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REO Appraisals Must Be Used For FHA Financing?

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Usually the FHA case # that is used on the REO report belongs to the original loan. A new FHA case # is assigned once a new loan is established. But i understand what you are saying, but i don't think it is as clear as what you are saying Caterina, that is why i am just questioning it. I just confirmed that FHA does NOT require this, it is just an option to help the buyer. That is really what i was interested in.
 
RSW said:
The difference is, the REO appraisal is done AS IS even if there are MPR required repairs.

As to the case # staying with the property? Most of the HUD REOs I've done had a case # that was more than 6 months old. Many of them are years old. How can the case # stick with the property over six months old? Again, it doesn't make any sence to me.

I do seem to remember reading where the HUD REO can be used for financing. But, I just can't place my fingers on the info. right now.
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The property that requires repairs to qualify for financing has a repair escrow if the $$ is under $5K. Getting these done FHA in a repurchase is sometimes a trick, because the buyer ends up having repairs done to a property they don't yet own in order to meet the MPR's for the purchase. It's risky, and it technically could be illegal because you are altering a property and ordering work done on a place currently owned by HUD. That has always bothered me, but not an appraisal issue and not germaine to our discussion.

HUD would be far better off having the repairs done and then marketing the home IMHO.

As for the age of the case number, I believe it sticks with the property until the REO file is closed and the property liquidated. Not positive.

It's been about 6 years since I did REO appraisal work for HUD. At that time, it was a requirement if it went FHA I believe.
 
Caterina Platt said:
The property that requires repairs to qualify for financing has a repair escrow if the $$ is under $5K. Getting these done FHA in a repurchase is sometimes a trick, because the buyer ends up having repairs done to a property they don't yet own in order to meet the MPR's for the purchase. It's risky, and it technically could be illegal because you are altering a property and ordering work done on a place currently owned by HUD. That has always bothered me, but not an appraisal issue and not germaine to our discussion.

HUD would be far better off having the repairs done and then marketing the home IMHO.

As for the age of the case number, I believe it sticks with the property until the REO file is closed and the property liquidated. Not positive.

It's been about 6 years since I did REO appraisal work for HUD. At that time, it was a requirement if it went FHA I believe.
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I understand the $5k thing and it may have to go as a 203k deal. I don't get where you are saying there is a repair escrow. This may be for conventional. But, I am not aware of this with the FHA deals. State your source for this comment, please.
 
RSW said:
State your source for this comment, please.
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Directly from the SW Alliance (First Preston) property manual under the Listing Property Code of IE or Insurable with Escrow.
 
This is not a FHA reference. It appears to be a lender specific guideline.
 
RSW said:
This is not a FHA reference. It appears to be a lender specific guideline.
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Scott,

First Preston/SW Alliance is the property management company contracted with HUD to dispose of their REO inventory in my region. It is indeed a HUD related reference.
 
Yes, First Preston is similar to HMBI here. They are a subcontractor for HUD. This is why i am raising this issue. I am worried that these subcontractors might be putting out misleading information, representing that they arepart of HUD or that they are saying things on behalf of HUD. There is so much confusion with all the new policies out there, i am worried that some are either taking advantage of others or that they, themselves, do not understand HUD policy. Just like all the misinformation on HVCC and the new HUD appraisal policies starting in Jan.
 
Gajope,

I have had issues from time to time with the interpretation of gray areas, but have generally found the M & M companies to have a pretty clear understanding of the FHA.

Contact your HOC if in doubt.
 
Then they are the M&M contractor for HUD. That is a specific requirement from them and this is not a HUD requirement. Our M&M contractor for this area has the same type of requirements. But, they are not HUD requirements.
 
What are you talking about? HUD requirements or M & M contractor requirements?

This is the way these are sold, period. If you don't believe me, fine. Check with the M & M in your area or call the HOC.

The buyer's escrow is deposited from the proceeds of the Buyer's loan. The work is completed and inspected, then the escrow proceeds are released to the contractors. Any leftover amounts go to reduce the borrower's loan amount. This appears to have changed a bit from the 2003 timeframe when I was doing FHA REO work, and may alleviate the catch 22 situation that existed at that time. This is only in the case of an FHA loan for the purchaser.

The listings in our area have a specified escrow amount which includes a 10% overrun over and above the deemed required repair amounts.
 
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