HUD Issues Announcement on Appraisals for HUD REO Properties
March 25, 2010
Source: Jerome Nagy, Chere LaRose-Senne
Phone: (312) 329-8455
The US Department of Housing and Urban Development (HUD) announced Mortgagee Letter 2010-08, HUD REO Appraisal Validity Period and Second Appraisals. Effective April 1, 2010, appraisals for HUD Real Estate Owned (REO) properties will be 120 days. For buyers financing the purchase of the REO with a FHA-insured mortgage must be ratified within 120 days of the appraisal effective date. ML 2010-08 reduces the appraisal validity date from the current 6 month period.
Effective March 8, 2010, buyers who use FHA to purchase a HUD REO must use the appraisal that was utilized in determining the listing price. A second appraisal can only be ordered to support a higher sales price if there are material deficiencies with the current appraisal or the current appraisal will not be valid by closing. The lender is responsible for:
1) determining if there are material deficiencies in the appraisal report,
2) documenting why a second appraisal is necessary, and
3) retaining both appraisals in the loan file.
Click here for Mortgagee Letter 2010-08: HUD REO Appraisal Validity and Second Appraisals