HUD has updated the FAQs on appraiser independence stating that the
appraisal report cannot be in the name of a broker and allowing the broker
to order the appraisal from a AMC (but not multiple AMCs) and allowing a
borrower to pay the broker directly for the appraisal.
Last week, the Federal Housing Administration (FHA) released Mortgagee Letter 2010-13, Appraisal Update and/or Completion Report providing additional guidance to ML 2009-51. ML 2010-13 provides discusses two prohibitions on the use of an appraisal report, the Market Conditions Form, and permissible validity periods.
Additional Prohibitions. ML 2009-51 outlines two additional prohibitions on the use of an appraisal report. First, an original appraisal report can only be updated one time using the Appraisal Update Report (AUR). Second, the AUR may not be used when ordered by a lender who is not identified as the intended user in the original appraisal report unless the original report is incorporated into the update.
Market Conditions Report. The appraiser must include a completed Market Conditions Addendum (Fannie Mae Form 1004MC or Freddie Mac Form 71) for the subject property.
Permissible Validity Periods. An appraisal with no AUR has a 150 day validity period (120 day validity period for the original appraisal plus 30 day extension period as permitted by HUD). An appraisal with a AUR has a 240 day validity period.
Finally, HUD has updated the FHA Appraisal FAQs on appraiser independence stating that the appraisal report cannot be in the name of a broker and allowing the broker to order the appraisal from an appraisal management company (AMC) and allowing a borrower to pay the broke directly for the appraisal.