The Federal Housing Administration plans to implement its own version of the Home Valuation Code of Conduct.
In an announcement today, the U.S. Department of Housing and Urban Development indicated that while the agency has not adopted the HVCC, it plans on issuing new FHA appraisal order guidelines that are consistent with, and adopt language from, the HVCC.
“Mortgage brokers and commission based lender staff are prohibited from ordering appraisals,” the news release stated. “FHA does not require the use of appraisal management companies or other third party providers, but does require that lenders take responsibility to assure appraiser independence.”
HUD detailed the new requirements today in Mortgagee Letter 2009-28.
The updates are effective for all case numbers assigned on or after Jan. 1, 2010.
Under another new policy, FHA appraisals will remain valid for only 120 days — even for construction deals, according to Mortgagee Letter 2009-30 today. The validity period was previously six months for existing construction and 12 months for new construction.
While FHA prohibits “appraiser shopping,” second appraisals can occasionally be ordered when borrowers switch lenders if some material appraisal defect exists or when a delay in transferring the original appraisal poses potential financial harm to the borrower, according to Mortgagee Letter 2009-29.
But the first lender is required to transfer the original appraisal to the new lender at the borrower’s request. In accordance with the Uniform Standards of Professional Appraisal Practice, the lender cannot request that the appraiser change the client’s name on the report unless it is a new assignment.
