Written By: Stacey Sprain, Op-Ed Writer
Mortgagee Letter 2009-51 communicates HUD’s acceptance of FNMA Form 1004D effective for cases assigned on and after January 1st.
The form is actually designed to serve two purposes:
1. To extend the validity period of an existing appraisal that is due to expire or has expired
2. To report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report.
You may recall that appraisal validity periods change effective January 1 for all property types to 120 days from the current validity periods of 180 days for existing construction and 12 months for all proposed and under construction cases. With the ability to have the appraiser recertify value with use of form 1004D when the original appraisal validity period expires, it will save the borrowers the expense of having to pay for a second appraisal and will save us lenders time from having to wait for a whole new appraisal to be completed when the original appraisal expires.
There are however, circumstances that render form 1004D invalid or not useable for purposes of re-certifying appraised value and such include the following:
- Property value has declined since original value effective date
- Building improvements that must be acknowledged to contribute to value cannot be seen from the street view
- Exterior of the property reflects deficiencies or other significant changes that were not in existence at the time of the original appraisal report.
When Form 1004D is utilized to re-validate the original appraised value of a property, the FHA Roster Appraiser who completed the initial appraisal must be the same person to complete the value recertification. The appraiser is responsible to complete the following actions in relation to appraisal updates:
1. Adhere to the Scope of Work and Appraiser’s Certification listed on the form, which includes an exterior inspection of the subject property from, at least, the street.
2. Research, analyze and verify current market data to determine if the property has declined in value since the effective date of the appraisal report being updated.
3. Assure compliance with development and reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), and specifically Advisory Opinion
4. Retain all supporting documentation in the work file.
5. Check the box applicable to Part A.
6. Concur with the original appraisal report and update the appraisal by incorporating the original appraisal report if the market value of the subject property has not declined since the effective date of the original appraisal.
7. Provide a photo of the street scene and photos from as many angles of the home that are visible from a public way.
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The second part of form 1004D, Part B, can be used to report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report. Part B of the form, however, may not be used in lieu of HUD-92051 Compliance Inspection Report, if the case involves new construction or manufactured housing.
For Part B, the original FHA Roster Appraiser or any other FHA appraiser currently in good standing is allowed to complete the report. The appraiser is responsible to:
1. Review the requirements and/or conditions noted in the appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report.
2. Check the box applicable to Part B.
3. Perform a thorough inspection of the items noted in appraisal referenced in the Summary Appraisal Report and confirm completion/satisfaction of requirements and/or conditions.
4. Describe the impact on the value of the property if requirements and/or conditions are not completed in accordance with the original appraisal report.
The validity period of Form 1004D Appraisal Update and/or Completion Report is 120 days, which begins with the effective date of the appraisal report. The initial or underlying appraisal that has been subsequently updated with form 1004D cannot exceed 12 months old at the time of loan closing.
About The Author
Stacey Sprain - As an op-ed writer, Ms. Stacey Sprain is currently a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution.