USDA FHA Let’s Get it Right
USDA has it right!
Thanks to TJ McCarthy, a Chicago based appraiser and current web master for the Illinois state appraiser association ICAP, for providing this interesting bit of news.
What this document says is that USDA expects the Home PURCHASER (the loan applicant) to obtain a “whole house inspection” in advance of submitting their loan application. This will be effective Oct. 1, 2015. Inspection can be paid by the seller.
This ‘whole house inspection’ is NOT DONE BY AN APPRAISER. It is to be done by someone licensed or certified as a home inspector, who then provides a written report to USDA. Upon receipt of that report, USDA will then determine what kind of appraisal will be ordered, either “as-is”, or “subject-to”, based on the inspection report, or possibly will deny the loan if the home is in significant disrepair – what they term as not being “decent, safe and sanitary”.
However, USDA still expects the appraiser to follow FHA inspection protocol when doing the report. But the appraiser now has direct evidence of known issues that can be referred to. An appraiser must be on the FHA appraiser panel in order to receive assignments from USDA and must follow FHA-HUD guidelines.
What is interesting is that USDA requires inspections via the FHA protocol, which turns the appraiser into a building inspector (after the loan application), which USDA says should be done by a licensed or certified home inspector. We’re going in circles with this.
It would seem logical that appraiser organizations band together and ask USDA to remove the ‘FHA approval’ from appraisers doing USDA assignments, and open those assignments to any ‘certified’ appraiser – since that’s what FHA now requires.