Update of conventional to FHA ?

[Doug]

I had a request to update a conventional refi to an FHA. The refi was done in July. Two of the comps are now over 1yr. Should i charge full fee since i need to reinspect as FHA and get 2 new comps? Is this an update of previous refi?

 

[Jo Ann Meyer Stratton]

You will need to go back to the property to look at everything and do all the FHA things, with new photos, new effective date, new comparables, etc. There are some things you would be able to clone from the old report, but a lot of things change. New intended use and users (remember with FHA there are two users), new purpose, etc, etc. Before the purpose was for a mortgage transaction, now the purpose is for FHA insurance, etc. So it is basically a completely new package/product. You might want to make a comment in your addendum that a report was previously completed for a non-FHA purpose and at the client's request has been converted to a FHA transaction. If and how much you discount your fee is up to you. Just finished a FHA report on a property that I did a FHA report on 6 1/2 months ago. Did a completely new package with everything new (except comp #5 was #1 in the old report), I discounted $50 from my normal FHA fee-but that was my business decision. But your order is not an update because everything has changed and your new report is not in reference to the old report.

 

[Mountain Man]

Agree with Jo Ann, it is a new report. They are trying to get by as cheap as possible, but FHA is a completely different creature.

Charge accordingly to what YOUR bizniz cents tell you.

 

[Verne Hebert]

It ain't no update. Good try.

I had a call yesterday from local mortgage vermin. We performed an appraisal for a large national lender. The borrower, for whatever reason, is not pursuing this loan.

The mortgage vermin is "...going to give me 50 bucks for 3 new originals". Apparently doing me a favor.

Down in Louisiana the saying is, Bon Chance!

 

[BenLuby]

In Georgia its 'Up Yours".
They think appraisers are two steps shy of legally stupid. If it went from FHA to conventional, and they are a good customer, that would be one thing, but going the other way increases your liability and the amount of work you have to do.
If they want it for free, tell them to try the Salvation Army.

 

[Blue1]

Doug,

This is a NEW APPRAISAL! You will be doing a full FHA inspection, pulling more comps and exposing yourself to more liability. I would charge MORE than for an conventional.

 

[Doug]

The homeowner chewed out my message machine for not being able to just fill out the FHA forms for a little extra, then said, She will not pay me anything. Next day i called the lender and had them explain the difference between conventional and FHA. Lender educated the h.o. and i performed the inspection the next day. Of course no apology to me for their rudeness and ignorance. Oh well!

 

[Restrain]

Of course, the fact that the inspection date has to be after the date the FHA case number was issued never registered with the LO, right? I have that problem with a lot of them. They think I can run out there and do the inspection without a case number - it'll be along in a couple of days.

Educating the masses.

Roger

 

[Mike Garrett RAA]

You can do a conversion to FHA from conventional BUT a new inspection is required in order to complete the VC sheet. Since the appraisal is old and the comps even older...I would do a complete new appraisal. You could offer a reduced fee since you have done a lot of the work already.

 

[Dave Doering]

In Georgia its 'Up Yours".
If it went from FHA to conventional, and they are a good customer, that would be one thing, but going the other way increases your liability and the amount of work you have to do.

I have found that going from a prior FHA appraisal to a conventional is a major pain and cause of great anger from most clients (regardless if they are "good" clients). Since FHA appraisals are done "subject to" the repair or correction of the VC (Valuation Conditions), to convert to a conventional loan (which are typically done "as is") requires that many of the repair items relating to FHA noncompliance be converted into a Condition adjustment in the Sales Comparison Analysis as well as considered as curable physical depreciation in the Cost Approach. It takes time to go through the report to ensure that all previous VC items and references are now treated as deferred maintenance or otherwise considered in either the accrued depreciation estimate or reflected in the effective age.

For some reason, even the more sophisticated lenders do not seem to understand the time required to do this and think that because they originally paid more for the FHA appraisal than the conventional appraisal would have cost that this should be done for free. Einsteins Theory of Economic Relativity (Time=$) applies.