Survey about FHA Assignments

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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FHA assignments survey

Tell them what it will take to get you to re-start FHA assignments.

FHA Appraisers,

A new ‘attitude’ survey about doing FHA assignments has been prepared by the Illinois Coalition of Appraiser Professionals (ICAP). ICAP has a planned meeting with FHA, and will use survey results in their discussion.

ICAP has asked that I distribute this, and by association, anyone who gets this may re-distribute via any other outlet, email list, etc.

Link to the survey.

It will take 4 minutes +/- to do this survey, depending on if you add additional comments at the end.

One item the survey does not ask about is if you have quit doing FHA assignments (but are still on the FHA approved list) since the 4000.1 Handbook came out. If you have, add that bit of news to the comment section. Tell them what it will take to get you to re-start FHA assignments.

All current approved FHA appraisers are encouraged to complete the online survey.

Thanks for your assistance!

From ICAP Website:

ICAP’s FHA Survey
All properties bought or refinanced with an FHA loan have to be appraised by a HUD-approved home appraiser. Since the Federal Housing Administration’s overhaul of its Single-Family Housing Policy Handbook the FHA is demanding a higher level of performance from appraisers.

The National Association of Relators (NAR) is reporting that some feel that the recent changes to the FHA’s handbook on appraisals require appraisers to take on home inspection-type duties to ensure standards are met and that consumers can mistake the role of the appraisal for that of an inspection.

To help prepare the Illinois Coalition of Appraisal Professionals (ICAP) for its upcoming meeting with the NAR it has prepared the following survey for FHA Appraisers.

Thank you for providing your feedback.

Image credit flickr - Jason Taellious
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser – Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com

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30 Responses

  1. JC says:

    Thanks for the survey! I stopped doing FHA work when the rules changed. I am not a home inspector. I appraise “rights” and value, not hot water heater, furnace, dishwasher, etc.

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    • Mark Thomas says:

      Same with me.  I did FHA for about 10 years with no real problems.   But I now refuse as I did not sign up to inspect houses for a living.

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  2. Koma says:

    Interesting how the most important question is left out of the survey. Guessing it would be too much of a shock to the system..lol Truth hurts like a b..ch!

    JC is right we are NOT home inspectors and do not need the additional risks. We get piled on enough.

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  3. Dave Jenkins says:

    I quick fix to this mess would be to simply require a home inspection in addition to a home appraisal and stop trying to mix the too together.

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  4. Wayne says:

    Question #1…are you currently an FHA appraiser and are you currently doing FHA Assignments? DUH…NO…gee, end of survey. The fact that I have prepared thousands and thousands of FHA appraisals over 35+ years does not qualify “pitiful” me to state my opinion as to what SUCKS with FHA…Those dudes know it all and do not want any input. They can play that game without me!   FHA is just another type of appraisal that we do not accept. We do not accept any AMC work either. Gee…..we still receive much more work than we can accept. If that stops…I will retire!

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    • Koma says:

      Yeah Wayne until they burn the house down i.e. college requirements.

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    • Wayne says:

      What would we do without FHA?

      Just another dumb appraiser looking for an assignment. Then, along comes Jack & Jill once happy but now getting a divorce! One/both of them need an appraisal. The federal highway department (State, County, city) needs to build a road…Maybe they just need to install a water line or sewer line. What about the school district needing a spot to build that new facility? Where is that gas pipeline going to be built?

      Oh…gee, our neighbor just had their house burn down and they thought they were in “good hands” until the adjuster arrived! Sucks to have that type of neighbors! You were on a cruise…having a wonderful time until you returned home. You find that BANK OF THE UNIVERSE made a mistake and had their people knock down your front door, destroy/trash all of your property including photos of children, etc. OPPS!…wrong house!!!! WE BE SORRY!….Who are you? what problem do you have with that?

      Really….appraisers can be very useful for a lot of things besides running a garbage disposal! if we refuse and/or charge their ass until it hurts they may listen to us. But…I am dreaming, wake me up one day!

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  5. Retired Appraiser Retired Appraiser says:

    Why ask appraisers what it would take? Try another of your RETARD SOLUTIONS FHA.

    When FNMA ran into trouble and they turned to FHA to pick up the slack there was suddenly a SERIOUS FHA appraiser shortage. Their solution: Throw testing out the window and open allow every appraiser with a pulse to do FHA work. Talk about a RETARD SOLUTION folks!

    Now FHA has botched everything again and every intelligent appraiser dumped their FHA work months ago.

    Why not go for another RETARD SOLUTION FHA? Open the flood gates again and convince Realtors to take on the insane liability that no intelligent appraiser will assume.

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  6. Retired Appraiser Retired Appraiser says:

    Here is another RETARD SOLUTION that FHA may also want to consider:

    Offer free one day seminars in valuation to Home Inspectors and tell them to slap a value on their reports.

    As insane as that solution may seem it’s NO DIFFERENT from what they are asking of appraisers. It provides you with a clear illustration of how STUPID their current demands are.

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    • E J Brown says:

      While they are at it they can also certify that the attic & crawl space meet FHA guidelines, what ever those are

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  7. Greg Boyd says:

    The inspection protocols have NOT changed with the consolidation of the handbooks and mortgagee letters in a single document (designed for all who do business with FHA – not just appraisers.) It SPECIFICALLY states that appraisers are not home inspectors and that an FHA appraisal is not the same as a home inspection.

     

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    • Mike says:

      Greg, sorry but things have changed.  That is, if you take the 4000.1 to mean what it says.  “Appraiser must review all legal documents relating to the transaction.”  What the heck does that mean?  The loan application is a legal document.  The title report is also.  The deed being conveyed is also.  The CC&Rs are also.  Do you read all the HOA documents?  Do you check to make sure the home is painted an acceptable color, that the fence was approved, that the small storage shed is not a HOA violation?  The appraiser must observe all areas of the crawl space and attic space.  Do you crawl under a home where the clearance is 12-18 inches and go in so that you can see the areas around the corner of the foundation and under other parts of the house not visible from the opening?  Do you work your way through the attic, hoping you do not step through the ceiling?  Do you operate “all appliances”?  How will you know the washer works properly if you do not run a load of cloths?  What do you put in the microwave oven before you run it?  When you sign stating the home meets 4000.1 requirements for HUD, it does not say that only some of the plugs and plumbing has been checked.  What about the rest of them.  Do you trip the GFI on each outlet?  Do you test each smoke detector?  The wording of “Must” is a big change and it is used numerous times.

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      • Bill Johnson says:

        Don’t forget about the zoning Mike. Does the appraiser also need to be a surveyor to establish the specific lot location so in turn setbacks can be determined? Do we measure to the street, sidewalk, the fence? The way I look at it a half a dozen experts should be called out and the report should be subject to there findings. Speaking of CC&Rs, do we have to weigh the borrowers pets to see if they meet guidelines, and if not, do we need to suggest and supervise a weight loss program?

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      • Koma says:

        Mike, Thanks for pointing this out to those who are taking this lightly. We are not whining, complaining, bi.ching we are bringing up valid points to what is going on here with FHA. We are also trying to let our fellow appraisers know what is heading our way. The liability they are putting on us has gone through the roof. Pun intended! They are stating we are not home inspectors and in the same breath stating we have to do things a HI would do. It is way too soon to know the outcome of this so appraiser beware.

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  8. Syd says:

    As others have stated, not much. I appraise real property, I am a real property appraiser.  You don’t see realtors selling refrigerator, central air, dish washers etc. Do you?

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  9. Greg Boyd says:

    Some of you are pretty silly and obviously read into the 4000.1 what you want. The requirement is for the mortgagee to provide documents necessary to analyze the property. If the appraiser doesn’t get what is need all they need do is request any relevant documents (put the appraisal on hold until you get them)

    (e) Additional Requirements When Ordering an Appraisal
    The Mortgagee must provide to the selected Appraiser a complete copy of the subject sales contract including all addendums, land lease, surveys and other legal documents contained in the mortgage file necessary to analyze the Property.
     
    The Mortgagee must disclose all known information regarding any environmental hazard that is in or on the subject Property, or in the vicinity of the Property, whether obtained from the Borrower, the real estate broker, or any other party to the transaction.

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    • Mike says:

      Greg, I believe it is you and others who poo-poo those who take the working literal who are “reading into” it what you want it to say. Here is a sampling of “the appraiser must”:
      The Appraiser must obtain all of the following from the Mortgagee before beginning an appraisal: any other legal documents contained in the loan file;

      When performing an appraisal, the Appraiser must review and analyze the following: any other legal documents contained in the loan file, and report the results of that analysis in the appraisal report.

      The Appraiser must note the presence of any Easements and Deed Restrictions to assist the Mortgagee in determining eligibility.

      The Appraiser must identify if the Property is affected by noise and hazards of low flying aircraft because it is near an airport. The Appraiser must review airport contour maps and analyze accordingly. The Appraiser must determine and report
      the marketability of the Property based on this analysis.

      The Appraiser must note and comment on all Onsite Hazards and Nuisances affecting the Property. The Appraiser must also provide photographs of potential problems or issues to assist the Mortgagee in understanding the problem. Special site conditions include rock formations, unstable soils or slopes, high ground water levels, springs, and other conditions that may have negative effect on the value.
      The Appraiser must report any special conditions that may exist or arise during construction and necessitate precautionary or hazard mitigation measures.The Appraiser must report to the Mortgagee any danger due to topographic conditions
      (e.g., earth and mudslides from adjoining properties, falling rocks and avalanches) to the subject Property or the adjoining land. The Appraiser must consider the readily observable soil and subsoil conditions of the site, including the type and permeability of the soil, the depth of the water table,
      surface drainage conditions, compaction, rock formations and other physical features that affect the value of the site, or its suitability for development or support of the existing improvements.
      The Appraiser should also consider events and published reports regarding the instability of the soil and surface support of the land as related to the subject and proximate properties.

      The Appraiser must note appliances present in the house at the time of observation and indicate whether that appliance is considered Personal Property or Real Property. The Appraiser must operate all conveyed appliances and observe their performance.

      The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if mechanical systems are not safe to operate; not protected from destructive elements; do not have reasonable future utility, durability and economy; or do not have adequate capacity.

      The Appraiser must observe the physical condition of the plumbing, heating and electrical systems. The Appraiser must operate the applicable systems and observe their performance. Central air conditioning is not required but, if installed, must be operational. If the air conditioning system is not operational, the Appraiser must indicate the level of deferred maintenance, analyze and report the effect on marketability, and include the cost to cure.

      If the Property has a septic system, the Appraiser must examine it for any signs of failure or surface evidence of malfunction. If there are deficiencies, the Appraiser must requirevrepair or further inspection.

      The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the roof covering does not prevent entrance of moisture or provide reasonable future utility, durability and economy of maintenance and does not have a remaining physical life of at least two
      years. The Appraiser must observe the roof to determine whether there are deficiencies that present a health and safety hazard or do not allow for reasonable future utility.

      The Appraiser must report if the roof has less than two years of remaining life, and make the appraisal subject to inspection by a professional roofer. When the Appraiser is unable to view the roof, the Appraiser must explain why the roof is unobservable and report the results of the assessment of the underside of the roof, the attic, and the ceilings.

      The Appraiser must observe the interiors of all attic spaces.

      The Appraiser must visually observe all areas of the crawl space…

      The Appraiser must also notify the Mortgagee of the deficiency of MPR or MPS if utilities are not located on Easements that have been permanently dedicated to the local
      government or appropriate public utility body.

      Are you doing all of that on each FHA assignment?

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  10. Greg Boyd says:

    Mike… of course I do all of that and always have as they were always required per the 4150.2, 4905.1, 4910.1, 4000.1, and dozens and dozens of mortgagee letters. This is nothing new and should be done on any assignment… not just FHA. It’s called due diligence. All the 4000.1 did was take existing policies and requirements (for all parties, not just appraisers) and put them into one handbook. Almost anything you can throw out I can find the reference in the old handbooks (which I have saved as pdf – they’re no longer available at HUD.GOV.) If you don’t feel comfortable doing FHA assignment then simply don’t do them. Or spend some time reading the 4000.1 (all of it.)

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  11. Mike says:

    Greg,

    So, you are saying that you do read the title report, analyze all deed restrictions, read the HOA documents and analyze them for any issues with the subject property, crawl around under all parts of the home in the crawl space and work your way through the attic on each home where these exist as opposed to the “head and shoulders”, etc. The “head and shoulders observation” is only allowed where the appraiser CANNOT get into the area due to limited access. It does not count if there is access and you just don’t want to deal with the cobwebs, spiders, dirty clothes. You operate the washer and dryer to make sure they work properly. You personally check to see if easements for utilities are dedicated to the local government. You physically inspect the roof for any issues.  You are able to estimate the cost to repair the air conditioning unit which does not work. You check for published reports about the soil in the area. You know the ground water level under the subject property.  You report on subsoil conditions of the site, including the type and permeability of the soil, the depth of the water table. You report any special conditions that may exist or ARISE DURING construction.

    Well, sir, my hat is off to you. You must be an expert in a wide range of fields besides appraising.  If you are not doing all of this, you might want to check with the attorney for your E&O provider and see if he agrees with you that “must” does not mean what it says and is an arbitrarily situation that you can explain away on the witness stand.

    Hey, I imagine you are a good appraiser and I am not trying to imply anything else. I have just heard too many “experts” claim that you do not have to do what it specifically says is a “must”. If an appraiser did all the “must” items, they would need to charge a fee far above typical fees. If an appraiser did not do the “must” items, their liability just went through the roof.

    Good luck!

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  12. Greg Boyd says:

    Yes, I do almost all of that. Head and shoulders is acceptable when access is limited. HUD/FHA does not expect the appraiser to crawl across rafters in the attic or worm their way through tight crawl spaces. Give Rob Frazier a call in DC. We talk from time to time. I got this straight from the horses mouth, so to speak.

    I think you are only looking at this superficially, without a strong background in FHA assignments and with a definite agenda result from preconceived notions.

    With all due respect.

    G

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  13. Wayne says:

    You discover that the home is zoned SF 7….Not 1, 2, 3, 4, 5, 6, 7 or 9 but SF 7. Gee what does that mean? This is in an addition with deed restrictions. Of course you have researched all of the zoning information to be sure that the home complies with SF7… and also that the deed restrictions involved for the subject comply. There is an existing oil well pumping on the lot next door and pipelines, storage tanks, etc. in every direction. You have researched the water table under the home. All appliances work perfectly and there are no encroachments or adverse easements of any type.

    It is reported that the home is connected to a private septic system. Any idea where that tank is? Any idea what the boundaries of the lot and location of sewer lines and tank? Oh… lets crawl under the home, lets crawl in the attic, lets check out the plumbing, electrical, HVAC…did you see that crack in the foundation, did you see that damp spot in the ceiling? Did you notice the leak in the heat exchanger? Did you notice the leak from the tank less water heater that is pouring water throughout the master bath (doing that one right now).

    I am not trying to give anyone a hard time. I just hope the stupid appraiser that does this report in a day at a fee of $450. gets to file bankruptcy on their way out of the appraisal door! Again, not trying to give anyone a hard time, but if enough of you will BUST YOUR FINANCIAL ASS you will stop that crap and the rest of us will get a break!

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  14. Baggins - FHA - old hat Baggins - FHA - old hat says:

    FHA, so easy a caveman whom is fha approved could do it.  Same thing as a normal appraisal, add in pics of crawl, attic, appliances, and disclaimer the appraisal is not synonymous with a home inspection.  Appraisers often state;  I’m not an inspector!  Well, if you’re a real property appraiser you should at least be well versed in construction, materials, building methods, etc, etc.  The dweasel pencil pushers took over this business, and it will never be the same.  All these desk workers whom can’t seem to get their mind around the direct relationships between construction knowledge and real property worth.  FHA just wants to make sure the borrower won’t tank with excess repairs for the first 2 years.  Like come on, that should be 10 years, but that’s how lenient this whole thing is.

    If there are irreconcilable concerns, FHA should force a home inspection report for every single order and make sure such report is furnished to the appraiser.  The obvious shortcoming with all order types, especially sales, is that the appraiser is usually not furnished any inspection data.  Lenders, fast and loose with the cash.  What’s new?  FHA is no different and they offer cash out all day long.  Sort of defeats the purpose of any updated handbook rules.  Soon even non FHA borrowers will be footing the pmi bill for those still entwined in this succer punch masquerading as a guarantee program.

    Canative talking about biased opinions based on preconceived notions?  Doesn’t that just beat all.  The pot called the kettle black.

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  15. Greg Boyd says:

    A trained and experienced appraiser with thousands of appraisals under his or her belt doesn’t need to reinvent the property inspection wheel with every assignment. If I was starting from scratch I’d be overwhelmed and it would take me all day to inspect a property and a week to develop the appraisal and write a report. Thankfully those days are long gone. I know what to look for, where to look for it, who to ask, who to call, how to observe (which is what is called for as opposed to a home inspection which is explicitly stated in the 4000.1 at Page 60: “Appraiser refers to an FHA Roster Appraiser who observes, analyzes, and reports the physical and economic characteristics of a Property and provides an opinion of value to FHA. An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.”

    This is why I am clear about what the appraisal is for and what it means and doesn’t mean:

    “The intended use of the appraisal is solely to assist FHA in assessing the risk of the Property securing the FHA-insured Mortgage (24 CFR § 200.145(b)). FHA and the Mortgagee are the intended users of the appraisal report.

    Upon completion of required inspections and any repairs indicated by such inspection, the property meets HUD Minimum Property Requirements as described in HUD Handbook 4000.1 . The FHA  Appraiser does not guarantee that the Property is free from defects. The appraisal establishes the value of the Property for mortgage insurance purposes only. A Home Inspection by a licensed Home Inspector is recommended. The appraiser assumes that the Buyer has read, understands and agrees to the information contained in the document titled “For Your Protection Get a Home Inspection.” HUD-92564-CN (6/14).”

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  16. Baggins - FHA - old hat Baggins - FHA - old hat says:

    That’s it.  Correct.  Just posted a similar comment not but a minute ago, in the previous FHA article on the blogs here.  You’ve got to know what to look for, and know what is and is not a problem.  If appraisers are daunted by FHA protocol, I suggest they get a better handle on their own positions, and gain mastery of home materials and construction issues.  Everything from positive water flow, to rotting woods, failed water lines, failed sewer lines, fall hazards, environmental hazards, deficient roofing, and the list goes on.  Someone at FHA confused the heck out of the issue by trying to bring appliances in there.  Their presence as real property has always been arguable, regardless if they’re technically attached via some water line coupling or not, etc, etc.  The intended use of the appraisal may say one thing, but the intended purpose of HUD which secured their federally mandated charter in the first place, is quite another.  Clearly the concerns pertaining to elevated risk with FHA appraisal has much more to do with improper management of FHA, than it does with improper application of technique by the appraisers.  Heck, the standard is only 2 years.  If you can’t call it with a super lenient only 2 year requirement, you’re missing the big picture.

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  17. Greg Boyd says:

    @ “Someone at FHA confused the heck out of the issue by trying to bring appliances in there.”

    As far as I can tell it’s always been there. My dad and brother taught me and they learned by reading all the actual paper handbooks, mortgagee letters and going to required HUD training sessions a long time ago. The first thing I had to do when going inside was turn on the stove and run the water while flushing the terlet.

    We used to have to take a proctored exam (Symantec?). Now appraisers just sign up. I think there should be a period of mentoring by an FHA roster appraiser and a comprehensive exam before applying for roster status.

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  18. Baggins - FHA - old hat Baggins - FHA - old hat says:

    If appraisers cannot identify the components of a home, they’re hopelessly unequipped to identify any real property deficiencies.  All this emphasis on math accreditation, and scarcely any emphasis on realistic considerations like perhaps that appraisers should indeed also be home inspectors.  I operate just like a home inspector, but only levy that information for real property value services.

    I don’t want to hear anything about how appraisers need better this or better that qualification though, as long as any monkey with a phone can run appraisal distribution without needing a license.  All order distributors need to be individually licensed, and that will go a very very long way towards necessary system corrections, much more so than yet another rule focused on the appraiser.  FHA, where appraisers go to die.  Like pet cemetery, but we only bury reports, not people or cats.  Hopefully they’ll never reanimate and become unearthed.  But if they do, we’ll call in Bruce Campbell or something.

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  19. E J Brown says:

    Well, when they finally run me down & kick me off the list it’ll almost be time to retire anyway

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  20. Al says:

    HUD FHA Appraisal Course Observations

    First Domino

    “The FHA HUD 4000.1 Handbook was updated on September 14, 2015. Since that time, the Appraiser User Community Members have been discussing and arguing about the impact of the Handbook updates. The entire Appraisal User Community knows the updated Handbook Appraisal inspection requirements are far beyond an Appraiser’s expertise and no Appraiser is complying with them.

    The updated Handbook impact on Appraisers will be determined by the state appraisal licensing boards. It’s time to get them involved and let them rule on the issue.

    A complaint has been filed with a state licensing board regarding an FHA Appraisal. The complaint is under review by the board. The board’s decision will be available when the complaint has been resolved. The estimated resolution date is not known.

    I’ve discussed the complaint’s general issues with Appraisers and consultants across the country. I believe this is the first complaint in the country submitted on this topic. The board’s ruling will set a precedent for FHA Appraisals and related disciplinary action….” read more

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  21. Greg Boyd says:

    You’re full of beans Alan.

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Survey about FHA Assignments

by Dave Towne time to read: 1 min
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