Can an appraisal ordered for conventional or government guaranteed loan purposes be used for an FHA transaction?

The effective date of the appraisal cannot be before the FHA case number assignment date unless the Mortgagee certifies, via the certification field in the Appraisal Logging Screen in FHA Connection, that the appraisal was ordered for conventional lending or government guaranteed loan purposes. The Mortgagee must retain documentation in the case binder substantiating conversion of the mortgage to FHA.
 
The Mortgagee must ensure that the appraisal was performed
  • by an FHA Roster Appraiser; and 
  • in accordance with FHA appraisal reporting requirements as detailed in Handbook 4000.1 and the Appraisal Report and Data Delivery Guide.
The appraisal must be in full compliance with the Uniform Standards of Professional Appraisal Practice (USPAP), which requires that this be classified as a new assignment. The intended use of the appraisal must indicate that it is solely to assist FHA in assessing the risk of the Property securing the FHA-insured Mortgage.  Additionally, FHA and the Mortgagee must be indicated as the intended users of the appraisal report.
 
If the Appraiser determines that the scope of work is met with regard to Minimum Property Requirements, Minimum Property Standards, and USPAP compliance, and further determines that a re-inspection of the Property is not necessary, the effective date of the appraisal may be the date of the original inspection. However, if an FHA-compliant inspection is required, the date of the inspection will become the effective date of the new appraisal.
 
The Appraisal Report and Data Delivery Guide can be accessed on the Single Family Housing Policy Handbook 4000.1 (SF Handbook) Supplemental Documents web page at https://www.hud.gov/program_offices/housing/sfh/handbook_references
 
For FHA policy information see Handbook 4000.1 Sections II.A.1.a.iii.(B)(7) and II.D.1.a. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
 

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04305