The Appraisal
When HUD takes a property into inventory an appraisal is ordered. On HUDHOMESTORE.COM in the Property Info Section for any property the appraisal date is listed. Appraisals are only good for 120 days.
If a contract is achieved during those 120 days the appriasal is free to the purchaser and must be used by all financing companies for use on FHA loans. Should the 120 days run out prior to settling, a new appraisal will be required by the lender at a cost to the Buyer. **It should be noted that any conditions established by the appraisor (predication)needs to be remediated by setting up a Repair ESCROW, for HUD will make no repairs nor allow the Buyer to make any repairs.**
-For a copy of the Appraisal & Property Condition Report, please send your request, to the Asset Manager with a copy of the ratified sales contract.
For Matt Martin: Customer Service Department at MMREMPhilly@mmrem.com.
Expiration of Appraisals (From FHA Manual)
A. Term of Appraisal. Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction properties, including HUD REO appraisals that have an effective date of on or after April 1, 2010, will be 120 days. Please see Mortgagee Letters 2009-30, 2010-08 and 2010-13 for more information.
B. Re-Use of Appraisal. Appraisals cannot be re-used after the mortgage for which the appraisal was ordered has closed. For example, an appraisal used for the purchase of a property cannot be used again for a subsequent refinance, even if the appraisal is within the 120 day validity period. A new appraisal is required for each refinance transaction requiring an appraisal.
C. Extension of Validity Period.
The original appraisal may be extended by 30 days to allow for the approval of the borrower and closing the loan provided the borrower signs a valid sales contract or is approved prior to the expiration of the appraisal. See HUD Handbook 4155.2 FHA Policy on Appraisal Extension.
For case numbers assigned on or after February 15, 2010, the original appraisal report may only be updated one time via the completion of Appraisal Update Report (Fannie Mae 1004D/Freddie Mac 442), thereby capping the overall validity period for an appraisal being updated at 240 days. The update can only be completed by the original appraiser provided they are currently in good standing on the FHA Appraiser Roster. See Mortgagee Letters 2009-51 and 2010-13.
D. More Details
· ML 2010-08 – Validity period for appraisals.
1. HUD REO contract must be ratified within 120 days of appraisal’s effective date, or mortgagee must order new appraisal or appraisal update.
2. Second appraisals not allowed to be ordered to support a purchase price that is higher than the value on the current appraisal.
· ML 2010-13 – 150 Day Validity Period (30 day extension): Loan must close within 150 days from the effective date of the appraisal. Must be ratified within 120 days, and close within 150.