08/12/15 Categories: Article
It took the FHA 16 years to replace the long ago outdated FHA Handbook 4155.2 and 4150 (Chapter #4). At that time I wrote a book “How to Make An FHA Single Family Appraisal.” All of that is now history as HUD-FHA has issued two new books that make the old ones and most of the Mortgage Letters obsolete. This is not surprising since a lot has changed in 16 years. Unfortunately, these two new books do not clearly indicate what is new and what is unchanged. This is the first of several articles that will point out some of these changes.
HUD-FHA New Handbook 4000.1 (FHAHB4000.1) and FHA Single Family Housing Appraisal Report and Data Delivery Guide (SFHAP&DDG)
These two handbooks were released on March 18, 2015 to be effective June 15, 2015. Late in April in response to many complaints the effective dates were advanced to September 14, 2015.
NOTE: NONE OF THE MATERIAL IN THIS ARTICLE SHOULD BE USED BEFORE THE NEW HUD-FHA HANDBOOK GOES INTO EFFECT.
Many of the changes are covered in the new FHA Single Family Housing Appraisal Report and Data Delivery Guide (SFHAP&DDG). However, FHA HB 4000.1 covers most of the other types of property that are insured by the FHA.
Environmental (page 391):
The Mortgagee must require corrective work to mitigate any condition that arises during construction that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, or the structural soundness of the improvements.
Comment: The Lender cannot do this unless that appraiser supplies this information in the Site section of the URAR among other options.
Lead-Based Paint (page 71):
Comment: There is new emphasis on what steps lenders must take when a building is built before 1978. However, the appraiser should keep in mind that some houses built after 1978 still might contain lead paint as paint that was stored (often for many years) containing led was used after 1978. Therefore the appraiser should consider using a standard comment in their appraisals that the appraiser did not inspect the property for lead paint contamination
Pre-Foreclosure Sales (Short Sales) – Definition (Page 121):
Pre-Foreclosure Sales, also known as Short Sales, refer to the sales of real estate that generate proceeds that are less than the amount owed on the Property and the lien holders agree to release their liens and forgive the deficiency balance on the real estate.
Stationary Storage Tanks (Page 431):
The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the subject property line is located within 300 feet of an aboveground or subsurface stationary storage tank with a capacity of 1,000 gallons or more of flammable or explosive material. This includes domestic and commercial uses as well as automotive service station tanks.
Proximity to High Pressure Gas Lines (Page 430):
The Appraiser must identify if the dwelling or related property improvement is near high-pressure gas or liquid petroleum pipelines or other volatile and explosive products, both aboveground and subsurface. The Appraiser must determine and report the marketability of the Property based on this analysis. The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the Property is not located more than 10 feet from the nearest boundary of the pipeline Easement.