USDA rural housing appraisal guidelines

[Mike Kennedy]

JULY 2009

United States Department of Agriculture Rural Development ​

Existing Homes
The basic objective of USDA’s Guaranteed Rural Housing loan program is to assist eligible applicants in rural areas obtain adequate, decent, safe, and sanitary homes. To this end, an existing dwelling must be inspected to determine that the dwelling meets the current requirements of HUD Handbook 4150.2 and HUD Handbook 4905.1​

When prepared in accordance with HUD Handbooks 4905.1 and 4150.2, the appraisal constitutes acceptable documentation to comply with existing dwelling inspections made in accordance with RD Instruction 1980-D, section 1980.341 (b)(l)(i).​

The lender should be careful to select an appraiser familiar with and who can certify that the requirements of HUD Handbooks 4905.1 and 4150.2 have been met. Lenders have the option to chose either:​

1. An appraiser performed by an FHA roster appraiser; or

2. An appraisal performed by a licensed or certified appraiser not on the FHA roster and a home inspection by a qualified home inspector.

Appraisers who are not on the FHA roster are not approved by FHA to complete appraisals in accordance with HUD Handbooks 4150.2 and 4905.1.

Lenders may determine that a non-FHA roster appraiser is qualified to perform the home inspection, as long as the lender is assured that the non-FHA roster appraiser is thoroughly familiar with HUD Handbooks 4150.2 and 4905.1.

An individual who is not thoroughly familiar with these handbooks should not certify that a property meets HUD handbook standards. Doing so would constitute a misrepresentation.

http://www.rurdev.usda.gov/ca/pdf%20files%20and%20documents/GRH%20property%20require.pdf

http://www.rurdev.usda.gov/regs/hblist.html#hb35601

 

[Bearslide]

JULY 2009

United States Department of Agriculture Rural Development ​

Existing Homes
The basic objective of USDA’s Guaranteed Rural Housing loan program is to assist eligible applicants in rural areas obtain adequate, decent, safe, and sanitary homes. To this end, an existing dwelling must be inspected to determine that the dwelling meets the current requirements of HUD Handbook 4150.2 and HUD Handbook 4905.1​

When prepared in accordance with HUD Handbooks 4905.1 and 4150.2, the appraisal constitutes acceptable documentation to comply with existing dwelling inspections made in accordance with RD Instruction 1980-D, section 1980.341 (b)(l)(i).​

The lender should be careful to select an appraiser familiar with and who can certify that the requirements of HUD Handbooks 4905.1 and 4150.2 have been met. Lenders have the option to chose either:​

1. An appraiser performed by an FHA roster appraiser; or

2. An appraisal performed by a licensed or certified appraiser not on the FHA roster and a home inspection by a qualified home inspector.

Appraisers who are not on the FHA roster are not approved by FHA to complete appraisals in accordance with HUD Handbooks 4150.2 and 4905.1.

Lenders may determine that a non-FHA roster appraiser is qualified to perform the home inspection, as long as the lender is assured that the non-FHA roster appraiser is thoroughly familiar with HUD Handbooks 4150.2 and 4905.1.

An individual who is not thoroughly familiar with these handbooks should not certify that a property meets HUD handbook standards. Doing so would constitute a misrepresentation.

http://www.rurdev.usda.gov/ca/pdf%20files%20and%20documents/GRH%20property%20require.pdf

http://www.rurdev.usda.gov/regs/hblist.html#hb35601

Good find, Mike - thanks for sharing.

The Existing Dwelling Certification form, as well as a list of other USDA forms is available in WinTotal - I assume in other software formats as well.

Clients ordering USDA appraisals here have insisted on using FHA appraisers. Other than adding the existing dwelling certification, these appraisals are conducted just as if it were for FHA but without a case number.

If you are asked to complete a USDA appraisal and you have questions, policies DO vary from state to state, so it's best to contact your state USDA agency.

Here's the link for PA.

http://www.rurdev.usda.gov/pa/

 

[Mike Garrett RAA]

In my state the chief review appraiser relies heavily on the cost approach. He wants to see attachments to the appraisal from the cost reference source...and it must be current.

 

[CANative]

If the subject has an inground pool what is the appraiser supposed to do? Chose sale comps that don't have pools but are otherwise similar? Make downward adjustments to sale comps that do have inground pools? State an opinion of the contributory value of the existing pool and let the client make a deduction?

What is the USDA protocol?

 

[jimmyfrank]

Diana ... one word of caution ... each state is different regarding whether the appraiser must be on the FHA panel or not. Some states have it mandatory while others do not. New Mexico, for example, is not a mandatory FHA Panel state while I believe Michigan is. One thing that is uniform, per 4150.2 .. the contracting appraiser MUST inspect the subject (interior and exterior) and the comparables from the exterior. A trainee can typically assist in the job and can sign the report, however, the appraiser assigned the job MUST inspect.

It is also important, as you have mentioned, the appraiser must know 4150.2 and 4905.1 and when signing the report are in fact stating they are competent to complete the appraisal in accordance with HUD guidelines. And as always, USPAP is also mandatory. When a review is completed both USPAP and USDA (Rural Development) guidelines serve as the basis for the review.

Again if one has questions, call your state office and speak to the Housing Director, the State Appraiser or a Residential Loan Specialist ....

Good luck.

You are exactly right, the states are different. In Al., it is called R D A and reviewed by a tough but fair chief appraiser in Montgomery.. No inground pools or lighted tennis courts.