their responsiblity for their appraisers selection in around 1994. Their excuse was to cut the cost of government to manage FHA appraisers but the real reason was to let originators to do their things. The FHA appraisrs roster was a joke. It had a very brief multi question test that could be taken in 10 minutes. I took it in 1999. Now, they don't even have any test but it doesn't make any different. Practically anyone with license can get on the roster. I don't know why there should be FHA appraisers license. What good it does except it indicates that the HUD has the copy of the appraiser in the file?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I have been on the roster since 1995 and If I remember correctly, we had to send in samples of our work for review with our applicaiton. No test was required at that time but that came later like you said. It was the 50 question test which was basicly common sence.
 

realbiz

Junior Member
Joined
Mar 14, 2008
Professional Status
Certified General Appraiser
State
California
Moh, I totally agree with you. The FHA test was a joke, FHA in my opinion was much better when they had control. After appraising and reviewing FHA appraisals for almost 15 years I had to take the 50 question test too. I had a Chums number, went to quarterly meeting, and received training directly from HUD. I really enjoyed when they assigned the appraisals, no lender pressure what so ever. If the value came in low, it was the lenders job (really the real estate broker) to obtain different comps and ask for a reconsideration. I received very few reconsideration, and from what I remember there was never a change. Usually they wanted to compare apples with oranges. Now the same subprime lenders are taking their hit the number appraisers over to FHA. If FHA does not take control, they will have problems.
 

sbb04

Sophomore Member
Joined
Jan 29, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Now that the sub prime market has collapsed it's obvious from the inquiries I'm getting (value checks, lender pressure, etc) that FHA has become the new candy store for these MBs. These people have absolutely no scruples. They could care less if the people lose their home, if the government goes even deeper in the hole or if an appraiser loses their license. I've gotten to be even more crusty with these people than before because I used to be on the fee panel when the government actually MADE money (I know a wild concept) on the insurance program and it ticks me off that these sharks are going to destroy the whole program.
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
Here in IL I had to get a chums # for Northern IL Chicago field office, Springfield Field office for Counties south of Will, and Indianapolis Field office for Indiana, all 3 had 2 days of training with HUD and then the first 3 reports for each were Field reviewed and graded. Then lenders started yelling about turn around times and they opened it for everyone and soon the lender started using their favorite skippy's.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
There is no scrutiny, experience, and geographical or practical competency requirements

Of course there is. HUD/FHA rules, policies, guidelines and protocols are very well documented and accessible. Licensed and certified appraisers are responsible for understanding and executing the appropriate scope of work for each assignment. Each appraisal report issued certifies to this and further certifies that they have the knowledge and experience necessary.

If they don't, off the list they go and the lender probably doesn't get a check from HUD.

How is a one or two day seminar and a quiz or a 3 hour exam going to help much? It's taken me years and years to get this far and I still have to put on my thinking cap pretty often.
 

ghrousseau

Member
Joined
May 5, 2006
Professional Status
Licensed Appraiser
State
Virginia
Several years ago when HUD was concerned about taxpayers money, it used to assign appraisals for all of their insured loans. This policy made appraisers independent from originators influence. Due to the downsizing and the pressure from government to cut costs and from lenders to let them have their own choice of appraisers selections, HUD gave up that responsibility and let the originators to select their own appraisers as long as appraisers were on FHA roster. But the roster is a joke. Practically any appraiser can apply to be placed on the FHA roster as long as the appraiser is licensed. There is no scrutiny, experience, and geographical or practical competency requirements. When HUD let originators to select their own appraisers for their loans, they consciously or unconsciously selected appraisers who inflated values and gave them any value they needed to close their loans because as soon as FHA insured the loan, it was FHA problem. To let originators selecting appraisers for FHA insured loans was like to let the fox guarding the henhouse.
If FHA is serious about its insured loans and is concerned about taxpayers money, it should take the appraisers selection responsibility back from originators and do the same thing that used to do several years ago. One clerk can handle this responsibility in any HUD center.

Moh, they are reviewing the appraisals and the DE underwriters. I saw a letter today one of our DE underwriters received because the CR appraiser clearly stated in the report that he did not inspect the crawl space. The DE failed to catch it because it was in a statement attached to the report which explained the SOW, so HUD-1 wants the appraiser to go back out and inspect the crawl space on a closed loan. I think there is some lag time on the review process, but HUD is looking at files they receive from lenders. Even delegated lenders have random files pulled for case binder review by HUD. Examples like this and others I have seens, along with the fact that they have been contracting for field review appraisers, gives me hope that they are getting a little more serious about auditing. Time will tell.
 
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