Frequently Asked Questions

FHA Appraisal Assignments

Circular No.:

2011-07-E

Date:

February 17, 2010

Distribution:

Staff and fee panel appraisers

Effective:

Immediately

The following are Frequently Asked Questions (FAQ’s) regarding LandSafe FHA appraisal assignments procedures and requirements. Included are questions regarding the use of the FHA Appraisal Update 1004D and the FHA Completion Report 1004D.

Q1

Does the appraisal update 120 day extension period begin 120 days after original report’s effective date or on the effective date that the FHA Appraisal Update 1004D is completed?

The Appraisal Update Report 1004D extends the validity period an additional 120 days from the effective date of the Appraisal Update report.

Reference: HUD FAQs – ML 2009-51

Mortgagee Letter 2009-51

Mortgagee Letter – 2010-13

Q2

How many times can the FHA Appraisal Update 1004D be utilized to update the appraisal?

An original appraisal report can only be updated one time via the FHA Appraisal Update 1004D.

Reference: HUD FAQs – ML 2009-51

Mortgagee Letter – 2010-13

Q3

If the appraiser who performed the original appraisal report is no longer on the FHA Appraiser Roster, can another appraiser in good standing on the FHA Appraiser Roster perform the FHA Appraisal Update 1004D?

No. Only the FHA Roster Appraiser who performed the original appraisal report being updated and who is currently in good standing on the Roster can perform the FHA Appraisal Update 1004D. If the original appraiser is not on the FHA Roster, the lender must order a new appraisal with another appraiser on the FHA Roster.

Reference: HUD FAQs – ML 2009-51

Q4

Can a second lender, not the lender who was identified as the intended user in the original appraisal report, request the original appraiser to complete the FHA Appraisal Update 1004D?

FHA allows the original appraiser to complete a 1004D Appraisal Update for an intended user who was not identified in the original appraisal report. The original appraiser must complete the 1004D Appraisal Update and must incorporate the original appraisal report by attachment. This is a new assignment under USPAP. Since the original appraiser (staff or fee) was engaged by LandSafe, the new lender would have to engage the original appraiser through LandSafe for the update or a new appraisal would have to be ordered from another appraiser.

Note: If the appraiser who performed the original appraisal report completes an update and incorporates the original report by reference only (not attached to the original report), the Appraisal Update 1004D can only be performed for the original intended user(s), as stated in USPAP Advisory Opinion 3 (AO-3).

Reference: HUD FAQs – ML 2009-51 and Mortgagee Letter – 2010-13

Q5

Can the Appraisal Update Report be ordered after the appraisal has expired?

No. The effective date of the Appraisal Update Report must be within the 120 day expiration period of the original report being updated. Therefore, the 1004D must be ordered prior to the expiration of the original report.

Reference: HUD FAQs – ML 2009-51

Q6

Are the requirements for completing an Appraisal Update 1004D the same for FHA and conventional loans?

No. The completion requirements of the form are similar for FHA and conventional. However, FHA has the following specific requirements that are not required on the conventional Appraisal Update 1004D:

· Fannie Mae Market Conditions Addendum (1004MC) must be completed with the form

· FHA case number is to be placed on the top right hand corner of the 1004D form

· No supervisory signatures are permitted; only the FHA Roster appraiser may sign the FHA Appraisal Update 1004D.

· Appraisal update is only allowed one time for FHA

Note: The appraiser must provide a summary of the analysis conducted in the assignment to determine if the value has declined. In addition, additional certification items should be included to be in compliance with USPAP Standards Rule 2-3.

Reference: HUD FAQs – ML 2009-51

USPAP FAQ#240

Q7

Is the fee for the FHA Appraisal Update 1004D the same as the conventional Appraisal Update 1004D?

No. The fee is higher on the on the FHA Appraisal Update 1004D since the 1004MC addendum is required.

FHA Completion Report 1004D

Q8

When is the FHA Completion Report 1004D utilized?

To report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report when the subject is an existing single family residence, individual condominium, or two-to-four unit property on an FHA appraisal assignment. It can also be utilized when the DE is requesting additional issues to be addressed that were not identified in the original appraisal report.

Reference: Mortgagee Letter 2009-51

Q9

When can the FHA Completion Report 1004D not be utilized?

The FHA Completion Report 1004D cannot be used when the subject property is new construction or a manufactured home; the FHA Compliance Inspection Report (HUD-92051) must be used. The CIR remains an approved form for all FHA completion orders. The LandSafe appraiser should always deliver the product requested, unless the order is for 1004D Completion Report on new construction or a manufactured home. The appraiser should contact the LandSafe Scheduler if they are uncertain about the product that was ordered.

Reference: Mortgagee Letter 2009-51

Q10

Who can complete the FHA Completion Report 1004D?

The appraiser that completed the original report if currently in good standing on the FHA Appraisal Roster or any other appraiser currently in good standing on the FHA Appraisal Roster. The original appraiser should be utilized unless there are some extenuating circumstances that require another appraiser to complete the 1004D (e.g. out on vacation, sick, not in good standing, deceased, has issues with their appraiser license).

Reference: Mortgagee Letter 2009-51

Q10

Are the requirements for completing the FHA Completion Report 1004D the same for FHA and conventional loans?

No. The completion requirements of the form are similar for FHA and conventional. However, FHA has the following specific requirements that are not required on the conventional completion report, which are:

· FHA case number is to be placed in the top right hand corner of the form

· No supervisory signatures are permitted; only the FHA Roster appraiser may sign the FHA Completion Report 1004D.

Reference: HUD FAQs – ML 2009-51

Mortgagee Letter 2009-51

Q11

Is the fee for the FHA Completion Report 1004D the same as on a conventional Completion Report 1004D?

No. Due to the higher level of inspection that is required and FHA minimum property standards that must be addressed, the FHA Completion Report 1004D has a slightly higher fee.