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

• FHA 4250.2 (Full) Appendix D.pdf
• FHA ML 2005-48 Appraisal Reporting Requirements - Revised.pdf
• FHA New Appraisal Reporting Requirements 1-06.pdf

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.