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The New FHA Appraisal Manual: What You Need to

Know. Rob Frazier, SRA, FRICS, Deputy . Director. Home . Valuation Policy Division, FHA Office of Single Family Housing. FHA Priorities. Expand Access to Credit. Ensure Long-Term Viability of MMI Fund.

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The New FHA Appraisal Manual: What You Need to






Presentation on theme: "The New FHA Appraisal Manual: What You Need to"— Presentation transcript:

Slide1

The New FHA Appraisal Manual: What You Need to KnowRob Frazier, SRA, FRICS, Deputy DirectorHome Valuation Policy Division, FHA Office of Single Family HousingSlide2

FHA Priorities

Expand Access to CreditEnsure Long-Term Viability of MMI FundTransform current guidance and processes

2Slide3

FHA Priorities

Transformation GoalsMake it easier to do business with FHAProvide better analysis and quality review Modernize to improve risk analysis

3Slide4

Transformation

Programs -Valuation RelatedProvide Clear Guidance and Instructions

Replace 4150.2 and Mortgagee Letters

Update or Replace Old Manuals and RegulationsSlide5

Transformation

Programs -Valuation RelatedCreate Electronic Appraisal Storage and Analysis

Electronic Appraisal

Process

(

EAP)

Electronic Appraisal Delivery Portal (EAD

)

Adopt Industry Data and Format

Standards

Minimize Affect to AppraisersSlide6

New On-Line Handbook

Application Through EndorsementSlide7

7

New SF Housing Policy Handbook

Provide stakeholders with a consistent, authoritative source for Single Family policy:

Transition from multiple Handbooks, Mortgagee Letters, and other guidance to a single policy guide.

Application through Endorsement

status:

Finalizing for publication this summer, with significant lead time before effective date.Slide8

Posting for feedback this summer,

with future, aligned effective dates:Appraiser 203(k)

Condominiums

To be part of, and used in concert with, future published version of

Application through Endorsement

section.

Also posting this summer:

Doing Business with FHA

section

Quality Control, Oversight and Compliance

section

8

New SF Housing Policy

Handbook

Slide9

Servicing (under development for posting later this year)

REO & ClaimsTitle I

HECM (Reverse Mortgages)

9

Sections

Still to Come Slide10

Components of Appraisal Guidance

Property RequirementsFHA requires underwriting of property condition as well as valuation.Observe, Analyze, ReportAppraisers’ requirements spelled out in one place, clearly

6Slide11

Components of Appraisal Guidance

Report and Data Format RequirementsA separate section dealing with forms, data and formats required, “how to” instructionsFHA Appraiser Roster FHA Appraiser Compliance

6Slide12

Changes-Enhancements of Note

Zoning and Legal Non-Conforming UseStationary Storage Tanks Accessory Dwelling UnitsSlide13

Changes-Enhancements of Note

Attic and Crawl Space Inspection RequirementsGeneral Acceptance Criteria, Property Eligibility, Nonresidential Use of Property. Slide14

Changes-Enhancements of Note

Cost and Income Approach for Value Photograph Requirements Sales history of comps – 3 years+Slide15

Changes-Enhancements of Note

Measurement and Reporting of Contributory Value of energy efficiency components or alternate systems (solar, etc.). Market Conditions Addendum to the Appraisal Report, Fannie Mae Form 1004MC Slide16

LOCATION OF DRAFT POLICY

Draft Posted Friday, July 31 at:http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/SFH_policy_drafts/appraiser_requirementsSlide17

Electronic Appraisal ProcessingSlide18

FHA Appraisal Review ProcessSlide19

Appraisal Data and Valuation

Electronic Appraisal Delivery (EAD)Collects Forms and Data from LenderValidates identity of appraiser (future)Leverages

industry data

and report form standards

19Slide20

Appraisal Data and Valuation

Runs FHA specific rules and scoringProvides data, PDF of report, results of scoringProvides First Generation Copy of Appraiser’s Work

20Slide21

21

EAP will:Use EAD portal to collect scored reports from Vendor

Enable

lenders to

upload

and

allow HOCs to use electronic files when needed

Electronic Appraisal Process (EAP)Slide22

22

EAP will:Move documents and data through FHA Systems

Filename is FHA

Case Number

with versioning functions

FHA staff members will view the appraiser’s original PDF

Electronic Appraisal Process (EAP)Slide23

23

MISMO 2.6 GSE (UAD) FormatFNM1004/FRE70 Single Family Appraisal Report

FNM1073/FRE465 Condominium Unit Appraisal Report

MISMO 2.6 Errata Format

FNM1004C/FRE70B

Manufactured Home Appraisal Report

FNM1025/FRE72 2-4 Family Appraisal Report

FNM1004D/442

Update of Appraisal

FNM1004D/442 Completion

Report

MISMO 2.6

Format

with embedded

PDFSlide24

EAD Unique Features

EAD Edits include 17 new (fatal) edits on 1004; 15 new edits on 1073 to align with FHA guidanceRequires a HUD Case NumberOn the appraisal form and in MISMO data Must be valid in CHUMSMust match subject address (auto-override allowed)

24Slide25

EAD Unique Features

Appraiser ValidationMust be eligible on FHA appraiser rosterAppraiser certification state must match subject property stateSupervisory appraiser not allowedAppraiser Digital Signature (auto-override) –

phase 2

25Slide26

Lender Options for Submission

26

UCDP

LENDERS / SELLERS

EADSlide27

EAP System Components

EAD Web PortalEAP Components inside FHADocument Classification and StorageAppraisal DatabaseAppraisal Scoring Database

Integration of the Databases with Endorsement Platform

9Slide28

“Lender Hard Stops”

Hard Stops are the Fannie Mae / Freddie Mac name for Errors in appraisal data submittedFHA has adopted the “base line” and has added a few of its own.To be published on the FHA website

28Slide29

“Lender Hard Stops”

FHA is concentrating on data errors that would cause a failure in the upload and matching processLender is still responsible for choosing a qualified appraiserLender is still responsible for underwriting the appraisal report

29Slide30

Appraisal Data and Valuation

Collect appraisal data and formsElectronicallyearlier in the processintegrate into FHA processesUtilize data to enhance analytics

inform policy

i

nform Appraiser Roster quality

c

ontrol

8Slide31

Appraisal Data and Valuation

Leverage industry data standards, systems, and processes where possible.Provide useful feedback messages aligned with FHA policy.Provide process efficiencies for lenders by seeding the endorsement screens with EAD data.

8Slide32

Thank You

For Further information:HUD.GOVAnswers@HUD.gov800-225-5342

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