FHA Temporary Partial Waiver

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Dave Towne
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FHA Temporary Partial Waiver - Actual Reasoning & DirectiveFHA Appraisers, on April 26, 2021, FHA issued this Temporary Partial Waiver, which is active for one year. This temporary partial waiver is effective for the 12-month period between April 26, 2021, and April 26, 2022.

It is found in FHA INFO #21-25 April 27, 2021:

Temporary Partial Waiver of the requirements of the single Family Housing Policy Handbook 4000.1 Section II.D.4.c.iii.(F)(2) Required Analysis and Reporting that the Appraiser must include, analyze and report a minimum of two active listings or pending sales on the appraisal grid (in addition to at least three recently settled sales) in an Increasing Market when a shortage of housing supply has been documented on the Fannie Mae Form 1004MC/Freddie Mac Form 71.

This waives the portion of Section II.D.4.c.iii.(F)(2) that the Appraiser must include, analyze and report a minimum of two active listings or pending sales on the appraisal grid. This partial waiver is applicable only in changing markets with increasing property values and a shortage of housing supply. This waiver will expire one year from the date of this waiver.

To ensure the continued availability of affordable housing (???) in housing markets with increasing property values and a shortage of housing supply, a partial waiver of the 4000.1 Section II.D.4.c.iii.(F)(2) requirement that the FHA Roster Appraiser must include, analyze and report a minimum of two active listings or pending sales on the appraisal grid in these changing markets is warranted.

There have been many reports citing the lack of active listings or pending sales in several markets which are experiencing increasing property values and a shortage of housing supply. Therefore, the FHA Roster Appraiser requirement to include a minimum of two active listings or pending sales and to ensure they are tested and have reasonable market exposure to avoid the use of overpriced properties as comparable properties, has not been possible in these markets.

Appraisers have been seeking guidance and since there is no alternative within the policy, it has prompted requests for inclusion of active listings or pending sales that are not competitive to property being appraised nor its market, which may create a misleading understanding of the property and its market.

As required in 4000.1 Section II.D.11, the appraiser must properly analyze and address market trends in the subject’s market on the Fannie Mae Form 1004MC/Freddie Mac Form 71 in support of changing market conditions including Property Values and Supply/Demand trends along with the availability of competitive active listings or pending sales.

This policy also recognizes that this analysis is most important where markets are demonstrating negative trends. Section II.D.4.c.iii.(E)(3)(i)(iii) Market Condition (Time) Adjustments requires the Appraiser to provide a summary comment and support for all conclusions relating to the trend of the current market.

These existing requirements along with the requirement of least three recently settled sales is sufficient for the appraiser to develop sound and supported conclusions in specific markets when property values are increasing and the shortage of housing supply is documented on the Fannie Mae Form 1004MC/Freddie Mac Form 71. The Appraiser must satisfy the remaining requirement in Section II.D.4.c.iii.(F)(2) to include at least three recently settled sales.

NOTE: I added the (???) to the above paragraph. The correlation of ‘continued availability of affordable housing’ in ‘increasing markets’ is a misnomer, and does not make logical sense!
 

Image credit flickr - John W. Schulze
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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2 Responses

  1. Avatar JC says:

    I bet lenders will still require it. They are still standing by the 15% net, 25% gross, etc. guidelines!

    4
  2. Avatar Seneca says:

    Silly requirement in the first place. I don’t need to grid out two listings to know how to report the market conditions for inventory. Just a waste of time in an exercise in form filling.

    1

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FHA Temporary Partial Waiver

by Dave Towne time to read: 2 min
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