Transfer of FHA Appraisals

by Dave Towne · Published July 27, 2016 · Updated October 31, 2017

FHA Case Transfer

FHA Appraisers,

The document below was issued yesterday by HUD FHA.

Sometimes clients will ask appraisers to ‘put the report into the new lender’s name’ if the lender changes within the allowed time frame for a current appraisal.

With FHA, the Case Number and the existing report STAYS WITH THE PROPERTY ADDRESS.

The appraiser does not have to re-do a FHA report when the lender changes, per this in the document below:

Working with Case Transfers

Mortgagees should note the following about case transfers relative to appraisal reports in both the EAD portal and FHAC:

If, prior to case transfer, the original mortgagee uploaded an appraisal for the case, the mortgagee that the case was transferred to (new mortgagee) will be unable to view the appraisal in EAD.
The new mortgagee must obtain a copy of the appraisal, in the required format, from the original mortgagee according to current FHA policy, and submit the appraisal to FHA through the EAD portal.
The original mortgagee must first transfer the case number to the new mortgagee in FHAC before the new mortgagee will be able to submit an appraisal in EAD for the case. Once the case transfer is complete, the new mortgagee should allow an overnight update before submitting an appraisal so that the case transfer information from FHAC can be updated in the EAD portal.

The new mortgagee may see appraisal information on the FHAC Appraisal Logging Screen that was submitted by the original mortgagee. FHA policy continues to require the new mortgagee to obtain a copy of the appraisal from the original mortgagee, and underwrite the appraisal to determine if it meets FHA requirements.

FHA INFO #16-49
July 26, 2016

TO: All FHA-Approved Mortgagees; All FHA Roster Appraisers

NEWS AND UPDATES

Updates to Electronic Appraisal Delivery Portal and FHA Connection Provide New Functionality for Working with Appraisal Reports

Today, the Federal Housing Administration (FHA) implemented system updates to its Electronic Appraisal Delivery (EAD) portal and FHA Connection (FHAC) technology that provide new functionality for related entities to view and work with appraisal reports.

As of today, both the originating lender (Principal) or the underwriting lender (Agent) and their third party service providers authorized to upload appraisals to the EAD portal can:

Submit an appraisal to FHA through the EAD portal;
Complete any updates on FHAC’s Appraisal Logging Screen; and
Confirm the data as required in FHAC.

With the addition of this functionality, EAD portal users with Principal/Agent relationships can access and approve appraisal reports without receiving error messages informing them that the FHA Case Number on the appraisal is not assigned to them.

Working with Case Transfers
Mortgagees should note the following about case transfers relative to appraisal reports in both the EAD portal and FHAC:

If, prior to case transfer, the original mortgagee uploaded an appraisal for the case, the mortgagee that the case was transferred to (new mortgagee) will be unable to view the appraisal in EAD.
The new mortgagee must obtain a copy of the appraisal, in the required format, from the original mortgagee according to current FHA policy, and submit the appraisal to FHA through the EAD portal.
The original mortgagee must first transfer the case number to the new mortgagee in FHAC before the new mortgagee will be able to submit an appraisal in EAD for the case. Once the case transfer is complete, the new mortgagee should allow an overnight update before submitting an appraisal so that the case transfer information from FHAC can be updated in the EAD portal.

The new mortgagee may see appraisal information on the FHAC Appraisal Logging Screen that was submitted by the original mortgagee. FHA policy continues to require the new mortgagee to obtain a copy of the appraisal from the original mortgagee, and underwrite the appraisal to determine if it meets FHA requirements.

Quick Links
• Review new EAD portal Frequently Asked Questions (FAQs) about the Principal and Authorized Agent, and working with case transfers on the FHA Resource Center’s online, searchable FAQ site
• Get information, user guides, fact sheets, and more on FHA’s EAD Portal Information Page

Author
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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

Carl says:
July 28, 2016 at 9:59 am
I stopped doing FHA assignments when the rules changed. Glad I did. This is what FHA appraisers have to deal with (post from appraisersforum). No thanks!

During the HUD FHA Appraisal course, we discussed the issue of running appliances during the inspection. HUD requires the appliances / HVAC / electrical and related items be run or tested during the inspection. HUD has also stated if the Appraiser runs or tests these items, then the Appraiser is responsible for any damage resulting from this. After the class, I asked the HUD FHA Appraisal Course Instructors the following question:

Due to this and the HUD recommendation that Appraiser’s use common sense when performing the inspection, I asked if the Appraiser could include a statement similar to the following in the appraisal report:

“The Client requires the appliances, HVAC, electrical and related items to be run or tested during the Appraisal inspection as specified in the HUD Handbook 4000.1. Due to a potential safety hazard or damage while running or testing these items, the Appraiser requires the Client to provide a qualified party to run or test these items during the Appraisal Inspection. The Appraiser will observe the tests performed by the Client’s designee and document the results. If the Client does not provide a qualified party to run or test these items during the Appraisal Inspection, then the Appraiser will document this and make the extraordinary assumption these items fulfill the FHA requirements unless noted otherwise in this report. The Appraiser will also visually observe the items and report any issues that are readily visible. ”

I ping’ed the HUD FHA Appraisal course Instructors several times for an answer and did not receive one. I then contacted one of the head Denver HOC Appraisers / Mgrs and requested their response. The HOC Mgrs response was:

Regarding your question below, HUD Handbook 4000.1, section II.B.3.e.iii, states that “the Appraiser must operate all conveyed appliances and observe their performance.” By completing an appraisal “as-is,” the appraiser is indicating that he/she complied with this statement. Additionally, if an appliance cannot be tested, this needs to be noted, and the appraisal is to be completed subject to a satisfactory inspection of the appliance (assuming it is not an REO appraisal). As such, I do not recommend that you add the language below to your appraisals.

You also indicate that HUD recently stated that the appraiser would be held responsible for damages caused by the appraiser’s testing of an appliance. I’d like to clarify that if one of our instructors made such a statement, it was simply intended as a cautionary remark to colleges, not a statement of HUD policy. If you have concerns about the extent of an appraiser’s legal liability when testing appliances, I recommend you consult with an attorney licensed in your state.

Please direct future questions to the HUD Resource Center at: answers@HUD.gov or (800) 225-5342.

I responded with:

Thanks for the response.

Unfortunately, your response is not consistent with Rob Frazier’s response during the Sep 29, 2015 HUD FHA Webinar on the Handbook. This further clouds the issue.

Single Family Webinars

Few quotes from the HUD Webinar:

Webinar 1:07:00

Caller: What does an Appraiser do when unable to comply with the Handbook 4000.1 inspection requirements ?
The Appraiser must state in the report it meets the 4000.1 requirements.

FHA staff response: The FHA staff confirm the Appraiser must state in the report the Appraisal meets the 4000.1 requirements. The FHA staff recommend the Appraiser should state “based on my scope of work ya da – ya da – ya da, it meets 4000.1”.

Webinar 1:09:00

Caller: If an Appraiser identifies their inspection methodology in the appraisal report, does that meet the Handbook 4000.1 requirements ?

FHA staff response: “Right, Your scope of work, your analysis, your report.”

Webinar 1:15:15

Caller: Asks general question on FHA Handbook requirements vs Appraiser does what they want.

FHA staff response: Song and dance. FHA staff again state Appraiser may do what they want.

The FHA staff have stated the Appraiser can ignore the Handbook, identify their scope of work, document this in the report and the Appraiser has fulfilled the Handbook requirements.

Fyi, some Appraisers are already requiring the homeowner to perform the tests and NAR is complaining about this (and other Handbook issues) and stating the Handbook requirements are unreasonable:

http://www.realtor.org/articles/concerns-over-FHA-handbook-and-appraisals

The NAR letter also claims many of the updated Handbook Appraisal requirements are far beyond an Appraiser’s expertise.

Someone needs to convince Rob Frazier to make the Handbook requirements reasonable and these issues would go away.

The HUD HOC Staff are struggling (and failing) to explain and support the HUD Handbook 4000.1 Appraisal requirements. The HUD Staff are providing conflicting responses between themselves and the HUD Handbook. The HUD Staff are also becoming tired of trying to explain and support the HUD Handbook appraisal issues.

This indicates the HUD Handbook appraisal sections are unusable.

The HUD Handbook appraisal sections MUST be rewritten to be realistic and enforceable.

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Baggins says:
August 2, 2016 at 12:32 pm
One hand does not know what the other hand is doing. When you’re guaranteeing loans with tax payer funds, anything goes. Wind down the GSE’s today, and watch sanity return to lending. You’ll see these lenders immediately take massive losses though, since they’ve long since stopped being averse to risk management and are purely volume production companies of future junk paper these days. If I were to show you an actual empty bag, that would be the same as handing you a mortgage backed security. It’s all an illusion man, and we’re at the bottom of the ladder. Do fha, don’t do fha, it does not matter. Everyone who deals in gse loans will eventually take major losses again, so unless you’re strictly outside of GSE lending, your exposure is the same regardless.

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