The Federal Housing Administration announced an updated form that enables an appraisal report to be extended.
The update was outlined in Mortgagee Letter 2009-51 from the U.S. Department of Housing and Urban Development. It allows for lenders, at the expense of the borrower, to extend the life of an FHA appraisal and avoid a new appraisal.
HUD said that the Appraisal Update and/or Completion Report — Fannie Mae Form 1004D and Freddie Mac Form 442 from March 2005 — is being adopted on FHA loans. It can be used for up to 120 days, and “in no case may a loan close where the initial or underlying appraisal that has been subsequently updated is more than one year old at the time of loan closing.”
Part A of the form includes a summary appraisal update for existing reports when the appraiser concurs with the original assessment. This portion includes the original report and must be completed by the still-approved FHA appraiser that produced the first appraisal.
But the form cannot be used on declining-value homes or with properties where improvements that supported the value are not visible from the street. Also excluded are properties where the exterior has visibly deteriorated or changed since the original appraisal.
HUD noted that Part A requires the appraiser to perform an exterior inspection, consider current data and ensure compliance with the Uniform Standards of Professional Appraisal Practice. If the appraiser concurs with the original assessment, a photo must be provided.
Part B is a certification of completion. This part of the form provides for compliance repair and completion inspections on existing and new construction. Another FHA appraiser in good standing can complete Part B.
The second part, however, can’t be used in lieu of form HUD-92051, Compliance Inspection Report, for new construction and manufactured housing.
Supervisory appraiser signatures can’t be used.
The update applies to case numbers assigned on or after Jan. 1, 2010.
