Effective January 1, 2010. FHA appraisal requirements will follow a similar procedure recently adopted by Fannie Mae/Freddie Mac. Read earlier posts here about “HVCC.”
Over the past few months, the HVCC guidelines have presented numerous obstacles in loan processing and closing for conventional loans. On the surface, it appears the FHA guidelines will be much less cumbersome.
Here’s some of what was stated in Mortgagee Letter 2009-08: “Historically FHA prohibited mortgagees from accepting appraisal reports completed by an appraiser selected, retained or compensated, in any manner by real estate agents. To ensure appraiser independence, FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.”
“FHA does not require the use of AMCs or other third party organizations for appraisal ordering, but recognizes that some lenders use AMCs and/or other third party organizations to help ensure appraiser independence.”
“FHA-approved lenders must ensure that the fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.”
Prior FHA regulations require that FHA appraisers “avoid conflicts of interest and the appearance of conflicts of interest. In order to help appraisers avoid conflicts or the appearance of conflicts, no members of a lender’s loan production staff or any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender not independent of the loan production staff and process, shall have substantive communications with an appraiser relating to or having an impact on valuation, including ordering or managing an appraisal assignment.”
This section was always designed to eliminate the possibility that the lender and the appraiser would collude to impact property value.
Only time will tell how the new guidelines meet the real world.
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