LO Wants Another FHA Appraisal.

[RSW]

Very good point, chris!

 

[ZZGAMAZZ]

I work with several mortgage BANKER clients with in-house underwriting. I'm also wondering if the 2nd appraisal will be identified as a "2nd FHA Appraisal." This process is much less definitive if one considers the nuances. Although the opinion of market value is what it is, we're just trying to figure out what's legit and what's not.

<<Ouch icon>>

 

[Caterina Platt]

That is what I expected and assumed, but I got to the bottom of it yesterday. According to the VP of the client: the original appraiser is no longer on the approved list for his investor....the original appraisal was used to fund the FHA loan in house. The loan is being sold out to another investor.

The original appraiser has been removed from the list and they need someone on their list to provide an appraisal that supports the original opinion of value. Investor stip on an already insured loan. I thought it sounded fishy. I told the VP I would not be including the FHA case number on the report and he was fine with that. Took me awile to figure this one out.

So are you doing this as a retro assignment with the investor as your client?

 

[PropertyEconomics]

That is what I expected and assumed, but I got to the bottom of it yesterday. According to the VP of the client: the original appraiser is no longer on the approved list for his investor....the original appraisal was used to fund the FHA loan in house. The loan is being sold out to another investor.

The original appraiser has been removed from the list and they need someone on their list to provide an appraisal that supports the original opinion of value. Investor stip on an already insured loan. I thought it sounded fishy. I told the VP I would not be including the FHA case number on the report and he was fine with that. Took me awile to figure this one out.

I believe this statement makes this assignment unacceptable under USPAP. Sorry. You cannot accept an assignment with a predetermined value or range of value which favors the cause of your client.

 

[Marcia Langley]

Mortgagee Letter 2008-09 states that a FHA case number is NOT required for the second appraisal requirement for high LTVs above $417,000 in declining markets. It is your choice to determine to what degree you choose to know the FHA regs.

The letter says a new case number is not required. The original case number is used. The FHA Connections system has a space to log in the second appraisal but only when required by FHA regs. New "first appraisals" are not logged in to that second appraisal slot.

It should be fairly easy for appraisers to tell if the order is for one of those FHA required second appraisals. For one thing, they will be ordered directly by the bank.

If you want to know whether the order is for an FHA required second appraisal, all you have to do is ask the underwriting bank. If that does not satify, ask the HOC. If the question is asked properly, it's a simple yes or no question and should not be difficult to answer.

If you learn that someone is trying to replace the first appraisal, it is also simple to ask the HOC if a first appraisal is already logged in. That is also a simple yes or no question.

======

If you learn that your delivered appraisal was never logged in, report it to the HOC. If that does not satisfy, report it more directly to HUD. Do whatever it takes.

If you suspect that someone else's appraisal was not logged in, you may want to report that, too, but you may not have all the facts.

The primary reason the FHA system is set up the way it is is to keep borrowers from having to pay for unauthorized appraisals. HUD will be very interested to know if the client, due to shopping for values, has caused the borrower to have to pay for more appraisals than what is authorized.

FHA does not expect appraisers to work for free. But they have no up-front control over that, only after the fact and after reported.

Appraisers who don't see to it that they get paid for their work are enabling the value shoppers. If your client is an MB, get the cash up front.

When you call to report that your delivered appraisal was not logged in, it will get more attention if you tell FHA that the borrower has paid for two appraisals than if you just report that an appraisal, especially one that was never paid for, was not logged in.

DU banks don't often refuse to pay for an appraisal without a legitimate reason. And they are not likely to risk not logging in an appraisal for "shopping" reasons.

It's the non-FHA approved clients that play these games. They really don't have anything to lose, they have no standing with FHA.Appraisers can only do so much to avoid enabling it.

Two major things appraisers can do to stem the problem is one, don't proceed without a case number, and two, make the MBs pay cash in advance.

If you don't adhere to these two policies, you will become embroiled in messy situations that cause you lots of angst.

Loosely speaking, FHA wants appraisers to get paid for their delivered appraisals and they only want the borrower to have to pay for one first appraisal and one second apprasail if FHA required. But if appraisers are not looking out for themselves, there is only so much FHA can do.

If you think about it, that general scheme is appropriate for non-FHA work as well.

On the other hand, the DU bank may have a reason to order extra appraisals for their own use as long as they do not charge the borrower for them. Whether or not FHA allows the bank to replace the first logged in appraisal is really out of our control.

 

[Michael Tipton]

The letter says a new case number is not required. The original case number is used. The FHA Connections system has a space to log in the second appraisal but only when required by FHA regs. New "first appraisals" are not logged in to that second appraisal slot.

It should be fairly easy for appraisers to tell if the order is for one of those FHA required second appraisals. For one thing, they will be ordered directly by the bank.

If you want to know whether the order is for an FHA required second appraisal, all you have to do is ask the underwriting bank. If that does not satify, ask the HOC. If the question is asked properly, it's a simple yes or no question and should not be difficult to answer.

If you learn that someone is trying to replace the first appraisal, it is also simple to ask the HOC if a first appraisal is already logged in. That is also a simple yes or no question.


Marcia, I will have to ask the Atlanta HOC for clarification on the use of a case number for the second appraisal. Mortgagee Letter 2008-09 does not specifically instruct the appraiser to use a case number. FHA's only intructions are directed to the lender as listed below.

What does the lender do with the second appraisal? The second appraisal, when required, is to be included in the FHA insurance binder. If the second appraisal is used to recalculate the maximum mortgage amount, the mortgagee must enter the appropriate information in the appraisal logging screen in the FHA Connection or functional equivalent.

 

[redfish]

I believe this statement makes this assignment unacceptable under USPAP. Sorry. You cannot accept an assignment with a predetermined value or range of value which favors the cause of your client.

I did not ask what the other appraisal value opinion was and was not provided one.

 

[Caterina Platt]

This is a bit convoluted, but here's my take:

The first appraiser is an FHA roster appraiser and has completed the report, and HUD accepted the report under the original case number.

Lender A now wants to sell this loan, but Investor A won't accept the report due to the original appraiser having been removed from their approved list.

Lender A is now required to obtain an acceptable appraisal so that Investor A is reasonably confident in the value. This is not a new FHA assignment requiring a case number. HUD is out of the picture. This is an appraisal for the investor's use, not HUD. HUD has already accepted the property and loan.

Investor A will be concerned with: value, and property conformation with FHA MPR's. The new appraiser will need to be familiar with FHA MPR's, so it makes sense to require a roster appraiser, but no case number will be issued.

The property would need to be appraised as of the date of the original report - a retro assignment.