A majority of loans today are FHA loans, so the Department of Housing and Urban Development (HUD) is taking steps to ensure the program doesn’t fall victim to the bad economy. These are some changes being implemented in the appraisal ordering process:
- Appraiser changes are effective as of Jan. 1, 2010.
- Mortgage brokers and commission-based lender staffers will be prohibited from selecting the FHA appraiser.
- Lenders are not required to use appraisal management companies (AMCs), but may do so.
- When a borrower switches to another lender, FHA prohibits the second lender from ordering additional appraisals to obtain a higher value, unless:
- The Direct Endorsement (DE) Underwriter determines the first appraisal is deficient;
- The appraiser of first appraisal is on second lender’s exclusionary list; or
- The first lender delayed the appraisal transfer to the second lender so as to cause harm to the borrower (e.g. missing a closing date or expiration of a rate lock).
- Appraisals are now valid for only 120 days for all existing, proposed or under-construction properties.
Metrowide Appraisals