The U.S. Department of Housing and Urban Development has eased its appraisal requirements on high-balance mortgages insured by the Federal Housing Administration.
In Mortgagee Letter 2009-48, HUD said second appraisals will no longer be required on high-balance loans in declining markets.
The change is immediately effective.
“Mortgagee Letter 2008-09, Second Appraisal Requirements, is rescinded in its entirety, eliminating the previous policy requiring a second appraisal to be performed for loans that exceed $417,000 secured by properties located in declining markets,” today’s mortgagee letter stated.
The elimination of the second appraisal requirement applies to high-balance cashout refinances as well.
But second appraisals will still required when a property is resold between 91 and 180 days after the seller acquired it and the new price exceeds the seller’s original purchase price. Improvement costs paid by the seller can be added to the original purchase price.
The cost of the second appraisal in that case cannot be charged to the borrower.
“The second independent appraisal must be completed by a FHA roster appraiser selected by the lender that is underwriting the mortgage,” HUD stated. “The lender is not to request a second case number through FHA Connection.”
