This update from Mortgagee Letter 2009-09 establishes appraisal requirements for declining markets.
Here are the 10 things your appraiser must do or provide for all FHA appraisals done after April 1st, 2009:
1. The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71)
2. At least 2 comparable sales within 90 days of appraisal date
3. A minimum of 2 active listings or pending sales in addition to the 3 closed comparables
4. Bracketed listings using both dwelling size and sales price when possible
5. Adjust active listings to reflect the List To Sales Price Ratio
6. Adjust pending sales to reflect contract sales price when possible
7. Include original list price and any revised list prices
8. Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales
9. Absorption Rate Analysis
10. Known or reported sales concessions on active and pending sale
This update includes an often stated warning that…”Direct Endorsement Lenders are reminded that if the appraiser they selected provides a poor or fraudulent appraisal that leads FHA to insure a mortgage at an inflated amount, the lender is held responsible equally with the appraiser for the integrity, accuracy and thoroughness of an appraisal submitted to FHA.”
If the above appraisal guidelines look foreign to you, that’s okay, because this update is intended for Appraisers and Underwriters. I sent this to you so you can take the following actions below to make yourself an FHA resource in your market.
