FHA APPRAISAL REQUIREMENTS

Effective April 1, 2009, FHA appraisers must now provide the following:

  • The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71)
  • At least two comparable sales that occurred within 90 days of appraisal date
  • A minimum of two active listings or pending sales in addition to the three closed comparables
  • Bracketed listings using both dwelling size and sales price when possible
  • Adjusted active listings to reflect the list-to-sales price ratio
  • Adjusted pending sales to reflect contract sales price when possible
  • The original list price and any revised list prices
  • Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales
  • Absorption rate analysis
  • Known or reported sales concessions on active and pending sales

This update includes this warning: “Direct Endorsement Lenders are reminded that if the appraiser they selected provides a poor or fraudulent appraisal that leads FHA to insure a mortgage at an inflated amount, the lender is held responsible equally with the appraiser for the integrity, accuracy and thoroughness of an appraisal submitted to FHA.”


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