Some revised federal guidelines that outline 10 things that appraisers must do or provide for all FHA appraisals done after April 1, 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 sales.

FHA also is restating its 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."

NOTE: The extra work is required when properties are determined to be in a declining market based on the conclusions of the 1004MC addendum. Ruth Lambert @ REV Mag says, "The FHA/HUD announced as of today that they will also REQUIRE the new Fannie Mae 1004MC form "on all appraisals done in market areas that are declining." Their date is also APRIL 1ST for compliance."

Massive changes are a foot in the appraisal industry. Hold on to your hat and put some spring in your step!

Can You Believe It?

Most appraisers I talk to are leery of the new changes about to take place. I, for one, think you have two ways to look at things. Either you can drag around and go “woe is me” or you can actually start doing something. I have been taking classes and learning about the 1004MC. I have been reading up on lender compliance with the HVCC. I choose to do something that will help me get ahead in my profession instead of waiting for someone else to fix what they think is wrong. Will we all have jobs after the May 1st date? Yes, but from whom? I have no idea.

Will it be AMCs that take over the appraisal ordering? If so they are going to have an uphill battle with the new proposed draft legislation to regulate AMCs. Mind you I don’t care one way or the other, as long as they pay us our full fee, disclose their fees, and pay within 30 days (all of which is in the new NC legislation!)

Will it be third party processors? Are the banks loaning money out to mortgage brokers going to accept third party processing meets HVCC compliance and continue letting them borrow money to write loans… Or will they dictate that mortgage brokers must now use their list of AMC appraisers?

Will 40 to 50 percent or more of the independent Mortgage Brokers be out of business because they cannot compete on a local level with Banks who don’t have to work under the same set of rules?

Or will NARs attempt to delay the start of the HVCC help to parlay this mess into next year?

Truly only time will tell, good news is we only have a week or so to find out.

Comments? Email me.