In cases where a borrower has switched Mortgagees, the first Mortgagee must, at the borrower’s request, transfer the appraisal to the second Mortgagee within five business days. The appraiser is not required to provide the appraisal to the new Mortgagee. The client name on the appraisal does not need to reflect the new Mortgagee.
If the original Mortgagee has not been reimbursed for the cost of the appraisal, the Mortgagee is not required to transfer the appraisal until it is reimbursed. The second Mortgagee may not request the appraiser to re-address the appraisal. If the second Mortgagee finds deficiencies in the appraisal, the Mortgagee must order a new appraisal.
The new Mortgagee must enter the borrower’s information in FHA Connection. The new Mortgagee must collect an appraisal fee from the borrower, and send the fee to the original Mortgagee, who, in turn, must refund the fee to the original borrower.
A second appraisal may only be ordered by the second Mortgagee under the following limited circumstances:
• the first appraisal contains material deficiencies as determined by the underwriter for the second Mortgagee;
• the Appraiser performing the first appraisal is prohibited from performing appraisals for the second Mortgagee; or
• the first Mortgagee fails to provide a copy of the appraisal to the second Mortgagee in a timely manner, and the failure would cause a delay in closing and harm to the Borrower, including loss of interest rate lock, violation of purchase contract deadline, occurrence of foreclosure proceedings and imposition of late fees.
For additional information see Handbook 4000.1 II.A.1.a.iii(B)(8) and (9) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh