Doing Business with FHA

Report
FHA Office of Single Family Housing
The New FHA Appraisal Manual:
What You Need to Know
Rob Frazier, SRA, FRICS, Deputy Director
Home Valuation Policy Division, FHA Office of Single Family Housing
FHA Office of Single Family Housing
FHA Priorities
• Expand Access to Credit
• Ensure Long-Term Viability of MMI Fund
• Transform current guidance and
processes
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FHA Office of Single Family Housing
FHA Priorities
• Transformation Goals
– Make it easier to do business with FHA
– Provide better analysis and quality review
– Modernize to improve risk analysis
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FHA Office of Single Family Housing
Transformation Programs Valuation Related
•Provide Clear Guidance and Instructions
•Replace 4150.2 and Mortgagee Letters
•Update or Replace Old Manuals and
Regulations
FHA Office of Single Family Housing
Transformation Programs Valuation Related
•Create Electronic Appraisal Storage and
Analysis
–Electronic Appraisal Process (EAP)
–Electronic Appraisal Delivery Portal (EAD)
–Adopt Industry Data and Format Standards
–Minimize Affect to Appraisers
FHA Office of Single Family Housing
New On-Line Handbook
Application Through
Endorsement
FHA Office of Single Family Housing
New SF Housing Policy
Handbook
Provide stakeholders with a consistent,
authoritative source for Single Family policy:
• Transition from multiple Handbooks, Mortgagee Letters,
and other guidance to a single policy guide.
Application through Endorsement status:
• Finalizing for publication this summer, with significant
lead time before effective date.
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FHA Office of Single Family Housing
New SF Housing Policy Handbook
• Posting for feedback this summer, with
future, aligned effective dates:
 Appraiser
 203(k)
 Condominiums
To be part of, and used in concert with, future published version of
Application through Endorsement section.
• Also posting this summer:
 Doing Business with FHA section
 Quality Control, Oversight and Compliance section
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FHA Office of Single Family Housing
Sections Still to Come
• Servicing (under development for posting
later this year)
• REO & Claims
• Title I
• HECM (Reverse Mortgages)
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FHA Office of Single Family Housing
Components of Appraisal Guidance
• Property Requirements
– FHA requires underwriting of property condition
as well as valuation.
• Observe, Analyze, Report
– Appraisers’ requirements spelled out in one place,
clearly
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FHA Office of Single Family Housing
Components of Appraisal Guidance
• Report and Data Format Requirements
– A separate section dealing with forms, data and
formats required, “how to” instructions
• FHA Appraiser Roster
• FHA Appraiser Compliance
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FHA Office of Single Family Housing
Changes-Enhancements of Note
• Zoning and Legal Non-Conforming Use
• Stationary Storage Tanks
• Accessory Dwelling Units
FHA Office of Single Family Housing
Changes-Enhancements of Note
• Attic and Crawl Space Inspection
Requirements
• General Acceptance Criteria, Property
Eligibility, Nonresidential Use of Property.
FHA Office of Single Family Housing
Changes-Enhancements of Note
• Cost and Income Approach for Value
• Photograph Requirements
• Sales history of comps – 3 years+
FHA Office of Single Family Housing
Changes-Enhancements of Note
• Measurement and Reporting of Contributory
Value of energy efficiency components or
alternate systems (solar, etc.).
• Market Conditions Addendum to the Appraisal
Report, Fannie Mae Form 1004MC
FHA Office of Single Family Housing
LOCATION OF DRAFT POLICY
• Draft Posted Friday, July 31 at:
http://portal.hud.gov/hudportal/HUD?src
=/program_offices/housing/sfh/SFH_polic
y_drafts/appraiser_requirements
FHA Office of Single Family Housing
Electronic Appraisal Processing
FHA Office of Single Family Housing
FHA Appraisal Review Process
Current Process
HOC or HQ
Reviewer
needs to view
appraisal
report
Request is sent to
record storage to
send file to
Reviewer
Original Paper File
is delivered to
Reviewer’s
Desktop
Review process
proceeds to its
conclusion
Elapsed time, 3 weeks or longer
Proposed Process
HOC or HQ
Reviewer
needs to view
appraisal
report
Reviewer opens
FHA website to
retrieve report
PDF file is
viewable on
reviewer’s deskop
Elapsed time, less than one minute if File in Database,
otherwise, 1 day to receive from Appraiser
Review process
proceeds to its
conclusion
FHA Office of Single Family Housing
Appraisal Data and Valuation
• Electronic Appraisal Delivery (EAD)
• Collects Forms and Data from Lender
• Validates identity of appraiser (future)
• Leverages industry data and report form
standards
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FHA Office of Single Family Housing
Appraisal Data and Valuation
• Runs FHA specific rules and scoring
• Provides data, PDF of report, results of scoring
• Provides First Generation Copy of Appraiser’s
Work
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FHA Office of Single Family Housing
Electronic Appraisal Process (EAP)
• EAP will:
 Use EAD portal to collect scored reports
from Vendor
 Enable lenders to upload and allow HOCs to
use electronic files when needed
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FHA Office of Single Family Housing
Electronic Appraisal Process (EAP)
• EAP will:
 Move documents and data through FHA
Systems
 Filename is FHA Case Number with
versioning functions
 FHA staff members will view the appraiser’s
original PDF
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FHA Office of Single Family Housing
MISMO 2.6 Format with embedded PDF
MISMO 2.6 GSE (UAD) Format
• FNM1004/FRE70 Single Family Appraisal Report
• FNM1073/FRE465 Condominium Unit Appraisal Report
MISMO 2.6 Errata Format
• FNM1004C/FRE70B Manufactured Home Appraisal
Report
• FNM1025/FRE72 2-4 Family Appraisal Report
• FNM1004D/442 Update of Appraisal
• FNM1004D/442 Completion Report
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FHA Office of Single Family Housing
EAD Unique Features
• EAD Edits include 17 new (fatal) edits on 1004;
15 new edits on 1073 to align with FHA
guidance
• Requires a HUD Case Number
– On the appraisal form and in MISMO data
– Must be valid in CHUMS
– Must match subject address (auto-override
allowed)
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FHA Office of Single Family Housing
EAD Unique Features
• Appraiser Validation
– Must be eligible on FHA appraiser roster
– Appraiser certification state must match
subject property state
– Supervisory appraiser not allowed
• Appraiser Digital Signature (auto-override) –
phase 2
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FHA Office of Single Family Housing
Lender Options for Submission
UCDP
EAD
LENDERS / SELLERS
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FHA Office of Single Family Housing
EAP System Components
• EAD Web Portal
• EAP Components inside FHA
• Document Classification and Storage
• Appraisal Database
• Appraisal Scoring Database
• Integration of the Databases with
Endorsement Platform
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FHA Office of Single Family Housing
“Lender Hard Stops”
• Hard Stops are the Fannie Mae / Freddie Mac
name for Errors in appraisal data submitted
• FHA has adopted the “base line” and has
added a few of its own.
• To be published on the FHA website
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FHA Office of Single Family Housing
“Lender Hard Stops”
• FHA is concentrating on data errors that would
cause a failure in the upload and matching
process
• Lender is still responsible for choosing a
qualified appraiser
• Lender is still responsible for underwriting the
appraisal report
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FHA Office of Single Family Housing
Appraisal Data and Valuation
• Collect appraisal data and forms
– Electronically
– earlier in the process
– integrate into FHA processes
• Utilize data to
– enhance analytics
– inform policy
– inform Appraiser Roster quality control
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FHA Office of Single Family Housing
Appraisal Data and Valuation
• Leverage industry data standards, systems,
and processes where possible.
• Provide useful feedback messages aligned
with FHA policy.
• Provide process efficiencies for lenders by
seeding the endorsement screens with EAD
data.
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FHA Office of Single Family Housing
Thank You
For Further information:
HUD.GOV
[email protected]
800-225-5342
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