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Chief Appraiser Blog |
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Recent PostsArchivesCategories« My New Blog | Home | Releases, Readdressing, and New Assignments » Appraiser Independence DayBy Bill Waltenbaugh, SRA | February 9, 2010 This Sunday is Valentine’s Day but the following day, February 15, 2010 is appraisers’ independence day; at least as far as HUD is concerned. Mortgage letter 2009-28 was originally set to go into effect on January 1, 2010 but was postponed until February 15, 2010. This Mortgagee Letter, with the subject of Appraiser Independence, outlines several new changes on how FHA appraisals are ordered, the fees that are charged and the protocol for communication between the lender and appraiser. It also reaffirms FHA's long time commitment toward the importance of appraiser independence. Part of this Mortgagee Letter addresses FHA's desire to place a firewall between a lender's production staff and the appraiser. Come February 15th, brokers and/or any other member of a lender's staff who is compensated on a commission basis will no longer be allowed to order appraisals directly through an appraiser. In a similar fashion, communication will also be prohibited between the appraiser and any member of the lender's staff who is compensated on a commission basis and/or anyone who reports to an officer of the lender who is not independent of the loan production staff and process. However, the Direct Endorsement Underwriter is allowed to request clarifications and discuss elements of the appraisal directly with the appraiser. Although FHA does not require the use of an AMC, they do recognize that lenders may use AMCs to help ensure appraiser independence. As such, they address how appraisers and AMCs are to be compensated for the services they provide. In both cases, the fees are to be kept separate and each should be compensated at a rate that is reasonable and customary for the services provided in the market area of the property being appraised. Another change FHA is making on February 15, 2010 is the adoption of the 1004D/442 Form. The use of this form is another step FHA is taking to standardize the reports commonly used in the industry. This two part form allows for the appraiser to provide a Summary Update Report (Part A) and/or a Completion Report (Part B). Completion of Part A, the Summary Appraisal Update Report, extends the validity period of an existing appraisal that is due to expire. Only the FHA appraiser who completed the original report and who is currently in good standing with HUD and the state, in which they are licensed, is allowed to provide the Appraisal Update. A drive-by inspection is required and the improvements must be observable from the street. Photos from as many angles as possible should be included in the report. The report cannot be used to extend the validity period of the property if it has declined in value or if the exterior inspection reveals deficiencies or changes that did not exist as of the effective date of the original report. The reporting requirements are very simple for this report but all of the research and analysis used to verify current market conditions and the appraiser’s opinion must be retained in the work file. Part B, the Completion Report, will be used to report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report. This report will replace the Compliance Inspection Report (CIR) for all repairs, requirements, and conditions except for new construction and manufactured housing. In these cases, the traditional CIR report will still be required. Unlike part A, any approved FHA appraiser in good standing can complete Part B. The appraiser must review the requirements and or conditions noted in the original report and inspect the property for their satisfactory completion. If any items are incomplete, the appraiser needs to describe the impact the incomplete items or conditions have on the subject and the final value. For more information on these two mortgage letters visit http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/2009ml.cfm Topics: For What it's Worth, Uncategorized | 2 Comments » 2 Responses to “Appraiser Independence Day”Comments |
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February 12th, 2010 at 4:57 am
Very interesting letter, I enjoyed reading it. You did not mention whether ALoft will allow appraisers to include " recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report" as guaranteed by letter 2009-28? I have not heard of ANY of the management companies address this new rule.
February 12th, 2010 at 7:30 am
How will appraiserloft become more transparent on the FHA fee's so that the appraiserloft roster of appraisers will know that they are receiving their fair customary market fee and how is appraiserloft getting compensated for their management service. In addition shouldn't appraiserloft be more transparent on all fee's they charge so that the roster will know that they are being compensated fairly. That is how good partnerships are formed. "Transparency".