June 02, 2004
The Department of Housing and Urban Development (HUD) revised its Mortgagee Handbook 4000.2, Application through Insurance, including some changes to the chapter on Property Appraisal and Valuation. Note that this is not the long-awaited revision of HUD's single family appraisal handbook.
Most of the changes are cosmetic, and serve to eliminate duplication across handbooks or to incorporate mortgagee letters — periodically issued policy directives — that have come out since the Handbook was last issued. The revised handbook makes it clear that "the FHA appraiser is the on-site representative of the Mortgagee and provides preliminary verification that" a property is eligible for FHA insurance. And while "the Mortgagee is responsible for determining the eligibility of properties in flood hazard areas," it "relies upon the FHA appraiser's notation on the URAR form."
Meanwhile, by notice published in the Federal Register June 2, the Farm Service Agency (FSA) amended its appraisal regulations effective July 2. The new rule will allow loan approval contingent upon a later appraisal, once the applicant is deemed eligible. It will also set a threshold loan amount of $50,000 for an appraisal to be required at all.
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