Mortgage Daily

Published On: January 8, 2008
FHA Appraiser ApprovalsFinal rule issued

January 8, 2008


The U.S. Department of Housing and Urban Development has issued a final rule on appraisers approved to conduct appraisals for loans insured by the Federal Housing Administration.

HUD has brought its own approval requirements more in line with appraisal approval requirements utilized in conventional lending, according to the Federal Register for Jan. 8. The final rule becomes effective on Feb. 7.

“This final rule updates the May 16, 2003, final rule by removing provisions that have since become unnecessary or are inapplicable,” the agency said.

HUD said its updated and streamlined appraisal reporting procedures and policies, including relaxing requirements on property repairs and inspections, ensure estimated values won’t materially differ between FHA loans and conventional loans. As a result, FHA appraisers don’t need special knowledge compared to their conventional counterparts.

Among current requirements for FHA appraisers are state licensing or state certification. Because states already require appraisers to pass an exam under the Appraiser Qualification Board qualification criteria, HUD has eliminated its own test for applicants.

“In light of the rigorous and comprehensive nature of the [Appraiser Qualification Board]-required examination, HUD has determined that the FHA test provides no additional assurance that appraisers listed on the FHA Appraiser Roster are able to provide accurate appraisals of properties that are to be the security for FHA-insured mortgages,” the rule stated. “HUD has concluded that passage of the state-administered examination required under the [Appraiser Qualification Board] qualification criteria is an acceptable indicator of an applicant’s competence in and knowledge of real estate appraisal methodology.”

Topics covered in the Appraiser Qualification Board exams include economics, legal issues, ethical issues and various approaches to property valuation.

“The [Appraiser Qualification Board] has revised the criteria twice, and the most recent revision will increase coursework requirements and require completion of a new National Uniform Examination beginning on Jan. 1, 2008,” the rule said.

The revision requires 150 hours of coursework, the accumulation of 2,000 hours of acceptable appraisal experience and the passing of a new National Uniform Examination.

In order to be eligible for approval, HUD said appraisers must have credentials and continuing education requirements as required by their state or that comply with certification criteria established by the Appraiser Qualification Board of the Appraisal Foundation. In addition, applicants cannot be listed in the General Services Administration’s Suspension and Debarment list, HUD’s Limited Denial of Participation list or HUD’s Credit Alert Interactive Voice Response System.

Should HUD identify an appraiser that is deficient in FHA appraisal requirements, the federal housing agency may require professional training.

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