FHA Appraiser Guidelines

SELECTION OF APPRAISER

1-0 INTRODUCTION
The success of the FHA insurance program and HUD's ability
to protect its financial interest begins with selecting
qualified and knowledgeable appraisers. This chapter
presents the minimum requirements that appraisers must meet
to be placed on the FHA Register.

1-1 FHA REGISTER
The FHA Register lists appraisers who are eligible to
perform FHA single-family appraisals. To conduct an
appraisal for FHA insurance endorsement, the appraiser must
be on the FHA Register.

Appraiser Appraiser HUD Appraiser
achieves applies reviews placed on
necessary to HUD application FHA Register
credentials

A. APPRAISER CREDENTIALS
To be eligible for placement on the FHA Register, all
appraisers must be state-licensed or state-certified and
must not be listed on any of these:

o GSA's Suspension and Debarment List (the government-
wide list of parties excluded from federal procurement
or non-procurement programs)
o HUD's Limited Denial of Participation List
o HUD's Credit Alert Interactive Voice Response System
(CAIVRS)

To be eligible to perform appraisals for FHA, the appraiser
must also pass a HUD//FHA test on appraisal methods and
reporting, which focuses on applied knowledge of the new
Handbook 4150.2 .

A uniform national examination will be available June 1,
1999. The examination contains fifty questions in a
multiple-choice format. The test will be administered by a
national provider and the cost paid by the appraiser.
Appraisers currently on the FHA Register will be
grandfathered until January 30, 2000.

B. REGISTER APPLICATION PROCESS
The application process is the first screening of the
appraiser's qualifications to perform HUD/FHA appraisals.
To apply, appraisers must submit the following to FHA:

o Updated form HUD-92563 "Register Appraiser Designation
Application"

o A copy of a current valid appraisal license and/or
certification verification that the appraiser has
passed the FHA Examination

HUD will review this information to determine the
appraiser's eligibility for the FHA Register.

1-1
4150.2

C. APPLICANT REVIEW
To verify that the appraiser is eligible to perform HUD/FHA
appraisals, REAC performs a detailed review of the
appraiser's professional qualifications and checks for any
negative information. The review does the following:

o verifies that the appraiser is state-licensed or state-
certified under the Appraisal Qualifications Board
(AQB) criteria

o verifies that the appraiser has passed the FHA
Appraisals Methods and Procedures test

o pre-screens the appraiser's social security number in
the HUD/FHA Credit Alert Interactive Voice Response
System (CAIVRS)

o reviews HUD records to ensure that the appraiser has no
pending suspensions, disqualifications or debarments

o verifies with the appraiser's signature that there are
no actions or pending judgements against the appraiser
for waste, fraud, abuse or breach of professional
ethics or standards

o reviews the previous period's performance, if
applicable.

D. DESIGNATION TO THE FHA REGISTER
When the review of the application is complete, the
appraiser is designated to the FHA Register. New appraisers
recently added to the FHA Register may be monitored and
reviewed more frequently to ensure that their performance is
consistent with HUD/ FHA guidelines and to monitor training
needs.

Because the initial application to the FHA Register will
occur after the appraiser has become state-licensed or
state-certified, the first term will coincide with the
remaining period of state licensing for the home state.
After this initial period, the FHA Register period will be
consistent with the home state license period.

Each period, every appraiser must re-apply to the FHA
Register, concurrent with the appraiser's application for
state licensing and/or re-certification. HUD reviews the
appraiser's performance and compliance with new testing
requirements and verifies that the appraiser is state-
certified or state-licensed.

For more information on the review process, see Chapter 6 of
this Handbook.

1-2

4150.2

1-2 LENDER SELECTION OF THE APPRAISER

Lender Lender Lender Appraiser Lender
selects assigns transmits performs reviews
appraiser appraiser case #, if appraisal appraisal
available

When the lender selects an appraiser from the FHA Register,
the FHA Connection processes a case number for the lender.
The lender may assign the appraiser before receiving the
case number, but the case may not be submitted for
endorsement without the case number. The case number must
be placed on all copies of the URAR as well as the VC form
and summary. The mortgagee will give the appraiser:

o the property address
o type of construction
o number of units
o other information necessary for the assignment

If the property is a condominium or a Planned Unit
Development (PUD), the lender will verify that it is HUD-
approved before ordering a case number or having an
appraisal performed. The lender will give the appraiser the
project name and ID number and all available property
information. If it is proposed construction for a PUD or
Condominium, it must be FHA-approved before ordering a case
number. The name of the Condominium or PUD must be given.

A. NON-DISCRIMINATION POLICY
The Department's regulations on choosing appraisers
state that there shall be no discrimination on the
basis of race, color, religion, national origin, sex,
age or disability.

HUD expects lenders to comply with anti-discrimination
requirements and affirmatively select female and
minority appraisers for a fair share of appraisals
commensurate with their representation on the FHA
Register. HUD will monitor lenders' choice of
appraisers by their sex and race.

B. CONTRACTUAL RESPONSIBILITY OF APPRAISERS
The appraiser is hired by the lender, and therefore has
a contractual responsibility to the lender. However,
the appraiser provides services for HUD programs, and
therefore, has an obligation to perform these services
commensurate with the standards and requirements of
HUD. This dual responsibility of the appraiser is
recognized in the review and reporting requirements of
HUD. The lender and the appraiser must meet their
respective obligations as prescribed by HUD/FHA.
Therefore, the intended user of the appraisal report is
also HUD. These contractual obligations to the lender
and HUD/FHA are in addition to the appraiser's legal
obligations to his or her credentialing state.

1-3
4150.2

C. COMMUNICATION WITH APPRAISERS
(1-2) HUD/FHA mortgage insurance is initiated when a lender
selects an appraiser from the FHA Register. Once the
appraiser agrees to perform the appraisal, the
appraiser is in a contractual relationship with the
lender. The appraiser will send the completed
appraisal directly to the lender. HUD advises the
appraiser to discuss the appraisal only with the
underwriter. No other individual should contact the
appraiser before the appraisal has been completed.
Real estate brokers and agents should consider the
lender their sole source of information on the
appraisal and all matters related to the appraisal.

D. APPRAISAL FEES
The appraiser and the lender will negotiate the price
and due date. HUD does not establish fees or due
dates. The fee is paid for market value estimate based
on guidelines consistent with HUD policy and procedure
established in this Handbook. The fee is not based on
a requested minimum valuation, a specific valuation or
the approval of a loan. Lenders may charge the
borrower only what is customary and reasonable in the
area to obtain an appraisal.

Appraisal management firms may charge the mortgagor a
fee for the appraisal that may encompass fees for
services performed by the firm as well as fees for the
appraisal itself. However, the total of these fees is
limited to the customary and reasonable fee for an
appraisal in the market area where the appraisal is
performed. Such arrangements must comply with all
aspects of the Real Estate Settlement Procedures Act
(RESPA) and its implementing regulations, including
restrictions against:

o kickbacks and referral fees
o charges for settlement services that were not
actually performed
o payments in affiliated business arrangements

Valuation Experts is your local Charlotte North Carolina Appraiser