Does the Appraiser and Property Requirements section of the SF Handbook include policy changes?

Yes. The Appraiser and Property Requirements for Title II Forward and Reverse Mortgages section (II.D.) of SF Handbook 4000.1 includes revisions and clarifications. This includes, but is not limited to, the following key policy revisions and clarifications: 
  • Properties with a Legal Non-Conforming Use: requiring the appraiser to comment if improvements can be rebuilt by right. 
  • Accessory Dwelling Units: Emphasizing Highest and Best Use to determine property type of classification. 
  • Attic and Crawl Space Inspection Requirements: Clarifying that FHA requires an inspection. 
  • General Acceptance Criteria, Property Eligibility, Non-Residential Use of Property: Ensuring that mixed use properties comply with zoning. 
  • Cost and Income Approach for Value: Clarifying that ALL appropriate approaches must be utilized when applicable. 
  • Sales History of Comparables: Requiring three years or more, instead of one year, and requiring due diligence by the appraiser for analyzing prior sales of comparable properties.   Energy Efficient Building Components, Solar Systems, etc: Requiring that contributory value of building components that enhance efficiency or energy savings must be analyzed and reported.
FHA requires that the appraiser utilize all appropriate methods of valuation and does not restrict this to only a matched pairs analysis.   FHA did not publish a detailed document of specific changes to the Appraiser and Property Requirements section; it is important that appraisers and mortgagees read the section in its entirety to understand the policy within the context of the entire section and the larger Origination through Endorsement section. 
Handbook 4000.1 II.D is available at

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-04419