Southern California Appraisal

PH: (714) 964-1573     E-Mail: momalek@verizon.net

What is FHA Appraisal?

FHA appraisal is for FHA Loans. FHA loans are more popular than conventional loans because they require lower down payments, require less than perfect credit, cost less, helps you keep your home and offer slightly lower interest rates. All FHA Loans are insured by Federal Housing Administration and require full appraisal by a certified appraiser except streamline refinancing. .
There is a minor different between FHA appraisal and other mortgage appraisals.
All appraisals whether they are FHA or otherwise have to comply with (USPAP) and appraisers have to be certified by the state where the property is located.
 FHA appraisers are required to engage in more detail inspection of the subject property. Although, the appraiser is not a home inspector but he or she ought  to look at all accessible and observable areas of exterior and interior of the property including Crawl Space and Attics.
FHA appraisals are to comply with HUD Protocols and Minimum property standards
 Existing constructions must comply with HUD’s Minimum Property Requirements (MPS), (HUD Handbook 4905.1). .
 Cosmetic repairs are not required; however, they are to be considered in the overall condition rating and valuation of the property. Examples of cosmetic repairs would include surface treatments, beautification or adornment not required for the preservation of the property. For example, generally, worn floor finishes or carpeting, holes in window screens, or a small crack in a windowpane are examples of deferred maintenance that do not rise to the level of a required repair but must be reported by the appraiser.
 The physical condition of existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or inspections are necessary - essential to eliminate conditions threatening the continued physical security of the property.
Required repairs will be limited to necessary requirements to:
· Protect the health and safety of the occupants  (Safety)
· Protect the security of the property (Security)
· Correct physical deficiencies or conditions affecting structural integrity (Soundness)
 A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated. Defective conditions include:
· Defective construction
Other readily observable conditions that impair the safety, sanitation or structural soundness of the dwelling
 Typical conditions that would require further inspection or testing by qualified individuals or entities:
· Infestation – evidence of termites
· Inoperative or inadequate plumbing, heating or electrical systems
· Structural failure in framing members
· leaking or worn-out roofs
· cracked masonry or foundation damage
· drainage problems
 Appraisers are reminded not to recommend inspections only as a means of limiting liability. The reason or indication of a particular problem must be given when requiring an inspection of any mechanical system, structural system, etc.
 These guidelines are provided to assist in the examination of the property. To perform this analysis, the appraiser must have full access to all property improvements.
 If unable to visually evaluate the improvements in their entirety, contact the lender and reschedule a time when a complete visual inspection can be performed. This includes access to the crawl space and attic. The appraiser is not required to disturb insulation, move personal items, furniture, equipment, plant life, soil, snow, ice or debris that obstructs access or visibility.
 An inspection done in accordance with these guidelines is visual and is not technically exhaustive. These guidelines are applicable to buildings with four or less dwellings units and their related property improvements.
 The latest change to FHA Appraisals:
1-As of Oct. 1, 2009; all FHA Roster Appraisers have to be either Certified Residential or Certified General. Link
Section 1404 of the Housing and Economic Recovery Act of 2008 (HERA) (Public Law 110-289, approved July 30, 2008) amended Section 202  of the National Housing Act to revise qualification standards for Federal Housing Administration (FHA) approved appraisers. This mortgagee letter sets forth the revised eligibility requirements for appraisers to qualify for placement and retention on the FHA Appraiser Roster and provides the timeline for implementation of those requirements.
  Section 202(f) of the National Housing Act mandates that all appraisers chosen or approved to conduct appraisals of properties that will be security for FHA-insured mortgages must: (1) be “certified” by the State in which the property to be appraised is located; or by a nationally recognized professional appraisal organization, and (2) have demonstrated verifiable education in the appraisal requirements established by FHA. (Note that the term “state” as used throughout this Mortgagee Letter includes U.S. Territories.) See the Source
2- FHA has long advised lenders and appraisers of the importance of appraiser independence in the context of generally accepted prudent lending practices.  In this mortgagee letter, FHA reiterates the importance of appraiser independence, and advises of new requirements regarding who is eligible to request an appraisal from an FHA Roster appraiser.  The new requirements set forth in this mortgagee letter will be effective for all case numbers assigned on or after January 1, 2010.  The existing requirements will remain in effect.