Today the Federal Housing Finance Agency (FHFA) announced changes to the Home Affordable Refinance Program (HARP) to “attract more eligible borrowers who can benefit from refinancing their home mortgage.” The announcement was made in conjunction with the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac. HARP will now allow borrowers to refinance even if they are underwater. According to the Wall Street Journal, only 894,000 borrowers have used HARP, of which 70,000 were underwater.
FHFA announced several enhancements to HARP, including eliminating the appraisal requirement. The appraisal is no longer required if a reliable automated valuation model (AVM) estimate can be provided by the GSEs.
Other enhancements include:
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
- Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
- Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac; and
- Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
The Appraisal Foundation (TAF) announced that the 2012-2013 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) is now available. This edition of USPAP will be valid for two years beginning January 1, 2012 through December 31, 2013. According to a TAF press release “the new edition includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs).”
You can purchase a hard copy of USPAP at the Foundation Store for $75 or the PDF for $60.
On September 19, 2011, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) announced it will re-propose it’s rule on the definition of a fiduciary. The rule was proposed to protect business owners who offer retirement plans and those who invest in these retirement plans and IRAs. The proposed rule defined a fiduciary as giving investment advice to an employee benefit plan or a plan’s participants and imposed a number of duties “including a duty of undivided loyalty, a duty to act for the exclusive purposes of providing plan benefits and defraying reasonable expenses of administering the plan, and a stringent duty of care.”
The National Association of Realtors (NAR) submitted comments on this proposed rule because it would have required appraisers to have a fiduciary responsibility to retirement plans in cases where the plan is involved in the purchase or investment of real property. NAR argued that appraisers are required to be independent and should not be considered a fiduciary. Yesterday’s announcement states that the agency is revising provisions of the rule including the application of the regulation to appraisers.
For those keeping score at home, the US Department of Veterans Affairs (VA) announced that it will not require Uniform Appraisal Dataset (UAD) compliance for appraisal reports on VA backed loans. VA will accept appraisal reports that are in compliance with UAD and is preparing a circular with more detailed information for a future release.
September 07-08, 2011 – Charlotte, NC. FHA Appraiser and Lender Training. The credit training includes an overview of 203k, 203k Streamline and Energy Efficient Mortgages. In addition we will review recent Mortgagee Letters and discuss general underwriting do’s and don’ts. The appraiser training will cover recent Mortgagee Letters, appraising HUD REO properties, 203k inspections, and defining required repairs vs. cosmetic deficiencies. Registration required, no fee. More info HERE.
September 08, 2011 – Anchorage, AK. FHA Appraiser Training. FHA will be conducting a 4-hr instructor-led live class on how to complete an FHA appraisal and highlight recent program changes that affect FHA appraisal protocol. This training is highly valuable for appraisers who would like to be added to the FHA Appraisers Roster, and an excellent review for those who are currently on the Roster. Registration required, no fee. More info HERE.
September 14-15, 2011 - Portland, OR. Annual NAIFA State Conference. Come join the Rose City Chapter of National Association of Independent Fee Appraisers (NAIFA) for their Annual State Conference. This 2 day conference will cover “Completing Today’s FHA Appraisal”, presented by FHA Santa Ana Homeownership Center instructors (7 Hrs CE); NAIFA will present “Operating an Appraisal Business” along with other property related topics. Registration required, Fee. For more information: http://www.ifanw.com/images/stateedconf2011.pdf
September 20-21, 2011 – Fort Worth, TX. A Day with FHA & The FHA Appraisal. Join the Fort Worth Mortgage Bankers Association and FHA’s Denver Homeownership Center in Dallas/Fort Worth for two days of training. Underwriters, processors, loan officers, managers, and appraisers will benefit from this opportunity. Classes will borrower eligibility, underwriting appraisals, refinances, troubleshooting, FHA connection, and more. Certificates will be issued to all attendees and six hours of CE Credit will be obtainable for Appraiser Licensing. There is limited seating; register early to ensure attendance. Registration required, fee. For more information please visit: http://www.fortworthmba.org/
September 21, 2011 – Webinar: HUD Appraiser REO Training – The Atlanta Homeownership Center is presenting a webinar on the REO M&M III protocol and HUD’s guidelines for FHA appraisers. Learn the general principles of the REO M&M III program. This training will explain the responsibilities of the M&M III partners and how FHA appraisers should appraise HUD REO properties. This training is designed for FHA appraisers, Lenders, Real Estate Listing Brokers, M&M III partners: Asset managers, Field Service Managers, Mortgage Compliance Managers, Loan Officers and Sales agents. This webinar is a semi-technical appraiser training. Training will be at:10:30AM-1:00PM Eastern Standard Time. Registration required, no fee. More info HERE.Course Materials can be downloaded here.
Save the dates for FHA Appraiser and Lender Training:
September 13-14, 2011 – Tampa, FL; September 27-28, 2011 – Chicago, IL. The lender training will include an overview of 203k, 203k Streamline and Energy Efficient Mortgages. In addition we will review recent Mortgagee Letters and discuss general underwriting do’s and don’ts. The appraiser training will cover recent Mortgagee Letters, appraising HUD REO properties, 203k inspections, and defining required repairs vs. cosmetic deficiencies. Location details to be announced. Registration is not yet open.
In recent days there have been rumors and reports that the implementation of the Uniform Appraisal Dataset (UAD) announced by the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, would be delayed. NAR has confirmed that the UAD will go into effect for appraisals on GSE mortgages as scheduled on September 1, 2011, and there will not be a delayed implementation. Appraisal reports submitted to the GSEs on or after this date are required to be UAD compliant. You can get more information on UAD requirements by visiting the Fannie Mae or Freddie Mac UAD web pages.
Yesterday, we discussed FHA’s adoption of the UAD effective January 1, 2012. This is not to be confused with the GSEs effective date of September 1, 2011.
This week, the Federal Housing Administration (FHA) released Mortgagee Letter 2011-30: The Uniform Appraisal Dataset (UAD) and Appraisal Reporting Forms. The ML states that FHA will adopt UAD and two of the UAD compliant reporting form for all FHA case numbers assigned on or after January 1, 2012. This also applies to HUD REO and pre-foreclosure sales after the first of the new year. Lenders may submit loans for endorsement with UAD-compliant appraisals prior to this date but are not required to do so.
FHA will require the UAD modified appraisal form for the Uniform Residential Appraisal Report (Fannie Mae 1004/Freddie Mac 70) and the Individual Condominium Unit Appraisal Report (Fannie Mae 1073/Freddie Mac 465). FHA does not accept exterior only appraisal reports.
FHA Roster appraisers are required to become familiar with UAD requirements and the modified appraisal forms. The ML identifies four UAD field specific compliance requirements. All other FHA appraisal reporting requirements remain in effect and the UAD requirements are not “a substitute for, and do not exempt FHA Roster appraisers from the requirement to provide adequate explanations in the addendum of the reporting form methodology, anomalies, property deficiencies and other conditions that may have an impact upon the value of a property and its marketability.“
On August 11, 2011, National Association of REALTORS® (NAR) President Ron Phipps sent a letter to federal regulators calling for a ban on the use of indemnification clauses used by appraisal management companies (AMCs). The letter was sent to Federal Financial Institutions Examination Council (FFIEC), the US Department of Housing and Urban Development, the Federal Housing Finance Agency, and the US Department of Veterans Affairs.
Indemnification clauses are becoming more common in service contracts used to engage AMC panel appraisers. In many cases, appraisers are asked to sign contracts that include language to indemnify and hold harmless the AMC against any suit, threat, or claim on any work product or service provided as part of the contract agreement. In some instances, the appraiser is even required to indemnify the lender and the AMC for amounts equal to their costs in repurchasing a mortgage loan, regardless of any proof of culpability on the part of the appraiser. The AMC is free from any legal obligation and the appraiser bears all responsibility.
NAR strongly supports the independence of appraisers and the appraisal process. The use of indemnification clauses places pressure on the appraiser, compromises their independence, and has a negative effect on the quality of appraisal reports. This adds risk for both consumers and lenders while diminishing much needed public trust in the appraisal profession.
The Appraisal Foundation (TAF) released a free video this week previewing the 2012-13 changes to the Uniform Standards of Professional Appraisal Practice (USPAP). The 23 minute video includes:
- revisions to the definitions of “Client”, “Extraordinary Assumptions”, Hypothetical Condition”, and a new definition of “Exposure Time”;
- Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE;
- Revisions to Advisory Opinion 21; and
- Revisions to STANDARDS 7 & 8
View the video here.
Check out other Foundation videos at their E-library.
The US Department of Housing and Urban Development (HUD) unveiled a proposed rule in the Federal Register to ensure the agency’s rules conform with the Housing and Economic Recovery Act (HERA) of 2008. The proposed rule requires that appraisers approved by the Federal Housing Administration (FHA) be certified, rather than licensed, by a state appraisal licensing board in order to provide appraisals for mortgages insured by FHA. Comments are due September 12, 2011.
While this proposed rule will officially make HUD in compliance with HERA, the agency has been using only state-certified appraisers for some time. Mortgagee Letter 2008-39: Revised Eligibility Requirements for FHA Roster Appraisers was released on December 17, 2008. The ML stated that all appraisers performing FHA appraisals must be state certified by October 1, 2009.
FHA will not, however, recognize appraisers certified by a “nationally recognized professional appraisal organization” in lieu of certification by a state appraisal licensing board. While HERA provides this flexibility, the proposed rule states that FHA will accept only appraisers certified by the state to “prevent disruption and to ensure efficient processing of mortgage insurance.”
Effective October 1, 2008, FHA stopped accepting applications to the FHA
Appraiser Roster from licensed but uncertified appraisers. All applicants for the
FHA Appraiser Roster must be state certified (certified residential or certified
general) appraisers who meet the minimum certification criteria issued by the
Appraiser Qualifications Board (AQB) of the Appraisal Founda
