Ask Henry

USPAP vs FHA Requirements
Hi Henry,
I completed an appraisal for Lender A. Then, Lender B called and said Lender A is OK with them using my report. Now I've been notified that Lender B's underwriter wants clarification on a couple of items, such as right of way and community water.

They don’t want client name changed. Can I do this and stay compliant with USPAP? Thank you in advance for your advice.

Carlene S Mathison
Cornerstone Appraisal

P.S. I did check with Lender A and was told it is okay to do this "because it’s an FHA assignment & FHA has mandated portability."

Dear Carlene,
You are correct the FHA does permit the original lender to transfer the appraisal to a second lender under certain circumstances. Here is a summary of this ruling:

"Appraisal Transfer and Change of Client Name in Appraisal Report"

In cases where a borrower has switched lenders, the first lender must, at the borrower's request, transfer the case to the second lender. FHA does not require that the client name on the appraisal be changed when it is transferred to another lender.

In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. To effect a client name change, the second lender and the original appraiser may engage in a new appraisal assignment wherein the scope of work is limited to the client name change. A new client name should include the name of the client (lender) and HUD.

There are a bunch of other requirements the lenders must comply with.

It is still my opinion that you are not required to do anything and in fact most anything you do will be treated as a new appraisal and you must comply with the USPAP requirements for making a new appraisal for which you should be paid.

I think you have a choice. Do nothing or tell lender B if they want you to do anything it will require you to make a new appraisal and you expect to be paid for it.