Where is the HUD 2 comps within 90 days requirement in 4000.1

[imjiminnh]

I can not for the life of me find reference to this requirement in 4000.1, does anyone know where it is?

Jim

 

[glenn walker]

I can not for the life of me find reference to this requirement in 4000.1, does anyone know where it is?

Jim

There is nothing in 4000.1 but if you are marking increasing or declining box and making time adjustments under market trend some lenders may ask for some newer sales.

 

[J Grant]

it does not exist as a requirement in HUD handbook, some clients ask for it, with a "detailed" explanation of why not, like DOH, there were none , as if we can magically produce it.

 

[ramrcdk]

Likely an AMC- Lender Instruction from "generic" instructions.
If zero, just explain.

 

[Terrel L. Shields]

Ah, why I dropped FHA... clients are idiots and have no clue what FHA requires.

 

[Tom D]

it's asked for in a declining/increasing market to see if that might be happening. hard to say right now with so few listings. i think in a recent FNMA letter it said that there may not be enough listings to do that. HUD usually follows fannie. used to do 2 listings on every appraisal, then decided to do 1. better productivity with increase in income. no lender has said anything about it, but i know what you are talking about.
HUD also sends out letters, may be in one of them. might go insane finding it.

 

[Mike Kennedy]

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What are the FHA appraisal requirements for reporting market trends?

The Appraiser must accurately report market conditions and determine when housing trends are increasing, stable or declining. The Appraiser must provide a summary comment as to the continuance of the current trend or if the trend appears to be changing, and provide support for all conclusions. If the Appraiser bases the adjustment on a published source, the Appraiser must include a copy of which must be included in the addendum.

The Appraiser must include an absorption rate analysis, and at least two comparable sales that closed within 90 Days prior to the effective date of the appraisal. If the Appraiser cannot comply with this requirement due to the lack of market data, a detailed explanation is required.

The Appraiser must include a minimum of two active listings or pending sales on the appraisal grid (in addition to at least three recently settled sales). Effective April 26, 2021 FHA issued a temporary partial waiver of the Handbook 4000.1 requirement in Section II.D.4.c.iii(F)(2) that the appraiser must include, analyze, and report a minimum of two active listings or pending sales on the appraisal grid. This temporary partial waiver of established policy will help ensure the continued availability of affordable housing in these markets. This temporary partial waiver is effective for the 12-month period between April 26, 2021, and April 26, 2022.

For active listings or pending sales, the Appraiser must:

• ensure they are market tested and have reasonable market exposure to avoid the use of overpriced properties as comparable properties;
• use the actual contract purchase price, or, when not available, adjust comparable properties to reflect listing- to-sale price ratios;
• include the original list price, any revised list prices, and calculate the total Days on Market (DOM). The Appraiser must provide an explanation for the DOM that does not approximate periods reported in the “Neighborhood” section of the appraisal reporting form;
• reconcile the Adjusted Values of active listings or pending sales with the Adjusted Values of the settled sales provided; and
• if the Adjusted Values of the settled comparable properties are higher than the Adjusted Values of the active listings or pending sales, determine if a Market Condition Adjustment is appropriate.

L unfurl="true"]https://hudgov.dynamics365portals.us/knowledge-details/?code=KA-04083[/URL]

For additional information, see:
Handbook 4000.1 II.D.4.c.iii(F)(2): https://www.HUD.gov/program_offices/administration/hudclips/handbooks/hsgh
FHA INFO #21-25: https://www.HUD.gov/program_offices/housing/sfh/FHA_info_messages
Handbook Waiver: https://www.HUD.gov/program_offices/administration/hudclips/waivers/

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04083
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[alebrewer]

In addition to Mike's note above (two listings/pendings for changing markets - along with the temporary waiver), the appraiser must use at least 3 sales that have settled within 12 months as per the following from 4000.1/II/D/4/c/iii/E/3/c/(ii):

Required Analysis and Reporting The Appraiser must include as many comparable properties as are necessary to support the Appraiser’s analysis and conclusion. At a minimum, the Appraiser must include the most recent and relevant sales, preferably within the last six months. The Appraiser must include at least three sales that settled no longer than 12 months prior to the effective date of the appraisal. The Appraiser must provide additional support by including more sales, offerings, offerings now under contract, or relevant sales that settled more than 12 months prior to the effective date of the appraisal.

 

[Tru Red]

Ah, why I dropped FHA... clients are idiots and have no clue what FHA requires.

Buyers using FHA products (at least from what I have observed over the past 20 years) have little to no clue of the home buying process.

Most are not qualified to own a home....... what with 3% (or less) down.........550 to 650 credit scores.....etc.

It is as it has always been.....a recipe for failure.

 

[andrew81]

Here is where to find it in the 4000.1

II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
4. Valuation and Reporting Protocols
(F) FHA Appraisal Requirements in Changing Markets
(2) Required Analysis and Reporting

"The Appraiser must include an absorption rate analysis, and at least two comparable sales that closed within 90 Days prior to the effective date of the appraisal. If the Appraiser cannot comply with this requirement due to the lack of market data, a detailed explanation is required."

Also:
"The Appraiser must include a minimum of two active listings or pending sales on the SCA Grid (in addition to at least three recently settled sales)."