FHA 4000.1 Handbook FAQ
FAQ PDF Document
In June 2015, the Denver HOC conducted a webinar (or perhaps live class) training on the ‘then upcoming’ new FHA 4000.1 Handbook. Questions were submitted, and the answers were compiled into a FAQ PDF document (posted at the end of this article).
Many of the questions were submitted by underwriters or other non-appraisers, but some were from appraisers. You will have to read through the 8.5 page FAQ PDF attachment to find appraisal related info.
However, the one question and answer below may help alleviate the fears of some appraisers:
Q. Does the appraiser have to note on the appraisal that an inspection of the attic was completed or is it acceptable for the appraiser to only state that the property meets minimum property standards and it is assumed the inspection was completed?
A. None of those are required. The appraiser does not have to say whether or not they inspected the attic or crawl space. Since the appraiser is required to include pictures of the attic or crawl space, the inspection is assumed when pictures are provided. The appraiser also does not have to state that the property meets minimum property requirements.
The appraiser does have to report any deficiencies, but they don’t have to report everything that’s good about the property.
Now, I don’t claim to be the ultimate expert on FHA policy. The above appears to be somewhat contradictory with what the 4000.1 Handbook, and the Data Delivery Guide say. If it is, those must be followed, not the FAQ.
Or it could be that many appraisers are having trouble actually understanding the FHA material because quite frankly, some of that is convoluted because on one hand FHA forces the appraiser to be a quasi-home inspector and systems operator, and on the other hand says the appraiser is only ‘observing, analyzing and reporting’ items with the property.
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My problem is the increased liability. I showed the new requirements to an attorney and he said I would be NUTS to take this risk as in his professional opinion I’m now a Home Inspector. The job of an appraiser is to collect, analyze and verify data, to determine market value as of an effective date, not crawl through attic spaces and be able to determine if they are property vented, or check the pressure release valve of a water heater. I have been turning down all FHA work, as this is simply not fair to the appraiser!
whats confusing is, the handbook and FHA can say that a comment is or isnt needed such as whether or not the crawl space or attic was inspected, but your client can always make you do otherwise. common sense says if pictures of the crawl space or attic are in the report, then the space obviously was inspected. the problem is, common sense is extremely rare in the appraiser world nowadays.
if that comment, (whether or not the crawl space or attic was inspected), is not in one of my reports, i guarantee you someone will be sending me back my report and telling me it needs to be in there because its required by the client.
appraisers understand the material. what appraisers dont understand, is why we always continue to be on different pages with so many things.
the bleeding continues . . . . .
I am located in Central Florida and can name 4, common, poisonous snakes (common Water Moccasin, Cotton Mouth Moccasin, eastern Diamond back and Coral Snake). We also have at least 2 poisonous spiders ( Brown Recluse & Black Widow) that are also commonly found in the area. I encounter the snakes outside of homes frequently and know that crawl spaces are a natural hiding place for both snakes and spiders. In the past when I perform head and shoulders inspections of attics and crawl spaces, I used a powerful light and examine the area around the access very carefully before thrusting my head in.
My point is this is not a question of if an appraiser is going to be bit, it’s when and how many times if we are required to inspect crawl spaces more that just head and shoulders.
A great point Martin but you forgot to mention the most deadly snake of all: The AMC Constrictor. If you don’t die from it’s poison it will crush your business and swallow you whole. Unfortunately it is indigenous to every state in the U.S. including Hawaii & Alaska.
I was almost crushed by one a few years ago. Fortunately I was able to dislodge it with a Zombie eradication tool that I always carry. Very close call that I don’t want to repeat. Thanks for reminding me. BTW. How did you retire? I want to grow up to be just like you!!
I didn’t retire…I quit because I refused to go along with their HVCC kickback business model. I got rid of my appraisers license and brokers license shortly afterwards so I wouldn’t be tempted into going back.
I highly recommend walking away to every appraiser. It takes a leap of faith though. If you don’t have faith in yourself a case of cheap liquor will do the trick.
A few things I have noted from handbook: you are not to test water heater valve, you are to ensure there is a drain pipe on it. As for crawl/attic, fully observe-means every inch, a photo does not show you crawled fully the attic or crawl however it is ok if you don’t as long as you state you didn’t and why you didn’t (snakes, safety such as attic not floored etc) I agree, there is a lot more liability however you have to be thorough on what you did and didn’t do. I don’t like changes but that is how it is ????
Good read. FHA keeps on getting tougher and tougher. I would have appreciated some detailed FAQ on crawl space storage areas. The guidance there says appraisers are not expected to be professional electricians. One wonders why a professional home inspection with minimum standards to include professional review of electrical, furnace, hazardous materials, plumbing review, and foundation health, are not included as standard borrower costs. How many borrowers could have been saved from lemons and confusing scenarios, if only central command would have made it a requirement to furnish the appraiser the home inspection report, and make professional home inspection reports a requirement for refinancing as well. The motivation continues to be maximum volume through the pipeline. Lack of national standards and licensing requirements for home inspectors is no excuse for omitting inspections and passing that duty to appraisers instead. HUD seems quite ready and able to put forth uniform requirements for participating appraisers, and it stands to reason such a program should exist for home inspection requirements and persons as well. I would really appreciate getting back to value analysis. It’s very silly to tell an FHA borrower I’ll have to run their dishwasher and actually crawl inside those crawl spaces. This appraisal industry is continuing to have uncertainty regarding appropriate limitations as to where the valuation professionals duties should begin, and end.