FHA Appraisal Requirements 2010

Earlier this year, FHA clarified who was qualified to perform an appraisal.  This seems kinda’ silly, because the appraisers must be on the FHA Appraiser’s Roster… but with the HVCC ruling in May of 2009, big banks started using “management” companies to handle the appraisal process.  The companies quickly became a profit center for the big banks, and that’s when the fun began.

In the fall of 2009, it was not at all surprising for an appraiser from Burlington, NC to be “assigned” a FHA appraisal for a property in Raleigh, NC!  In the Mortgagee Letter 2009-28, FHA clarified the following for the “management” companies:

An appraiser who is primarily experienced in appraising detached, single family dwellings in one market may lack the knowledge, experience and/or sources for obtaining market data that will enable the appraiser to perform quality appraisals on condominiums or manufactured homes in the same market or detached, single family homes in another market a short distance away.

The valuation principles for appraising all residential properties are essentially the same no matter the market in which a property is located, however not all appraisers are knowledgeable and experienced or have access to sources of data for all markets. A lender must not assume, simply because an appraiser is state-certified, that the appraiser is qualified and knowledgeable in a specific market area. It is incumbent upon the lender to determine whether an appraiser’s qualifications, as evidenced by educational training and actual field experience, are sufficient to enable the appraiser to competently perform appraisals before assigning an appraisal to them.

If you are considering a purchase or refinance in NC, please call Steve and Eleanor Thorne, Certified Mortgage Planners, 919-649-5058.  The good news is that Fannie and Freddie just made a similar ruling about appraisals, for more information please click here.