What issues regarding FHA lending have been raise throughout this chapter and which ones place great responsibility on the appraiser?

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1 The FHA & VA Appraiser: Thriving and Surviving (7 hour CE) This course will provide you with an understanding of the historical and present needs for FHA and VA programs. It focuses on the most current FHA appraisal requirements including inspection and reporting requirements. It also provides resources for continuing updates on the programs. You will also learn how to get placed on the FHA roster and the essential information needed to prepare for the new simplified FHA appraiser exam. We also overview VA appraisal protocol, as well as the process to be considered as a VA appraiser. C h a p t e r 1 Discussion Point What issues regarding FHA lending have been raise throughout this chapter and which ones place great responsibility on the appraiser? 1. The volume of loans insured by FHA 2. The risk of loss to FHA for defaulted loans, specifically due, but not limited, to: More lenient eligibility requirements Higher loan to value ratio (lower down payment) The broad types of properties eligible C h a p t e r 2 True or False Challenge 1. The FHA 203(k) program requires that one- to four-unit dwellings must be completed for one year. True 2. The FHA 220 program does not allow for the purchase of properties that have already been rehabilitated by a local public agency. True 3. Properties qualifying for the 255 Home Equity Conversion Mortgage can be investment property or owner-occupied. False 4. The FHA 203(b) loan program allows financing for the purchase of up to a four-unit property. True 5. A feature of the 203(h) Mortgage Insurance Program for Disaster Victims is that there is no down payment required. True

2 C h a p t e r 3 True or False Challenge 1. A first-time applicant for the FHA Appraiser Roster is NOT required to submit proof of state appraisal certification. False 2. The certification contained in the FHA Appraiser Roster application acknowledges that the FHA roster appraiser is NOT an agent or employee of HUD/ FHA. True 3. An individual submitting false information in an FHA Appraiser Roster application could be subject to fines of up to $25,000 and imprisonment for up to five years. True 4. Once the application for the FHA Appraiser Roster is completed by the appraiser applicant, the application and supporting documentation are mailed to the HUD office in the applicant s jurisdiction. False 5. FHA roster appraisers are responsible for monitoring the Appraisal Subcommittee s website for accuracy of their certification status and information. True

3 C h a p t e r 4 Multiple Choice Activity 1. FHA considers which condition to require an automatic repair? a. defective paint on a home built before 1978 b. heaving sidewalks c. leaky faucets d. poor workmanship 2. An appraisal on a dwelling that is under construction and more than 90% complete with only minor finish work remaining, is performed a. as is. b. subject to the appraiser s review of plans specifications. c. subject to completion. d. subject to repairs or alterations. 3. If soil contamination appears to be present, the property a. is appraised subject to repairs. b. might require further analysis and testing. c. must have the condition removed. d. would not qualify for FHA financing. 4. An all-weather roadway is a. one on which all vehicles can pass in all types of weather. b. one on which an emergency vehicle can pass in all types of weather. c. a solid surface public road. d. a solid surface road. 5. To check a plumbing system, the appraiser must a. check for leaks around fixtures. b. flush toilets. c. turn on a representative number of faucets. d. all of the above 6. In an FHA appraisal, the appraiser s certification states that a. the appraiser has relied on the sales comparison approach. b. the appraiser has verified comparable sales with an interested party. c. the lender may not distribute the appraisal report. d. only the lender/fha/hud may rely on the report. 7. Front and rear photos of the subject should show a. accessory structures. b. the grade of the site. c. opposite sides of the structure. d. surrounding properties. 8. To check the electrical system of a property, the appraiser is required to a. examine the inside of the electrical service panel with the cover off. b. test all outlets with an electrical testing device. c. test a random number of switches and receptacles. d. turn on all electrical fixtures and appliances at once. 9. In most cases, to qualify for FHA financing, the subject property must a. have a closet in every bedroom. b. have handrails on all stairs. c. not have conditions that would threaten the safety and well-being of the occupants. d. all of the above 10. The subject floor plan sketch must include a. accessory structures. b. below-grade finishes. c. garages. d. interior walls.

4 C h a p t e r 5 Workgroup Discussion Point Discuss the FHA protocol for the following circumstances: A property without a house number or street address Protocol: Enter the nearest intersection if a house number is not available. A special assessment for a street lighting assessment that will last for the next 10 years Protocol: Report the dollar amount of special assessments for the subject property and provide a brief explanation for the assessment. If the assessment is larger than typical, the appraiser should probably discuss whether the assessment might affect marketability of the property. The seller in a sales transaction is someone other than the owner of record Protocol: If the seller is not the owner of public record, the appraiser must explain. Checking the central air-conditioning of a property in cold-climate winter months Protocol: Do not operate the systems if doing so may damage equipment or when outside temperatures will not allow the system to operate. A property has both vinyl siding and brick exterior materials Protocol: If there is a combination of materials, show the predominant portion first and rate the observed condition. Description of windows Protocol: Enter window type: Double hung, single hung, casement, sliders, etc., and identify the window frame material: Wood, aluminum, steel, vinyl, etc. Rate the condition observed. Describe the storm sash material or state if windows are double glazed, or a combination of the two. Rate the condition observed; if none, so state. Describe the style of any screens (full, half, none) and rate the condition observed. A crawl space Protocol: Access to the space should be clear. Examine the crawl space for inadequate access (minimum entry of the head and shoulders). Check the distance from the bottom of floor joists to the ground. Space should be adequate for maintenance and repair. A minimum distance of 18 inches from the ground to the bottom of the joists is highly recommended but not mandated. Check for insulation and ventilation or for any structural problems. The support beams should be intact and of structural soundness. Dirt basement floor Protocol: For a dirt basement floor, determine whether such a property is typical for the area and is readily marketable. If it is typical for the area and readily marketable, it is not required that a concrete basement floor be installed. Mechanical equipment, however, must be located on a concrete pad.

5 C h a p t e r 6 True or False Challenge 1. MLS, by itself would be considered a verification source of data. False 2. For location, using terms such as corner lot or through street is acceptable. True 3. Gross adjustments, per FHA guidelines, can never exceed 25%. False 4. Comparable sales should always be researched for a prior transaction one year prior to the date of the comparable sale. True 5. More than one box may be marked in the reconciliation section ( as is, subject to inspection, etc.) depending on the assignment and property conditions. True 6. The income approach would be required by FHA if the property were a single-family investment property. False 7. When reporting the cost approach, the appraiser is to describe the method for determining physical depreciation. True 8. If the cost approach is developed, the appraiser must provide an explanation if the remaining economic life is less than 30 years. True

6 C h a p t e r 7 Multiple Choice Activity 1. The HUD Data Plate could be found in any of these areas EXCEPT the a. electric service panel. b. kitchen. c. outside rear section of the unit. d. utility room. 2. If a small residential income property has both a conventional dwelling and a manufactured home on the site, the appraiser would need to complete the a. 1004C form only. b form only. c form and the 1004C form. d form and portions of the 1004C form. 3. In selecting comparables for a condominium unit, the appraiser has found no sales of two-bedroom, townhouse units within the past 12 months similar to the subject. The appraiser should a. consider all such properties in the subject project as comparable. b. select larger three-bedroom townhouse comparables in the subject development. c. select one-story, two-bedroom comparables in the subject development. d. select superior two-bedroom townhouse units in the subject development. 4. To be eligible for FHA financing, the manufactured home must have a HUD Certification Label affixed to a. the foremost axle. b. the foremost cross-member of the frame. c. an interior location, such as the electrical panel or a kitchen cabinet. d. the taillight end side of each transportable section. 5. What would NOT be an acceptable method of describing the style of a manufactured home? a. Cape Cod b. Iron Trojan model c. one-floor d. Ranch 6. The cost approach is required for a manufactured home only if it is a. less than one year old, but being re-conveyed. b. more than one year old but has never been considered as real property. c. new construction conveyed from the manufacturer. d. none of the above 7. For a two- to four-unit property, which would NOT be required to satisfy reporting protocol? a. number of dishwashers b. number of refrigerators c. number of television cable connections d. number of washer/dryers 8. A two-unit dwelling in which one unit has a mother-in-law suite (accessory unit) would be a. considered only a two-unit dwelling. b. considered two units, with the suite having contributory value. c. considered three units. d. ineligible for FHA financing. 9. Which statement best describes the cost approach in a condominium unit appraisal? a. The appraiser could calculate the cost of the entire building and divide by the number of units. b. It is applicable if less than one year old. c. It is not applicable. d. It is not required if more than one year old. 10. An on-site sewage system owned and maintained by a condominium project would be a. automatically subject to inspection. b. considered a private system. c. a public system, if all residents have access to it. d. unacceptable to FHA.

7 C h a p t e r 8 True or False Challenge 1. Any of the reporting options specified by USPAP (self-contained, summary, restricted-use) may be chosen by the appraiser for reporting a VA appraisal. False 2. For a condominium to qualify for VA financing, a condominium project must be approved by VA. True 3. An unvented space heater or fireplace will automatically disqualify the property from VA Financing. False 4. A VA appraiser s assistant may perform the property inspection as long as the VA appraiser develops and concludes the final opinion of value. False 5. The purpose of a VA loan is to offer a financing avenue to qualified veterans, which is insured by the federal government. False Excessive dampness in the crawl space of a dwelling will result in automatic disqualification of the property for a VA loan. False 6. Additional comparables are necessitated when any of the comparable sales exceed six months. False 7. VA fee appraisers must notify the VA Office of Jurisdiction seven days in advance prior to going on vacation. True

8 O n l i n e R e s o u r c e s Appendix D: Valuation Protocol: GH.doc VA Lenders Handbook