FHA Announcements / FHA Condo Approval Process

FHA announced many changes this week, issuing 5 Mortgagee Letters.   One announcement is that after Jan 1, FHA is adopting HVCC is most of it’s current form - the same one adopted by Fannie & Freddie in May.  That means that mortgage originators will no longer be able to order appraisals from appraisers directly for FHA appraisals.  In addition, FHA appraisals will now be good for 4 months, instead of 6 months as before - and they clarified how to handle the appraisal when borrowers switch lenders on an FHA loan.  They re-stated that the initial lender must transfer the appraisal to the new lender, but also allowed for a second appraisal to be ordered in specific instances.

Realtors may still provide comps to appraisers on FHA transactions, but not an estimate of value - a fine distinction.

Keep in mind - this change will have no impact on Wells Fargo, as we are already in compliance.  We have a good process already for appraisals, no worries with us on this one!

Additionally, FHA announced some items they are considering - instead of a net worth of $250,000, lenders must have a net worth of $1 million.  Mortgage brokers will no longer get individual FHA licences, they would originate through larger lenders who would assume the risk for those loans.  It is unclear what these proposed changes would mean - it could mean that more brokers will have access to FHA, but it could also mean that many medium size companies will no longer meet the net worth requirement.  Regardless of how that plays out, remember that you really want an FHA expert working with your buyers - don’t let loan officers get their “on the job training” on your files!