FHA Appraising Secrets - What FHA is Looking For in Our Reports

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FHA requests that appraisers document and explain as much as possible. Additionally, they need to include all information requested, submit complete information, limit the use of “See Attached”, limit the use of canned statements and proof read all their work.

With the high volume of cases touching the desks of FHA underwriters, it helps when the appraisals are sent in as complete and clean as possible. This makes the jobs of the underwriter that much easier. As with any lender an appraiser works with, the more information provided, in the most comprehensible manner, the easier it will be for the underwriter to approve the file and move on to the next.

The FHA case number is required to be on every page of the appraisal report on the line for “File Number.” The appraiser can use the “Case Number” line for a file name or other unique appraisal identification number.

If there is evidence of hazards and/or nuisances, further analysis and/or testing may be required. In the Appraiser’s Certification it states that appraisers must report any adverse conditions that are apparent, known or discovered. They also need to report any needed repairs and any physical or functional inadequacies. Finally, appraisers must address adverse environmental conditions.

FHA refers to the “3 S’s” when speaking about issues that need to be reported regarding the condition of a property.

Safety - the health and safety of the occupants

Security - preserve the continued marketability of the property

Soundness - the structural integrity

If any issue compromises any of these three areas, then it needs to be mentioned in the report. If conditions are only cosmetic, than the property would be appraised “as is.”

Required repairs might include inadequate access/egress from bedrooms to exterior, defective roof with three or more layers of shingles, evidence of structural problems or infestation, defective paint when home was constructed prior to 1978, lack of water pressure when tested or foul odor coming from septic system.

For more information about FHA’s requirements of appraisers or for general information about appraising or to purchase Dawn’s ebook on FHA appraising, go to http://www.appraisalgroupsocal.com

November 24, 2008