What to and not to report--These days?

[Dan/Fla]

Been a while since I have been asked to do FHA inspection on an older home. So have a few questions.
1. I know we used to comment and need installation of hand-rail if 3 or more steps to home and or porch which leads to home. I think I read were that is not required anymore, unless we deem it a safety issue. However do we note anyway?
2. Paint chipping on aluminum sided home built 1947 I know we recommend scraping, sanding and painting. But is it required for whole home even though only noted at front of home. Realtor stated just the area noted. Where I have always stated the house?
3. Wood to ground clearance on a detached garage, it is touching now. Like I said been a awhile but I seem to remember 4” out building 6” subject. Is this correct or does someone have better numbers.
4. Access under home the subject has about 10 to 11” vertical, My camera fits for some shots but what is those numbers, I believe this is not large enough.
5. Home vacant, electricity and water are on but never got hot water, and C h & A units did not come on nor did inside fan. Though circuits are on require inspection only; not repair if we do not know correct?
It appears FHA is relaxing rules I need to make a check list for these things again, does anyone have one? Had VC sheets on inspection but it still does not have it all, our items.

 

[Michael Tipton]

When I took a FHA CE course last fall, NAIFA had included a student manual. The NAIFA instructor referenced the following.

Appendix D Valuation Protocol
Mortgagee Letters 2005-02, 2005-34 and 2005-48. All documents are available online either as a sticky here or at HUD/FHA's websites. 2005-48 and Appendix D will address most of your initial questions.

There is also a number of FHA appraisal webcasts available at the attached link.

http://www.HUD.gov/webcasts/archives/sinfamily.cfm

 

[Ted Martin]

FHA threw the baby out with the bathwater, so they could be "competitive".

You still need to report the defects but about the only required item remaining is the paint. They only need to deal with the surfaces that are defective, front only new paint would be OK if the rest is in good shape. Other required repairs are based on your best judgment of what is necessary for the structure to be considered safe, sound and secure.

 

[Elliott]

I went to the FHA class. Essentially I was told that the conventional
standard was what FHA wanted. They didn't wanted to be nit picky.
But they didn't want the HO to have 'significant' health, safety, or
marketing issues. So I don't make a big deal about stuff, unless its
marketability or safety. I still will write up peeling paint or a relief valve on
a HWT. I do some rural development loans that require the FHA
standard and I modify it to include the FHA letters that essentially
threw the standards out the window.

It is so wierd that FHA had the 4-page VC sheet and classes, promised
to criminally prosecute if you did anything wrong, then they did a 180.

 

[Greg Bell]

Peeling paint , no hot water are definitely MPR.Heating fans MUST turn on or it's MPR..
Crawl space needs to be adequate fOR access , your decision.....Have fun..

 

[Marcia Langley]

Dan,

The documents cited by Michael are the "horses Mouth" info for your questions. Items that are not specifically mentioned in those documents have to be evaluated by you in light of the "safe, sound, secure" mandate. You need to study FHA's definition of those terms and that will guide you for any items that are not specifically mentioned. There is not an all inclusive list of items.

FHA has minimum property standards that must be repaired just like the GSEs' do. There is just a different standard for each one (Freddie/Fannie/FHA). They are all very similar to one another but there are some differences. And it's way too much information to just "tell" someone. You need to study up on it.

The paint repair only needs to be done to correct the extent of the deficiency.

If you have a question about a particular item, you could ask us about that.

 

[Ron Patton]

Perhaps I am misinformed, but I feel like there is significant oversight occurring here in this thread. Yes, FHA has relaxed some guidelines, but many of these issues still require due diligence: frayed wiring; wiring splices; buckling roofs; nail popping roofs; bad flashing; deck posts in contact with ground; siding in contact with ground; inadequate water pressure; undersized electrical panels; guttering problems. True, cosmetic conditions now only have to be reported insofar as they affect value. Still have a responsibility to note these things for lender. With a whole new generation of FHA Appraisers coming into the system having done nothing more than submit a copy of their license, the diligent appraiser who bothered to study the "stimulating" 4150.2 guidelines likely will become a dinosaur. And FHA will be the next defaulting subprime lender. Just last Monday, the head of FHA told the National Press Club that they would require federal funding to continue operation; fees they generate were no longer sufficient to sustain them. Wait until they start dealing with defaults on bad loans resulting from unqualified borrowers and appraisals that were performed by inadequately trained appraisers. FHA is the new subprime; volume has exploded. IMHO, they are a disaster waiting to happen. Ron Patton, Chattanooga, TN

 

[RSW]

Thanks for all of your suggestions. I will consider all of them. I am really looking for some content and things that you think would be benificial to the students since there are so many new appraisers getting on the FHA roster. The class I am interested in would be offered more than once and not necessarily through an association or group but rather through a real estate education school.

 

[Mike Garrett RAA]

Use the old VC sheet when doing your inspection. Note any deficiencies. When in doubt, call the HOC.

 

[Mike Seward]

While reading this thread, I am reminded of HUD's comments in its final rule (January, 2008) regarding appraiser roster requirements where they did away with the requirement for an applicant to pass a HUD exam.

http://regulations.justia.com/view/99342

They seem to be saying that an FHA appraisal is "not materially different" from a Fannie Mae appraisal. There fore, no additional appaiser knowledge or skills are necessary.

Quoted in part:


"[[Page 1431]]

HUD recently undertook a review of the appraisers listed on the FHA
Appraiser Roster and determined that the credentials of all currently
listed appraisers comply with the applicable AQB criteria. As a result,
the provisions in the May 16, 2003, final rule for a 12-month phase-in
period are no longer necessary. HUD has also determined that no State
in fact ``grandfathered in'' appraisers who had been licensed prior to
establishment of the AQB criteria, a concern at the time of the
publication of the May 16, 2003, final rule. Consequently, today's
final rule does not contain these unnecessary provisions.
This final rule also eliminates the requirement for applicants to
pass a HUD test on FHA appraisal methods and reporting. FHA has
undertaken a series of initiatives to align its practices with those of
the conventional lending industry, including streamlining and updating
its appraisal reporting procedures and policies. By adopting and
requiring the use of updated appraisal reporting forms and relaxing its
repair and inspection requirements for existing properties, FHA has
ensured that an appraisal of a property that is to be the security for
FHA-insured financing is not materially different from an appraisal of
the same property performed for conventional financing. As a result,
the knowledge and skills needed to perform an FHA appraisal do not
differ from those needed to perform an appraisal for a conventional
mortgage. Therefore, HUD has determined that a separate test on FHA-
specific appraisal methods and reporting is no longer necessary."

So, if FHA standards are now similar to Fannie Mae's, are we still flushing toilets and running hot water?