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What is the lenders responsibility in ordering FHA appraisals?

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Michael Pecora

Thread Starter
Freshman Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
We have so many questions about what appraisers are supposed to do but I ask you, what about the lenders? Does FHA hold them to a higher standard?

Are they allowed to ask us for comp checks, as-is appraisals, or to stop the assignment if there are any "problems"?

I've searched the HUD website but didn't find much. Does anyone here know?

My policy has been to just do the appraisal, start to finish, the way it should be done, no matter what "problems" there are. As you can guess, I'm not popular with certain lenders who only want it their way.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I've been through at least a dozen lenders, AMC's and mini-AMC's run by appraisers during the last couple of years. Everyone is happy, happy, happy until they get a report or two that has repair and/or inspection requirements or comes in too low on value. Then I never hear from them again.

Brad Pack from SAHOC has stated both in the forum and in conversations I've had with him that FHA is well aware of the problems but I really don't think they are as aware as they think. Just my opinion, Brad. And it's going to get worse. Just sign up at www.brokeroutpost.com and read the posts for a few days. Go back a week or two.

HUD's position that appraisers who are licensed or certified can just send an application to HUD and be approved are good go go by virtue of their license and the responsibility for knowing the SOW is probably not a reasonable position... if HUD is concerned about the SOW being competently performed.
 

fritzvogel

Senior Member
Joined
Dec 16, 2004
Professional Status
Certified Residential Appraiser
State
New York
FHA Qualifying question. My wife is seeking FHA roster status. She has all the answers (as usual, women thing). But question # 1 on the new, revised, great, non test, application form asks for an answer for vacant and utilities off, boiler plate. They want it verbatum....I can't find an exact anywhere.
"If the property is vacant, the appraiser schould note in the improvements section under "condition of the property" wheather the utilities were on or off at the time of inspection. If off, condition the appraisal on a satifactory re-inspection when the utility that was off at the time of inspection is back on, to be sure it dose not require alteration, repair of further inspection." Henry Harrison RE Valuation Magazine, summer 2007....is this the CORRECT reponse ?????
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
That answer is incorrect. The correct answer (found under FHA Quick Tips in the revised Appendix D to HUD Handbook 4150.2) is:

"If unable to visually evaluate the improvements in their entirety, contact the lender and reschedule a time when a complete visual inspection can be performed. This includes access to the crawl space and attic."

Tip: When you have an FHA assignment and you know the property is vacant or on lockbox or access is via one of the agents, ALWAYS ask ahead of time if all of the utilities are on.
 

Doug Meyer

Senior Member
Joined
Sep 13, 2003
Professional Status
Certified Residential Appraiser
State
Indiana
Greg, I have been banned from the broker outpost..:blush: . Must have been my good attitude.

Appraisers you need to get one thing straight. Brokers are not lenders!!! I have never had a LENDER ask for a comp check for FHA but the BROKERS do. Be sure you get your terminology correct!!

Now Michael, was this a broker or a bank lender asking for comp checks?
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
We have so many questions about what appraisers are supposed to do but I ask you, what about the lenders? Does FHA hold them to a higher standard?

Are they allowed to ask us for comp checks, as-is appraisals, or to stop the assignment if there are any "problems"?

I've searched the HUD website but didn't find much. Does anyone here know?

My policy has been to just do the appraisal, start to finish, the way it should be done, no matter what "problems" there are. As you can guess, I'm not popular with certain lenders who only want it their way.

You're dealing with Mortgage Brokers, right?

What can you expect of them?
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Michael,......Yes, of course they can ask for comp checks ! HUD could not really take issue with the concept of comp checks, but USPAP does. How one receives that request, and processes it into perhaps a fully-USPAP-compliant Desktop Report.....is surely one option to sell the client. That could be ordered and delivered as a preliminary assignment. If they are accepting of the results they can then order the other "appraisal" with a Case #.

As is ?.....Aren't all parties most likely thinking and dealing in the "now" ? What are the overall conditions there today ? What is the likelihood that major update or upgrade investments will occur prior to whatever transaction is pending ? Not very likely.

Stop the assignment if there are any "problems" ? - - Here they go again. You could always do a preliminary walk-through observation, look into attic and crawlspace, and go back to your car by touring out and through the back yard. Call that another assignment option, started and completed on its own merits....with no value opinion. Whether one gets paid for these two options is up to that individual. Free desktop reports are VERY common. Free property visits with observation reporting begin to obligate the client to open their wallet. Of course, the client rep could also visit the subject property themselves to see if there are any "problems". Then....they could call you to do an "appraisal".

Once someone has ordered an "appraisal" from you......that decision is separate from any other order that may have preceded it, and the order document should come through with no biasing comments, no biasing requests, and no mention of anybody's estimate of value for the property. Despite the increased number of states with (new) legislation regarding coercion and influence of appraisers.....no one is taking it very seriously except....certain appraisers.

The way you're doing it, Michael, is the best way to be doing it. Brokers and lenders have many, many free online valuation services to avail, willing realtors with their opinions of value, and the opportunity to personally visit the subject and interview the owner/borrower and observe condition and appeal before they ever contact you ! Any one, or all, of those options might lead the client to conclude that they "can't do the deal".

There are vertibrate appraisers and there are invertebrate appraisers too. We occupy the same planet and live in the same market areas. It's not likely for one to have both morphological attributes. Being "popular" with a client is very much linked to those genetic traits. Long term survival has its tests and challenges every day. As for "lender's responsibility" in the long run ?......with FHA deals.....I think the lender has to be WILLING to BUY BACK loans that default, don't they ? One can be certain that the lender would turn to the appraiser for "help".
 
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