Ask Henry

Based on the questions being asked online there seems to be a lot of confusion about the new HUD-FHA regulations. Here are the official answers to some of the most common questions.

When do the new HUD-FHA regulations become effective?
Answer: They were supposed to be effective 6/15/2015. The effective date has been postponed until September 14, 2015.

If mortgagees are ready to implement on June 15, will they be allowed to submit cases that use the SF Handbook on or after this date?
Answer: No. Mortgagees must submit cases that use existing FHA policy until the new SF Handbook becomes effective on or after September 14, 2015.

Will FHA publish a “Highlights of Changes” document that summarizes the policy changes contained in Origination through Endorsement?
Answer: No.

Will you publish a new “Harrison’s Illustrated Guide – How to Make an FHA Single Family Appraisal”?
Answer: Yes! I am working on now and plan to have it available in early August. You can make a publication order from Forms and Worms 1-800-243-4545 or Pre-Order and Save 10%! Pre-order price of $44.95 for orders placed before 9/14/2015. Regular price $49.95

Book Review

Valuing Contaminated Properties-An Appraisal Institute Anthology Vol. II

Edited by Richard J. Roddewig, MAI, CRE
American Institute of Real Estate Appraisers
Chicago, Il, 60607
500+ Pages, Soft Cover; Price $75 (AI price $60

My first reaction to this book was “wow it is big and heavy!" In this day of Google and the Lum Library, who needs to spend money on an Anthology when you can get a custom made bibliography from the Lum Library (312-335-4467). That being said, in my view, an appraiser should not even think about making an appraisal of a contaminated property until they are familiar with the Appraisal Foundation Advisory Opinion AO 9 which is covered in Chapter 1.

Chapter 1, USPAP and the Appraisal of Properties Impacted by Contamination or Environmental Risk, starts with a five page introduction by the editor. It points out, for example, “The distinction between source sites, non-source sites, adjacent sites, adjacent sites and proximate sites is one of the topics covered by AO-9." By the time I finished reading Chapter 1 I was mentally exhausted.

Chapter 2, The Recognized and Generally Accepted Methods for Appraising Property Affected by Contamination and Environmental Risk, starts with another five page introduction by the editor.

After reading and digesting these two chapters, I realized it is not necessary to read the rest of this book as it is an Anthology with 67 articles, divided into 10 chapters, covering many topics. For example, article 10.2, How Australian Appraisers Assess Contaminated Land, will have limited use to most appraisers.
Whereas, chapter 7 consists of 17 pages across 5 articles all of which cover the subject of Mold — A topic which all appraisers should be knowledgeable.

Summary: This Anthology is a definitive compilation of accepted appraisal knowledge written by many authors, selected and interpreted by the editor, who is a valuation expert. If you make or are planning to make appraisals of contaminated property, the cost of this book is a small price to pay for a valuable reference to help you improve your work.


HUD-FHA New Handbook 4000.1 (FHAHB4000.1) and FHA Single Family Housing Appraisal Report and Data Delivery Guide (SFHAP&DDG)

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.

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.


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.


The Apple Watch

by Henry S. Harrison

On April 10th, the first day the Apple Watch was available for preorder, my son H Alex (REV’s Editor) ordered one for me. It arrived about a month later and I have worn it daily since then. I believe that it has features that will be especially useful for appraisers.

Text Messaging: What makes this feature unique is that you never have to turn this feature off, even when you are at a symphony, movie, lecture, etc. It will notify you with a vibration when you have received a text from selected family members, your office, friends, etc. (limit 12). You can do the same with email.

Monitoring your health: This is the feature that Apple plugs the most. The watch has sensors on its back that monitor your motion and heart rate. It is very sophisticated. Its GPS system will keep track of how far you walk or run, and as you exercise you can glance at you heart rate.

Locating your iPhone (if you forget where you’ve left it!) The Apple Watch is right out of Dick Tracy. It has a microphone and a speaker. You can make or answer calls while driving without taking your hands off the steering wheel or glancing down.

Siri is more amazing than ever. You can say “call my wife”, “call the office”, “turn on the alarm system”, or TV., etc. — and she does your bidding.

Watch Faces: Of the nine available, highly customizable watch faces, my favorites are "Mickey Mouse" (who moves his arms and taps his feet) and "Extra Large," which just shows the time in very large bright digital numbers. Other watch faces include a chronograph, stopwatch, alarm, Astronomy, motion butterflies. This is just the beginning — because you can add more features to each face “called complications.”

Complications include a world clock, solar system, calendar, weather, stock prices, alarms, timer, battery charge %, activity summary, and so much more.

Does all this sound complicated? Yes. it is — and isn’t. For example, you can take the watch out of an attractive box, charge it up, and go through a simple procedure that gets you started. It will do a lot of things without any more fussing. But you do have to learn how to use the digital crown by turning it, pushing it down, double clicking it and holding it down. Using a finger, you can swipe the face up, down, and to either side. You can also tap it or hold it down.

The watch comes with printed instructions and a lot of tutorials you can watch on your iPhone. The internet is also full of instructions, including complete videos. What they don’t tell you is that there is a very good Apple Watch User Guide, which I found very helpful and I still refer to it regularly.

As if all this were not enough, there are already over 3,500 Apple Watch Apps that you can download from the Apple Watch App store. Many of them are free.

When you Google Apple Watch, there are many sites with app information. This is one of the best I have found so far:

Ask Henry

Apple Watch Q&A
On a recent Southwest Flight from Orlando to Hartford, a neighboring passenger spotted my Apple Watch. I spent most of the rest of the trip answering questions and demonstrating the watch to several other nearby passengers.

Question: Do I need a cell phone to run an Apple Watch?

Answer: Yes! It requires an iPhone 5 or later model.

Question: How much does an Apple Watch cost?
Answer: There are three basic models: “Watch”, “Sport” (slightly smaller) and “Edition.” Mechanically they are all the same. The size, case material and band make the difference.
- Sport with 38mm aluminum case & sport band lists for $349.00
- Watch with 42mm silver aluminum Case and sport band lists for $399.00
- Edition with 38mm gold case lists for $10,000+
- Edition with 42mm gold case lists for $12,000+

Question: How long does the battery last?
Answer: This depends upon your usage. So far I have not run the battery below 25% in one day, but I do put it back on the charger each night.

Question: Is the Apple Watch waterproof.
Answer: It is supposed to be O.K. to wash your hands, shower or drop your Apple Watch in the toilet for a few moments! There are stories online of people going swimming with it on. I haven’t had the courage to do so.