James S. Graner

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Appraiser Cannot Bend on FHA Property Guidelines!

This Missouri appraiser feels tired and worn down from real estate agents, loan production staff and recently underwriters telling him to look the other way on FHA concerns. HUD wrote a code for various things to be checked, I am not a building inspector, and I certainly do not wish to perform home inspections. Just a few things have to be in order. In previous blogs, I have summarized the FHA observation. Any appraiser in Missouri has long understood that no house is a perfect structure with all million parts in perfect order.

I as a professional that performed a significant number of appraisal reports for B & C mortgage loans for many years know and greatly understand a little missing paint is not usually a significant life and death issue. I understand that most people can easily climb three or four big foot steps, I get it when people shove thirty years worth of family keepsakes in the closet that has the only attic entry. Nobody understands better than me that no kids will ever play with an old single man's garage door. Unfortunately, I did not make the rules, and no FHA appraiser has the authority to overide any of the HUD's guidelines.

The guidelines are not overly strict. Some of the most common concerns are mentioned in FHA Property Guidelines Are Not Understood by Many Mortgage Originators! Please understand that many of the REO properties (foreclosed homes,) short sale homes and other severly distressed sales might not meet the FHA property standards when you view them. Conventional financing is a little less strict minimum property standands and perhaps agreements can be made for a buyer to perform some repair/modifications on a home before sale so financing can be completed.

This is a new market with many things that were not common just a couple of years ago. FHA financing was only a small portion of overall mortgages, REO sales were a smaller portion of the overall home stock, Conventional mortgages were more available than before. Just because mortgage financing worked in a certain for somebody else or even you in the past, does not mean today's climate will work the same.

Comment balloon 4 commentsJames Graner • January 28 2009 10:17PM

Comments

Oh I hear you - And with the new rules (over $417k loan amount or 85% LTV or random appraiser audits) a second appraiser is going to go out anyway.  Do you think they'll overlook everything that your lender or agent expects you to overlook?  Likely not... and then who gets the fines or revocations of licenses?  Ummm.... not them.

On a side note, we had a class with the western region HUD appraisal team who said that it is now up to the appraiser's discretion about railings.  It depends on who resides in and/or visits the house being appraised as to whether appraiser's need to call for repairs.... then again, they also gave some information that was found to be incorrect later... so to be safe, you may as well play by the old rules.

Posted by Sara Goodwin, Portland, Oregon Appraiser (Ashcroft & Associates) about 9 years ago

Sara,

I am afraid of the feds, I will use the straight and narrow. I have tried to get people past the handrail, however appraiser still must mention the circumstance. The underwriter then immediate demands the rail be installed.

Posted by James Graner (Residential Services: http://appraisalmo.com) about 9 years ago

I'm with you - I had an appraiser friend that got dinged for not mentioning a safety strap on a water heater.... and not disclosing there was a car battery in the garage (alrighty then, I'm going to have to start making a note: "The subject property had a vehicle in the garage at the time of inspection.  Although the appraiser did not look under the hood of the car, it is presumed that a battery is located there.  In addition, the car may have gas in the tank, coolant and probably some oil.  An inspection is suggested to further determine the hazards this may cause to the dwelling")

Posted by Sara Goodwin, Portland, Oregon Appraiser (Ashcroft & Associates) about 9 years ago

THIS IS JUST A PORTION OF A COMMENT IN MY FIRST APPRAISAL WITH THE NEW MARKET CONDITION ADDENDUM.

there is not enough dependable data for the appraiser to give an accurate forecast. In the past, concessions have averaged around,$3000.00 and it is to soon to calculate any significant change/trend. Although we see foreclosures in our market, it is too soon to determine the extent of impact on the market. Furthermore this appraiser refers the user to an additional statistical page in this report using the same criteria from the same source and producing SP/LP Ratio 97% for the year. and a median DOM of 115 for the year. Using statistics for a term of less then one year dose not allow for reaction to climate, housing starts, school year, regional preferences, unique or unusual, circumstances typical to the region etc.

I GET A REAL KICK OUT OF APPRAISER'S IN LARGE METRO AREAS, COME TO MY AREA AND SPEND SOME TIME. WHERE COMPS ARE MILES APART, AND THE GUYS THAT DO 9 APPRAISALS A WEEK AND THINK SOME HOW THINK THAT IS COMMENDABLY.

WHO EVER MADE THIS FORM (1004MC) HAD NO CONCEPT OF WHAT A APPRAISAL IS, HAD TO BE AN ACCOUNTANT THEY THINK EVERYTHING HAS TO BE A MATHEMATICAL EQUATION.

APPRAISERS ARE FAR MORE THEN NUMBERS CRUNCHERS AN APPRAISAL IS OR SHOULD BE BASED ON KNOWLEDGE OF THE CRAFT, OF THE REGION, AND YES MARKET TRENDS BUT WHEN YOU START WHITTLING STATS DOWN TO THE NTH DEGREE AND SUMMARIZING THOSE STATS THEY ARE ONLY AS GOOD AS THE DATA APPLIED. IF WE LET THESE NITWITS TAKE AWAY ARE PROFESSION BY LIMITING IT TO A MATHEMATICAL EQUATION WE LOSE. NOT JUST APPRAISERS EVERYONE IS EFFECTED BY THE MARKET AND MATH DOES NOT SET TRENDS PEOPLE DO. THE BANKING PROFESSION WOULD LIKE NOTHING MORE THEN TO HAVE A TIGHT CONTROL ON SETTING VALUE AS THEY SEE IT NOT AS THE MARKET REALLY IS. LOOK HOW WELL THEY HAVE DONE SO FAR. HOWS THAT WORKING OUT? THERE IS ONLY ONE THING CONTROLLING BANKING AND THAT'S GREED. THEY WOULD LIKE TO HANG IT ALL ON THE APPRAISER AND I'M SURE THERE ARE SOME OUT THERE THAT SHOULD NOT BE APPRAISING BUT THE BANK DOES NOT HAVE TO EXCEPT INFERIOR WORK. THE BUCK STOPS WITH THE BANK,THE BANK LOBBYIST, AND THOSE GOVERNMENT BUREAUCRATS WHO ARE TO MORALLY WEEK TO STEP IN AND STOP THE NONSENSE.

WHAT ME GROUCHY?

 

Posted by dAVEY almost 9 years ago

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