HUD No. 05-132
September 26, 2005
HUD STREAMLINES APPRAISAL PROCESS FOR FHA MORTGAGES
Reduced paperwork and improved appraisal process makes FHA more user-friendly
WASHINGTON - The Department of Housing and Urban Development announced today that the Federal Housing Administration (FHA) is eliminating two of its appraisal-related forms and updating its appraisal protocol. The lending industry, particularly real estate agents and appraisers, welcomes these changes, which will reduce burdensome and duplicative paperwork. As part of the initiative, FHA will adopt four of Fannie Mae's recently revised appraisal reporting forms, which are now considered the industry standard.
'Streamlining our appraisal procedures, which in turn benefits homebuyers, is another of our efforts to make FHA easier to deal with for the lending industry,' said Brian D. Montgomery, Assistant Secretary for Housing- Federal Housing Commissioner. 'We will continue to work with all aspects of the housing industry to make the whole FHA mortgage process smoother, enabling more potential homebuyers to utilize the advantages of having FHA mortgage insurance.'
Of particular note is the elimination of the Valuation Conditions (VC) form. FHA has determined that new property reporting requirements on the revised Fannie Mae and Freddie Mac appraisal forms satisfy any concerns regarding the physical property conditions of the home. This makes the use of the VC sheet unnecessary when estimating the market value of a property purchased through FHA.
National Association of Realtors� President Al Mansell said: 'Realtors� welcome the elimination of the Valuation Conditions form because it will help expedite the processing of FHA loans and make FHA appraisals more in line with conventional appraisal practices. NAR looks forward to working with HUD as they continue to implement additional improvements to the FHA program.'
Bruce Kellogg, President of the Appraisal Institute, a trade association for real estate appraisers, said: 'We are pleased to work with the Commissioner and FHA to improve the agency's appraisal program. Greater uniformity in appraisal reporting will result in a more consistent product and benefit the home buying public.'
Additional information on these changes can be found in Mortgagee Letter 2005- 34 on the HUD website.HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.