what is a Form 442?

[Julia Young]

I have a request to complete a form 442 on an appraisal. The house is a HUD house and has some damage. It is in fair condition. I specifically asked and was told when I did the conventional type appraisal it was "as is" and I would not need to do an estimated cost to cure, only a rent schedule. I said it was in Fair condition and now OF COURSE they want a repair estimate, pictures, and heating and cooling estimates, and are calling for a form 442. When I did the appraisal the utilities were not even on and I said so. Is this a form number for something else. I have WinTotal/Athena I am familiar with REO's and Repair and Maintenance addendum but not a 442. The house is pre-1978 and I am not a lead based paint expert on abatement or cure. How should this request be handled? Any suggestions?

 

[Farm Gal]

Julia: for a faster response post this sort of question in Urgent...

If they want cost to cure etc, charge 'em extra unless it was part of the original order... (unless they are a favorite client...) and if you are not pretty used to doing massive CTC's get some help on those estimates...

The 442 is the standard "final inspection" form. Just state they did or did not complete whatever you observed needed repair ... or you have gone back and the utilities are on and reinspected?

Did the lender get any other inspections? Did they provide you with any reports? If you did the appraisal "as-is" you DID put in extraordinary assumptions that all was well with the mechanical etc systems...?

Regards,
Lee Ann

 

[Julia Young]

I will contact them to verify but it appears the work has yet to be done, from the wording they used. Their written request, quote:

1. Appraisal to provide: All interior materials to be in average condition.
2. Heating/Cooling to be in Average condition.
Form 442 w/photos for all deferred maintenance to be completed.
Supply cost to cure.
Condition of subject to be in average condition.

In my appraisal the H & A is "unknown" stating the utilities were not on at the time of my visit. If they are still non-working, I would need to recommend a H&A contractor inspect. A (442) may not be the form they are really needing. The work appears not to be done as they have asked me to provide the estimate to cure or repair. The only appraisals of this type I have done were with the assistance of a contractor the purchaser had engaged to do the estimate and/or repairs. Do appraisers generally provide this type of break down of cost? It seems to be a risky venture. I haven't done much HUD work. I am inclined to tell them I will provide the photos and the final after the work is completed, then let them provide the cost to cure. What would you do?
Julia

 

[Mountain Man]

:? I don't think they want the 442 Final Inspection until after the work is completed. Otherwise, all you can do is provide photos and say that the work is NOT complete. What's the purpose?

I have done cost estimates on many occasions for repairs or REO's. But I also do some remodeling, and know what it cost in my area. If you truly don't have any idea, I would say get some help from a contractor or handyman friend. Offer to pay for the estimate, and include that cost in your quote to the client. Like you, the contractor has to look the house over, and take more time back at the office to do an estimate. If the client is not willing to pay, then they don't get the cost to cure estimate. Heck, I bill them when they want an estimate. I don't just make it up from numbers out of the sky. If only the UW's could understand that. :roll:

Mell.

 

[Julia Young]

I have a handyman that does repairs for my properties. He charges by the job and it depends on how far he goes with the repairs I want. My son does high-end remodeling, faux finishes, etc. and his charges are a lot different than the handyman's. My point is there is a chasm between these approaches to repair, not to mention the hidden costs we can't see. Every remodeling job I have ever undertaken cost me more than I initially thought it would. "Patching" is a lot different than quality repair. Somewhere in the middle is probably appropriate. Potential homeowners see things differently than rehabbers looking to resell and meet the minimum. I just hate being put on the spot to call the shots for repair. Sometimes it seems like the industry pressures the appraiser to take responsibility for everything and when something goes wrong, they "know who to call."

 

[Jo Ann Meyer Stratton]

You mentioned HUD. Is it a home that is being sold by HUD and you are doing the appraisal for the buyer that is receiving conventional financing? Or is it a home that HUD has repossessed and the property management company now wants to find out if the home can be resold with HUD financing, what type of repairs are needed, and what price range HUD should attempt to market the home for? If the last sentence applies, and the repairs would cost more than $5,000, then HUD would need to sell the home subject to conventional financing or under the 203K program. If less than $5000, HUD could sell it with standard HUD financing but repairs would need to be done before sale. Also if it is because it has been repossessed by HUD and now HUD wants the market value there is a very specific Mortagee Letter that needs to be followed in completing the URAR report. Check out Mortgagee Letter 00-27 "Appraising and financing HUD Real Estate Owed Properties with FHA insured financing-single family loan production". Also Mortgagee Letter 00-47. (obtain at www.hudclips.org) If there is a FHA loan to be processed, a contractor licensed in whatever the problem is or a FHA inspector should do the final inspection, not the appraiser. If the financing is conventional, then the appraiser would complete 442 form (HUD will not accept a 442), for what ever cosmetic items that are observable and would not require a licensed contractor or home inspector.

 

[Julia Young]

The house has been repossessed by HUD and placed on the market to sell. I was given a copy of the winning bid contract agreement. The utilities were not on and I was asked to complete an appraisal "as is" with no repairs. The house is pre 1978 and there is peeling paint. it is in fair condition with doors broken, cabinets missing and pull down stairs hanging loose, etc. etc. I had to note the deferred maintenance and the condition as fair and note the peeling paint. The lender then faxed over the request from the underwriter that I estimate a cost to cure. put it on a form 442 with photos. The work would need to be done or condition average with a before and after estimate. This wasn't in our original order. It sounds more like at 203K. I always thought there had to be a contractor working with the 203K when it was active but I thought the program was defunct. I certainly see the potential for abuse with high cost to repair estimates and the work not actually getting done properly. I did another one of these and required a final. Never heard anything from them again so one wonder's how they handled the final.
It is getting increasingly difficult to do business, particularly fairly and keep oneself out of someone else's difficulties.
I went to HUDCLIPs, checked Alamode and could not locate a form listed as a 442. If it is a final inspection, my forms don't call it a 442.
Julia

 

[Jo Ann Meyer Stratton]

Julie:

The form is a "Satisfactory Completion Certificate". Choose the one without a certification. At the very bottom of the form in tiny print will be the form number 442. The form was developed years before USPAP was even thought of. That is why you choose the one without a certification. The 442 should NEVER NEVER be used when a client orders a "recertification of value". When a client does order a "recertification of value", they are really looking for "An Update to an Appraisal"; which is a completely different topic of its own (see page 90 of 2001 USPAP). It was used for that purpose years ago, but it is not in compliance with USPAP. So only use it for cosmetic items that would be in line with an appraiser's expertise. Like, yes they did install carpet as was planned originally. Or no they installed vinyl sheeting instead of ceramic tile that was in the original plans. The 203K program is still available and is a HUD program and can get very involved. It sounds like you are doing an appraisal for a conventional loan and your client did not provide you initially with all their requirements. What they are now asking is over and above their original request--so tell them there will be additional fees.

 

[Charlotte Dixon]

Jo Ann says....The form is a "Satisfactory Completion Certificate". Choose the one without a certification.

Jo Ann..what do you mean 'without a certification'....For many years I used a Reinspection form provided by MCS, but they haven't included it in their new software. I think I asked elsewhere on the Forum which form to utilize if I need to say....
"Grading & Seeding not complete" and have to go back at a later date

The 442 Satisfactory Completion Certificate doesn't seem to work for me if on new construction all items are not completed. :?

 

[Jo Ann Meyer Stratton]

Charlotte:

I use Day One software. They have two choices for the form 442-- one with a "Recertification of Value" at the bottom and one without. As you will notice at the very bottom of the page, the form 442 was created 6/78! Ten years before USPAP was even thought of! "Recertifications of Value" basically no longer exists and have not for many years (see page 90 of the 2001 USPAP and AO-3). Prior to the adoption of USPAP, the space at the bottom was filled out without any supporting documentation sent to the client. Now, of course, that CANNOT be done. So I always make sure to choose the one without the recertification statement at the bottom. There is a large space on the form where you describe everything that has not been completed, what effect it has on value, etc. If you need more space, put in BIG LETTERS, see attached addendum. If everything has been done per plans and specs, I usually type in a statement that the home appears to have been completed per the plans and specifications originally provided by the client. When I was in an area where they had building permits, I would refuse to go back to the property until after the building inspector had cleared the property. In those areas, the building inspector would put a green label in the electrical box when the home was complete. So I wouldn't go to the property until the lender told me the "green tag" had been issued, then I would take a photo of the green tag. Otherwise it was a full inspection (observation) fee every time I went to the property, which could start to add up if the loan officer wasn't paying attention.