How is the Commissioner's Adjusted Fair Market Value (CAFMV) established for Foreclosure Sales and Post-Foreclosure Sales Efforts?

Unless otherwise directed by HUD, Mortgagees must first obtain, and review for accuracy, an “as-is” FHA appraisal, which includes both an interior and exterior evaluation of the Property. If the property is occupied and an interior inspection cannot be obtained, an exterior-only inspection may be used.

The appraisal must be valid on the date of the foreclosure sale. The validity period for appraisals is 120 days.


HUD provides an automatic 30-Day extension from the appraisal expiration date due to delays such as bankruptcy, court delays or delays outside of the Mortgagees’ control.  The Mortgagee must request and obtain HUD approval via the Extensions and Variances Automated Requests System (EVARS) for extensions beyond the automatic 30-Day extension.

If a Property that had an exterior-only appraisal becomes vacant, the Mortgagee must obtain a new appraisal that includes both an interior and exterior inspection if:

  • before foreclosure, any delay due to obtaining a new appraisal will not cause the foreclosure sale to be canceled; or
  • after foreclosure, the Mortgagee conducts Post-Foreclosure Sales Efforts.
Mortgagees must use an FHA Roster Appraiser to perform the new appraisal.
 
HUD will reimburse the Mortgagee for the cost of one new appraisal following vacancy, through the FHA insurance claim. 
 
Mortgagees must upload the appraisal information and related FHA case number through HUD’s system of record (P260) within 30 Days of the date of the appraisal.
 
After determining the property’s appraised value using the most recent appraisal, the Mortgagee’s authorized employees must access the Commissioner's Adjusted Fair Market Value (CAFMV) link in FHA Connection (FHAC) to determine a property’s CAFMV.  The CAFMV remains valid and in effect for 120 Days from the date of the appraisal.
 
In jurisdictions where the Mortgagee is required to bid a specific amount at foreclosure, that amount will be deemed to be the CAFMV for purposes of the initial foreclosure; however, the Mortgagee’s authorized employees must utilize the CAFMV link in FHAC to access a Property’s CAFMV for use in any Post-Foreclosure Sales Efforts.
 
To facilitate a Claims Without Conveyance of Title (CWCOT) Post-Foreclosure Sales Effort, the Mortgagee may contribute an additional amount needed to raise a third party’s bid to the CAFMV and allow the sale of the Property to such third party. HUD will not reimburse any contribution by the Mortgagee to facilitate the sale through the FHA insurance claim.

The Mortgagee must submit a variance via EVARS if it becomes aware of any damage that occurs to the Property after the appraisal has been completed. The Mortgagee will be provided with additional instructions as appropriate.

If the foreclosure sale does not take place within 120 Days from the date of the appraisal, and within such additional time provided under Extension to Appraisal Validity Period (see Handbook 4000.1, Section II.A.2.p.iii(A)(2), the Mortgagee must request an updated appraisal and obtain an updated CAFMV.
 
To access FHA Connection go to: https://entp.hud.gov/clas/index.cfm


Any questions may be directed to the FHA Resource Center by email at: answers@hud.gov, or by toll-free telephone number (800) CALLFHA (225-5342). Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339.
 
For additional information, see:

Handbook 4000.1 available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh:
  • HUD’s standard on Claims Without Conveyance of Title (CWCOT) including property valuation and CAFMV located in III.A.2.p.iii(A)-(D), and
  • FHA CWCOT appraisal requirements, located in Section II.D.12.e.iii(H)

Mortgagee Letter 2020-21 is available at: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

 


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-05155