Nightmare Partial Release that FHA just won't let go.

[J Grant]

ive had an FHA reviewer give me a serious hard time once, they are relentless. do what they ask or face the consequences and no they dont care what you think.

Exactly. This should be a once-in-a-lifetime event. Either the client screwed up or the appraiser did, or both did in this case and even if the appraiser did not screw up, HUD is GOD in this situation, so do what god asks and stop complaining about it.

Getting put on a do not use list by HUD is a career killer. Almost no lending client will use an appraiser on that list. If HUD feels the original appraisal is too deficient or the appraisal is so uncooperative, they will order a new appraisal, and that is another career killer. That is why HUD is GOD here, unless somebody does not care about their career, in which case have at it-

 

[Timothy Hogan]

The 4000.1 states the floolwing:

4000.1.III.A.1.j.iii. (B) Partial Releases Requiring HUD Approval



(1) Request Process

The Mortgagee must obtain HUD approval for any partial releases other than Partial Releases from Condemnation Not Requiring HUD Approval. The Mortgagee must send the following to the Jurisdictional HOC for the Property:



•a written request containing the following information:

◦whether or not the Mortgage is in good standing;

◦the amount of the outstanding principal balance;

◦the due date of the last unpaid installment;

◦if the Mortgage is Delinquent, the number of Delinquent payments;

◦a list of unpaid special assessments, if any, and the total amount payable;

◦a complete legal description of the Property to be released;

◦the Borrower’s reasons for requesting that the Mortgagee make the release, including how the land to be released will be used;

◦the monetary consideration, if any, to be received by the Borrower;

◦the amount of a prepayment, if any, to the mortgage principal;

◦any restrictions to be imposed on the land to be released;

◦a survey or sketch of the Property showing:

the dimensions of the portion to be released;

the location of existing and proposed improvements; and

the relation of the Property to surrounding properties;



◦plans and specifications, including Cost Estimates of any alterations proposed for the remaining Property after the release; and

◦the case number of the mortgaged Property; and



•a valid FHA appraisal that reflects:

◦the value before the partial release of security; and

◦the value of the remaining Property after the partial release of security.





(2) HUD Review

HUD will process the request for the partial release of security and notify the Mortgagee of the approval or rejection in writing.



(3) Required Documentation

The Mortgagee must retain a copy of HUD’s approval or rejection in the servicing file.



(C) Fees for Partial Release of Security

The Mortgagee may charge to the Borrower reasonable and customary costs, up to the amounts listed in Appendix 3.0, involved in processing of the following modifications of the mortgaged Property:



•partial releases

•condemnation

•order of taking

•subordination or consent to Easement

•lot line dispute/adjustment

•subdivision consent

•consent to change in covenants and restrictions

 

[Andee]

Which part of post #7 are you amending BCRJC?

"Someone does not totally understand partial release. OP is dealing with someone that may be confused as to what they actually need.

Who cares what the highest and best use of the parcel that will no longer have a lien on it is?

Who cares what the value is?

The appraisal for the release is to value what is left for LTV lien purposes, period.

Sorry for bolded sentences --- could not get them to "unbold"."

My thoughts exactly...I should only be dealing with the portion that will remain, yet the HUD Reviewer is making my life hell and basically asking for 3 values but not making me write 3 reports, just making sure all the information that would pertain to those 3 values is within the one report that is written, so if I have the HBU for what is remaining, they want it for what it was, and what is being released, they want 3 values, they want to know what the improvements are as a whole, and separate, etc...it has been a thorn in my side and doesn't follow anything that makes sense.

And according to the HUD doc, they want 2 values, which I gave them, and this shouldn't be an issue because they are more concerned with LTV's over 75%, this is way below that, for both values.

 

[Andee]

It was basically two different appraisals to me. Appraisal one is one site. Appraisal two is adjoining site. However, H&B use comes into play.

Two separate values, or appraisals, but not for the portion being released. One as a whole (both parcels), one with the remaining parcel only.

 

[Andee]

HUD is trying to mitigate their liability.

HUD is your client. Understand?

I understand that and their liability is much less than it was when they funded the loan....much much less as property prices have increased so much so that it has brought the values way below 50% and HUD wants less than 75%.

 

[Andee]

Because what happens often is a the Subject property is worth more located on a extra large lot size. And when you remove it from the Existing House it goes down in value because it no longer is located on a large being the Two parcels combined.

So now your sale and marketability may change as will value downward. In this CASE the owner wants to build a home for his son-daughter on the separate parcel which works for him and his family but a stranger may not want to purchase the existing home on a smaller lot size with strangers living next door. The two lots often create a lot of buffer zone, and utility for many people who would not want the Subject after its located on a smaller lot size.

This would make sense if you were dealing with smaller lot sizes. The current site size is 2.32 acres, split will be 1.16 acres each. The subdivision was plat for each lot to be 1.16 acres, the current owner just got lucky when he bought the property that the two lots were sold together by the previous owner. For this particular area, it will not cause an issue because it is literally the only property with two lots in the whole subdivision.

 

[Andee]

How can a client come back and just state "It was supposed to be FHA"?

There was some confusion with that when the Lender placed the order, so it came across as a conventional at first. Then when I went out the second time, for the FHA inspection, the homeowner said that he was hoping to have the Lender drop the PMI and convert his existing loan to a conventional due to the extremely low LTV...haha, little did he know that it doesn't always work that way, and you don't get to tie everything into one neat little bow when playing ball with HUD.

 

[Andee]

Not so fast. You may be somewhat correct. The OP appears to have given both values within the same report. If so than this was not followed.

HUD did not have an issue with only 1 report, just wanted 2 separate grids which could be within the same report.

 

[Andee]

And therein lies the problem, those who understand and those who have the big stick.
Before and After value(s), two appraisals - 2 fee's, any changes in the SOW, New report, new fee

was given an appropriate fee when it was a conventional, and they increased a little more when I had to deal with it being an FHA.