Appraiser News

The latest NC Appraisal Board Appraiser Report is now out and can be viewed at http://www.ncappraisalboard.org/bulletins/Feb2010.pdf.

Some changes that is being made by the appraisal board are CE, trainee supervision, etc.

The current appraiser count in North Carolina is 4,147.

NC appraiser trainees 550
NC appraiser license 223
NC certified appraiser 2,200
NC certified general appraiser 1,174

Interesting note:
North Carolina certified general appraisers that took the exam: 0


Take Care and God Bless,

Your Charlotte North Carolina Appraiser

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.

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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

FHA Guidelines

Many home owners and property buyers are now using FHA to get financing. Here are some of HUD/FHA guidelines.



2-10. BASIC VALUATION PROCESS. The purpose of valuation, definition of
value, valuation principles, and the practical limitations of
appraisal data dictate the basic valuation process. The process
embraces:

A. A study of the future use of the property and of the motives
of possible prospective owners;

B. A forecast representing the most probable series of expected
future returns to be derived from continuous ownership of the
property; and

C. An analysis which converts the expected returns into a
present price, that is, an estimate of value.
Charlotte NC Appraiser

2-11. DETERMINATION OF RIGHTS INCLUDED IN PROPERTY. The word property
refers to rights which are possessed through acquisition of title,
that is of ownership. The concept of ownership embraces the rights
of possession, control, enjoyment, and disposition. It is these
rights in relation to a specific property that must be valued. The
rights must be known before they can be valued. The extent of the
rights depends upon the nature of the title that will be held by the
party whose rights are being valued.

A. Fee Simple Title. Fee simple absolute may be defined as "the
largest possible estate in real property." There are other forms
of holding title to real property, such as fee determinable and
conditional. There are also various ways of holding title such
as life estates and remainders, joint tenancy, and tenancy by the
entirety. Regardless of the nature of title, the rights of an
owner even though exclusive, are never absolute for they are
always subject to the rights of the sovereign authority, such as
the right to tax, to regulate and control as by zoning ordinances
or other legislative enactments, and the right of eminent domain.

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4150.1 REV-1
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(2-11) B. Easements and Other Restrictions to Rights. If a title is
encumbered the rights are correspondingly restricted and may be
less valuable, depending upon the nature of the encumbrances.
Examples are encumbrances in the nature of easements,
reservations, restrictions, and rights-of-way.

C. Lessee, Lessor Rights. The term "property" may refer only to
the rights established by a lease. A lease is an agreement
under which the tenant (Lessee) acquires certain rights in a
real property for a designated period of time from the Landlord
(Lessor). The Lessor is usually, but not always, the owner of a
property. The terms and conditions of a lease must be
ascertained before the lessee's or lessor's "property" can be
valued.

D. Delineation of Rights as a Prerequisite to the Value Estimate.
Property rights generally include the right to use and occupy,
the right to lease to others, and the right to encumber or sell.
The exercise of these various rights results in the realization
of benefits. The extent and nature of the rights determine the
extent and nature of the benefits which, when compared to other
properties that contain the same rights and benefits, indicate
the value to be ascribed to the property or rights to the
property. The benefits cannot be valued except in consideration
of certain assumed characteristics and motives for ownership,
such as the right to occupy, or to lease, or to mortgage or sell
that vests in any owner holding title in fee simple
unencumbered. An owner might occupy the property and value it
because of its desirability as a place of residence for his/her
family, or an owner might value the property because of the net
rental he/she can realize from it. After delineating the
property, or rights to be appraised, appraisers are required to
value them from the point of view of typical buyers to whom the
property exerts its strongest appeal.

Real estate appraisers Charlotte North Carolina

2-12. ESTIMATION OF RETURNS FROM PROPERTY. Returns from property relate
to either future direct services or the amenities which will be
enjoyed by an owner-occupant, or to dollar incomes which are the
source of value to an investor. The forecast must embrace the
entire future. It is incomplete if it includes only a forecast of
services or returns which are expected to accrue during the next
year, a typical early year, or "on the average" in early years.
Future services of properties are best conceived if they are
visualized as being in the form of a flow of returns. The returns
will be periodic services which include shelter, enjoyment and pride
of ownership, or net dollar income. All forms of returns should be
considered as a flow of benefits, whether they take the form of
direct satisfactions or dollars.

A. Trend and Flow of Returns. In urban residential real estate,
the flow of returns is present only when the site is occupied by
useful buildings or other programs of use. Undeveloped vacant
land is presumed to become productive shortly after the
completion of
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2/90
2-7
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4150.1 REV-1

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(2-12) construction. Typically, the flow of returns will rise rapidly
to a maximum rate in the early life of the improvements and
gradually decline during midlife and late life until the
improvements have finally lost profitable usefulness and the flow
of returns is only large enough to justify purchase of the
property as vacant land. (However, see Gentrification, page 4-6.)

B. Net Return. The difference between the value of total services
or total revenues of a property, and the expenses and taxes, is
the net return. As the value of a property arises from its
capacity to produce net returns, the characteristics of the
future net income stream must be forecast in valuation.

1) The future net income stream has three characteristics:

a. Quantity, or the size of the income stream at the time
of appraisal and thereafter;

b. Quality, or the possible fluctuation in size of the
income stream; and

c. Duration, or the period of time during which the income
stream in any size will endure.

2) Physical deterioration and obsolescence will decrease the
average amount of net returns in the future, thereby
decreasing the margin between amounts of net returns and the
periodic amounts which represent a fair return on the value
of the land. The services of buildings are limited to
duration owing to the fact that buildings will eventually
become useless due to the action of forces which cause
deterioration, disintegration, and obsolescence. Therefore,
the portion of the net income attributable to the building,
whether measured in services or dollars, is not only of
limited duration but subject to decline during the period of
its continuance. Gradually, the value of improved property
may decline until eventually only land value remains. At
that time, the building has reached the end of its economic
life.

Charlotte FHA Appraiser NC

FHA Guidelines

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.


Update the combination of FICO scores and down payments for new borrowers.
New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.


Reduce allowable seller concessions from 6% to 3%
The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.


Increase enforcement on FHA lenders
Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches


This FHA update was bought to you by Valuation Experts, a real estate appraisal company in Charlotte, North Carolina. Your Local Charlotte NC Appraiser