FHA Announced this week that it will make some “proceedural” changes to the appraisal process at the beginning of the year. They hope that the changes will, in some cases,
“help to expedite loan closing when a borrower decides to transfer their application to another lender during the transaction process. The changes also ensure that lenders are not obtaining second appraisals solely for the purpose of getting a higher value or eliminating required repairs.”
When a borrower (who is in process) moves their FHA loan from one lender to another, the original lender is required to move the FHA Case number to the new lender. At that time, most lenders will require a NEW appraisal. FHA wants to discourage this, and says you can only order a 2nd appraisal under limited circumstances.
These circumstances include:
- The DE Underwriter for the second lender found material defects with the original appraisal.
- The original appraiser is on the second lender’s exclusionary list.
- The first lender failed to provide a copy of the appraisal in a timely
manner, which causes potential harm to the borrower for events outside of the borrower’s control. These events include rate lock expiration, purchase contract deadlines and foreclosure proceedings.
- In all cases the lender must document the loan file regarding the reason for the second appraisal and both copies of the appraisal reports must be retained in the case binder.
In addition to THESE changes – FHA also announced that they will be changing procedures for ordering FHA appraisals, which move them firmly closer to the HVCC ruling that Fannie and Freddie adopted earlier this year.
FHA will prohibit appraisals ordered by mortgage brokers or borrowers, in addition to the current restriction of real estate agents’ involvement in the appraisal order process. Does this mean that a Broker can not order an appraisal? No. It simply means that they can not SPEAK to the appraiser, and it will be ordered on a rotation basis, OR ASSIGNED by the LENDER. This process has worked POORLY for the consumer (IMHO) and I’m sad that FHA took this position. But – these are the rules, and we will work with them!
If you are looking for a FHA Mortgage in Cary, considering a purchase in Raleigh, or refinance in Johnston County, call Steve and Eleanor Thorne! We know all of the mortgage program details, and we have the LOWEST Mortgage Rates in NC!!