50 Most Common Appraisal Review Deficiencies Webinar 9:00 AM Mountain Time All audio for this webinar If you have any is through your computer technical or audio issues – there is no separate – please review the call-in number Support for Technical Issues document by Please ensure that you are clicking on the able to receive sound Supporting Material through your computer Button located just and that your speakers are below this screen un-muted www. hud.gov 1 Important Things to Know Question and Answer Format Utilize “Ask a Question” button on your screen To view response to a question, click on “Answered Questions” tab Audio/Technology questions utilize the “Help” button Supporting Material A copy of this Power Point presentation A PDF version of the presentation Frequently Asked Questions related to technical issues (PDF) If you have audio issues or the slides stop advancing – simply refresh or reload the page displaying the webinar www. hud.gov 2 Make Sure Pop-Up Blockers are Disabled Pop-up Blocker is turned on in Internet Explorer by default. To turn it off or to turn it on again if you've already turned it off, follow these steps: Open Internet Explorer by clicking the Start button , and then clicking Internet Explorer. Click the Tools button, and then click Pop-up Blocker. Do one of the following: To turn off Pop-up Blocker, click Turn Off Pop-up Blocker. To turn on Pop-up Blocker, click Turn On Pop-up Blocker. www. hud.gov 3 1
Important Things to Know Archive Version (POP-UP) http://www.hud.gov/offices/hsg/sfh/talk/parc/phiarch.cfm www. hud.gov 4 The Most Common Errors Found in FHA Appraisal Reports (URAR) 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 5 Presenters Don Pearsall Karl Kaufmann 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 6 2
Purpose The purpose of this presentation is to acquaint the audience with the most common errors that FHA finds when reviewing appraisal reports. It introduces and explains, rather than supplants, official policy issued in Handbooks and Mortgagee Letters. If you find a discrepancy between the presentation and Handbooks, Mortgagee Letters, etc., the official policies prevail. Please note the information provided in this training is subject to change. 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 7 Energy Efficient Mortgages What is an EEM? Allows homeowners to improve the energy efficiency of their home by financing the cost of the improvements into their loan. If the savings in utility costs will more than pay for the costs of the improvement, borrower does not have to qualify for the extra costs of the energy improvements. Who is eligible? New and existing 1-4 units including condominiums and manufactured homes Purchases, streamline refinances, no cash-out refinances, 203(h) disaster loans, and 203(k) rehabilitation mortgages Homeowners How do you apply? Find a EEM lender Purchase a HERS report from an acceptable source (utility company, local state or federal agency or nonprofit) Qualify for the base mortgage before the energy efficient improvements are added No second appraisal is needed to support added costs 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 8 Energy Efficient Mortgages Want More Information? EEM Webinar is Archived See Mortgagee Letters; ML 2009-18 ML 1995-46 ML 2005-21 ML 1993-13 See HUD Handbook 4155.1 6.D.1 Department of Energy’s website: http://www.energystar.gov/index.cfm?c=home_improvement.hm _improvement_contractors#s1 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 9 3
Poll Question What section of HUD Manual 4150.2 pertains to Valuation Protocol? 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 10 Homeownership Centers Santa Ana Denver Atlanta Philadelphia 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 11 Objectives • To illustrate the most common errors found in FHA appraisal reports • Provide an understanding of FHA guidelines • To change your mindset from “Form Filler” to “Analytical Appraiser” • Answer your questions 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 12 4
Resources Resource Center: www.HUD.gov 800-CALLFHA (800-225-5342) E-Mail: answers@hud.gov Knowledge Base: www.hud.gov/answers 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 13 Resources Handbooks: • 4150.2 (6/99) Valuation Analysis, with emphasis on Appendix D • 4150.1 REV 1 (3/90) Valuation Analysis • 4145.1 REV 2 (12/91) Architectural Processing & Inspections • 4905.1 REV 1 (3/91) Requirements for existing 1-4 family units • 4910.1(7/94) Appendix K, MPS • Proposed construction – 1-4 family 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 14 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 15 5
1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 16 Appraiser’s Certification on the FHA Roster Application I certify that I have read and fully understand and will comply with HUD Handbook 4150.2 , “Valuation Analysis for Home Mortgage Insurance for Single Family One- to- Four Unit Dwellings” (with particular emphasis on Appendix D, “Valuation Protocol”), any updates to the Handbook, Mortgagee Letters, and all other instructions and standards, in performing all appraisals on properties that will be security for HUD/FHA insured mortgages. 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 17 FHA Appraiser Oversight FHA oversight is based on the following risk factors, as established in Mortgagee Letter 2009-41: • High default rate on loans • High volume of FHA loans • Complaints • Referrals • Previous administrative appraiser roster actions 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 18 6
Review Process How does the FHA review process work? • Appraisal reports are randomly selected • Desk Review • Risk Assessment (value and property condition) • Identify possible deviation from HUD/USPAP • Field review (if necessary) • Completed by contract appraisers or FHA staff appraisers • Rating • Action or Sanction Letter 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 19 Disciplinary Actions • Notice of Deficiency • Education • FHA Roster Removal • Limited Denial of Participation (LDP) • National Debarment • Civil Money Penalties • Civil & Criminal Actions Multiple sanctions may be pursued concurrently 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 20 Disciplinary Actions Removal or Removal w/Education: • Value • Fraud • Repairs • Prior actions/sanctions and other factors These deficiencies have a direct impact on value and marketability and represent the highest level of risk. 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 21 7
Disciplinary Actions Education: • Environmental • Legal compliance • Data collection & reporting • Support for adjustments • Prior actions/sanctions and other factors These deficiencies may impact the quality of the report; but generally do not affect value. 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 22 Disciplinary Actions Notice of Deficiency (NOD) • Inaccurate reporting • Omission of information • Flawed data interpretation • Prior actions/sanctions and other factors These deficiencies are considered gaps in due diligence and professionalism. 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 23 Appraiser’s Rights Regarding Disciplinary Action • Notice of Deficiency and Education cannot be appealed • Roster Removal – may request informal conference • Limited Denial of Participation (LDP), National Debarment • Civil, Criminal sanctions - remedy through Civil/Criminal Court systems 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 24 8
FHA Appraisal Requirements and the Most Common Errors 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 25 Subject Section URAR (FNMA 1004) 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 26 #1 – Neighborhood Name Report the name of the subdivision, the commonly known neighborhood name or the name of the PUD 4150.2, 2, D-14 14 1-800-CALL FHA FHA- Serving the American Homebuyer www. hud.gov Since 1934 27 9
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