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US Dept of HUD
4150.2
1 SELECTION OF APPRAISER
1-0 INTRODUCTION
The success of the FHA insurance program and HUD's
ability
to protect its financial interest begins with selecting
qualified and knowledgeable appraisers. This
chapter
presents the minimum requirements that appraisers must
meet
to be placed on the FHA Register.
1-1 FHA REGISTER
The FHA Register lists appraisers who are eligible to
perform FHA single-family appraisals. To conduct
an
appraisal for FHA insurance endorsement, the appraiser
must
be on the FHA Register.
Appraiser Appraiser HUD
Appraiser
achieves applies
reviews placed on
necessary to HUD
application FHA Register
credentials
A. APPRAISER
CREDENTIALS
To be eligible for
placement on the FHA Register, all
appraisers must be state-licensed or state-certified
and
must not be listed on any of these:
o GSA's Suspension and Debarment List
(the government-
wide list of parties excluded from federal procurement
or non-procurement programs)
o HUD's Limited Denial of
Participation List
o HUD's Credit Alert Interactive Voice
Response System
(CAIVRS)
To be eligible to perform
appraisals for FHA, the appraiser
must also pass a HUD//FHA test on appraisal methods and
reporting, which focuses on applied knowledge of the
new
Handbook
4150.2 .
A uniform national
examination will be available June 1,
1999. The examination contains
fifty questions in a
multiple-choice format. The
test will be administered by a
national provider and the cost paid
by the appraiser.
Appraisers currently on the FHA
Register will be
grandfathered until January 30, 2000.
B. REGISTER
APPLICATION PROCESS
The application process
is the first screening of the
appraiser's qualifications to perform HUD/FHA
appraisals.
To apply, appraisers must submit the following to FHA:
o Updated form
HUD-92563
"Register Appraiser Designation
Application"
o A copy of a current valid appraisal license and/or
certification verification that the appraiser has
passed the FHA Examination
HUD will review this
information to determine the
appraiser's eligibility for the FHA Register.
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4150.2
C. APPLICANT REVIEW
To verify that the appraiser is eligible to perform
HUD/FHA
appraisals, REAC performs a detailed review of the
appraiser's professional qualifications and checks for
any
negative information. The review does the
following:
o verifies that the appraiser is state-licensed or state-
certified under the Appraisal Qualifications Board
(AQB) criteria
o verifies that the appraiser has passed the FHA
Appraisals Methods and Procedures test
o pre-screens the appraiser's social security number in
the HUD/FHA Credit Alert Interactive Voice Response
System (CAIVRS)
o reviews HUD records to ensure that the appraiser has no
pending suspensions, disqualifications or debarments
o verifies with the appraiser's signature that there are
no actions or pending judgments against the appraiser
for waste, fraud, abuse or breach of professional
ethics or standards
o reviews the previous period's performance, if
applicable.
D.
DESIGNATION TO THE FHA REGISTER
When the review of the application is complete, the
appraiser is designated to the FHA Register. New
appraisers
recently added to the FHA Register may be monitored and
reviewed more frequently to ensure that their
performance is
consistent with HUD/ FHA guidelines and to monitor
training
needs.
Because the initial application to the FHA Register
will
occur after the appraiser has become state-licensed or
state-certified, the first term will coincide with the
remaining period of state licensing for the home state.
After this initial period, the FHA Register period will
be
consistent with the home state license period.
Each period, every appraiser must re-apply to the FHA
Register, concurrent with the appraiser's application
for
state licensing and/or re-certification. HUD
reviews the
appraiser's performance and compliance with new testing
requirements and verifies that the appraiser is state-
certified or state-licensed.
For more information on the review process, see Chapter
6 of
this Handbook.
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4150.2
1-2 LENDER SELECTION OF THE APPRAISER
Lender Lender
Lender Appraiser
Lender
selects assigns
transmits performs reviews
appraiser appraiser case #, if
appraisal appraisal
available
When the lender selects an appraiser from the FHA
Register,
the FHA Connection processes a case number for the
lender.
The lender may assign the appraiser before receiving
the
case number, but the case may not be submitted for
endorsement without the case number. The case
number must
be placed on all copies of the URAR as well as the VC
form
and summary. The mortgagee will give the
appraiser:
o the property address
o type of construction
o number of units
o other information necessary for the
assignment
If the property is a condominium or a Planned Unit
Development (PUD), the lender will verify that it is
HUD-
approved before ordering a case number or having an
appraisal performed. The lender will give the
appraiser the
project name and ID number and all available property
information. If it is proposed construction for a
PUD or
Condominium, it must be FHA-approved before ordering a
case
number. The name of the Condominium or PUD must
be given.
A.
NON-DISCRIMINATION POLICY
The Department's
regulations on choosing appraisers
state that there shall be
no discrimination on the
basis of race, color,
religion, national origin, sex,
age or disability.
HUD expects lenders to
comply with anti-discrimination
requirements and
affirmatively select female and
minority appraisers for a
fair share of appraisals
commensurate with their
representation on the FHA
Register. HUD will
monitor lenders' choice of
appraisers by their sex
and race.
B. CONTRACTUAL
RESPONSIBILITY OF APPRAISERS
The appraiser is hired by
the lender, and therefore has
a contractual
responsibility to the lender. However,
the appraiser provides
services for HUD programs, and
therefore, has an
obligation to perform these services
commensurate with the
standards and requirements of
HUD. This dual
responsibility of the appraiser is
recognized in the review
and reporting requirements of
HUD. The lender and
the appraiser must meet their
respective obligations as
prescribed by HUD/FHA.
Therefore, the intended
user of the appraisal report is
also HUD. These
contractual obligations to the lender
and HUD/FHA are in
addition to the appraiser's legal
obligations to his or her
credentialing state.
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4150.2
C. COMMUNICATION WITH APPRAISERS
(1-2) HUD/FHA mortgage insurance is initiated when a
lender
selects an appraiser from
the FHA Register. Once the
appraiser agrees to
perform the appraisal, the
appraiser is in a
contractual relationship with the
lender. The
appraiser will send the completed
appraisal directly to the
lender. HUD advises the
appraiser to discuss the
appraisal only with the
underwriter. No
other individual should contact the
appraiser before the
appraisal has been completed.
Real estate brokers and
agents should consider the
lender their sole source
of information on the
appraisal and all matters
related to the appraisal.
D. APPRAISAL FEES
The appraiser and the
lender will negotiate the price
and due date. HUD
does not establish fees or due
dates. The fee is
paid for market value estimate based
on guidelines consistent
with HUD policy and procedure
established in this
Handbook. The fee is not based on
a requested minimum
valuation, a specific valuation or
the approval of a loan.
Lenders may charge the
borrower only what is
customary and reasonable in the
area to obtain an
appraisal.
Appraisal management
firms may charge the mortgagor a
fee for the appraisal
that may encompass fees for
services performed by the
firm as well as fees for the
appraisal itself.
However, the total of these fees is
limited to the customary
and reasonable fee for an
appraisal in the market
area where the appraisal is
performed. Such
arrangements must comply with all
aspects of the Real
Estate Settlement Procedures Act
(RESPA) and its
implementing regulations, including
restrictions against:
o kickbacks and referral fees
o charges for settlement services that were not
actually performed
o payments in affiliated business arrangements other
than return on ownership
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