HUD Mandates Changes In FHA Appraisal Process


Due to homeowner complaints about problems and defects found in houses after they have moved in, HUD (US Housing and Urban Development) has changed the way that appraisers must evaluate a structure.  HUD has mandated that appraisers now give a summary of observations to all homebuyers under the FHA program.  The summary of observations looks at the physical condition of several areas of the home including: Soil Contamination; Grading and Drainage Problems; Well & Septic; Wood Destroying Insects; Structural; Foundation; Roofing; General Health and Safety Issues; Mechanical Systems; and Deteriorated Paint.

HUD is quick to note that the appraiser is NOT doing a home inspection, and has published some forms explaining this to the homeowner.  The form "Notice to the Homebuyer" (Form HUD-92564-HS) explains the difference between a home inspection and an appraisal; and "For Your Protection: Get A Home Inspection" (Form HUD-92564-CN) requires the potential homeowner to sign that they "understand the importance of getting an independent home inspection. . .I have thought about this before I signed a contract with the seller for a home."

Visit the HUD website to look over the 1999 Mortgagee Letters (Mortgagee Letters 99-29, 99-22, 99-18 refer to the Appraisal/Home Inspection industries).   The letters can be found under the "Short Cuts, 1999 Mortgagee Letters".   If you are interested in looking at the various forms appraisers are required to use during the appraisal process, they can be found under the section "What's New", "List New Documents."  Look for the following form numbers:

HUD-92564-CN   -   For Your Protection Get A Home Inspection

HUD-92564-HS   -   Notice to the Homebuyer

HUD-92564-VC   -  Appraisal Forms.



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