Seward Real Estate Blog

FHA APPROVED Appraisal Services
June 27th, 2008 9:39 PM
 Appraisal News for                                
 Mortgage Professional


FHA PROPERTY INSPECTION AND REPORTING CHANGE EXAMPLES
EFFECTIVE 1/2006

FHA Inspection Examples of minor propertry conditions that no longer requires Automatic Repair for existing properties

  • Missing handrails 
  • Cracked or damaged exit doors that are otherwise operable
  • Cracked window glass
  • Defective paint surfaces in homes constructed post 1978
  • Minor plumbing leaks (such as leaky faucets)
  • Defective floor finish or covering
  • Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of unrepaired structural damage
  • Rotten or worn out counter tops
  • Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post - 1978.
  • Poor workmanship
  • Trip hazards (cracked or partially heaving sidewalls, poorly installed carpeting)
  • Crawl space with debris and trash
  • Lack of an all weather driveway surface

FHA property conditions that may represent a risk to the health and safety of the occupants or the soundness of the property that FHA will continue to REQUIRE AUTOMATIC REPAIR for existing properties include:

  • Inadequate access/egree from bedrooms to exterior of home
  • Leaking or worn out roofs
  • Evidence of structural problems
  • Defective paint surface in homes constructed pre-1978
  • Defective exterior paint surfaces in home constructed post - 1978 where the finish is otherwise unprotected.

 FHA no longer mandates
 AUTOMATIC INSPECTIONS for the following items and/or conditions in existing properties broker or REALTOR® was still the second most popular method for researching real estate.

  •  Wood Destroying Insects/Organisms
  • Well (individual water system)
  • Septic
  • Flat and/or unobervable roof

FHA Inspection Examples that continue to require AUTOMATIC INSPECTIONS

  •  Standing water against the foundation and/or excessively damp basements
  • Hazardous materials on the site or within the improvments
  • Faulty or defective mechanical systems (electrical, plumbing, or heating)
  • Evidence of possible structural failure (e.g. settlement or bulging foundation wall)

 

New FHA Appraisal Reporting Requirements - FHA  Handbook 41150.2 Appendix D
 
In September 2005, the Federal Housing Administration (FHA)
issued  Mortgagee Letter 2005-34 , which announced the adoption of four of Fannie Mae's revised appraisal reporting forms as the release of the 139 page   
Revised Appendex D of Handbook 4150.2, CHG-1.


FHA has shifted from its historical emphasis on the repair of minor property deficiencies and now only requires repairs for those property conditions that rise above the level of cosmetic defects, minor defects or normal wear and tear.

That's an IMPORTANT change for Both lenders and appraisers to be aware of it's easy for both of us to keep doing business-as-usual which will ultimately result in confusion and delay the processing of the loan.

 
With the elimination of the HUD VC-Sheet, FHA Roster Appraisers are to report all readily observable property deficiencies, as well as any adverse conditions discovered performing the research involved in completing the appraisal, within the appraisal reporting form.  

Lenders should use professional judgment and rely upon prudent underwriting practices in determining when a property condition poses a threat to the SAFETY of an occupant and/or jeopardizes the SOUNDNESS and STRUCTURAL integrity of the property, such that additional inspections and/or repairs are necessary.

As stated in the Revised Appendix D, FHA now permits an "as-is" appraisal for existing properties that serve as security for FHA-insured mortgages when minor property deficiencies, which generally result from deferred maintenance and normal wear and tear, do not affect the safety of the occupants or the security and soundness of the property.

FHA no longer requires repairs for these types of minor cosmetic deficiencies to bring a property into compliance with FHA Minimum Property Requirements. Please review the examples on the left, to get an idea of those types of deficiencies that are now considered cosmetic.

Lenders must review the appraisal to determine whether the appraiser has reported any property conditions that will affect the health and safety of the occupants or the security and the soundness of the property and must require immediate repair where the property condition poses a threat to these criteria.

If the appraiser reports a potential property deficiency that may pose a threat to the safety of the occupants or the security and soundness of the property, the lender should require an inspection of the condition to determine whether repairs are necessary to mitigate or resolve the problem.

Additional Reading Resouces

 
Should I hire a professional?

Are you a Do-It-Yourselfer? Many of us take pride in the ability to handle a household task by ourselves. After all, that’s one of the perks of home ownership! But not home improvement projects are created equal and, eventually, there may come the time where you will need to hire a professional to do the work. Here are some questions to ask yourself when hiring a professional:

Do you know how to do the work? This may seem like a silly question, but many people think they can do something just by reading a book on the subject. Be realistic with your skills and knowledge and consider the end results. If you lay concrete for a new sidewalk, will it look as professional as you would like? Do you know enough about the chemical composition of concrete to end up with a sidewalk that will last?

Would you make the situation better or worse? If you get into a project and find out you’re not as savvy as you thought you were, not only will you pay a professional to fix the initial problem, but you may have to pay him/her more to fix your mess. Plus, you don’t want to risk bringing harm to yourself or anyone around you. Both electrical and plumbing projects are ones you should typically leave for the professionals.

Do you have the time? Your spare time is valuable. While you may be able to handle painting the house or installing new carpet, it may also be more valuable to hire someone else to do it and you can spend your evenings and weekends relaxing instead of working on the house.

While many homeowners like to take on DIY projects, some people simply fear hiring a professional. That’s understandable considering home improvement contractor complaints were the source of the most consumer complaints last year, according to the National Association of Consumer Agency Administrators.

But there are ways to screen for qualified help. As an appraiser, I get to know people in many different fields every day. I would be happy to recommend a contractor, plumber or electrician I have worked with or know in the area. In addition, there are online services, such as ServiceMagic.com or your local Better Business Bureau that can connect you with prescreened, licensed and insured contractors in your area.

 


 

 

William Seward
Seward Real Estate Service
P.O. Box 36193
Indianapolis, IN 46236


 
www.seward-realestate.com      Ph. (317)823-1777
 

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Posted by Bill Seward on June 27th, 2008 9:39 PMPost a Comment

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