FHA Mortgage Blog

There are new FHA Appraisal Guidelines that went into effect on April 1, 2009 that Las Vegas home buyers and sellers need to know about.

These new FHA Appraisal Guidelines are not to be confused with the recent Home Valuation Code of Conduct (HVCC) agreement that went into effect on May 1, 2009.

In order to accurately report on housing trends in specific neighborhoods, appraisers will have to follow new guidelines for all properties that will be secured by FHA-insured mortgages.

Overall, the FHA Appraisal requirements specifically relate to homes in declining markets.

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There are basically 10 major points of interest that sellers, buyers, and agents need to pay attention to with regards to the new FHA Appraisal Guidelines:

• The Market Conditions Addendum  (Fannie Form 1004MC/Freddie Form 71) needs to be completed.  This basically has to do with creating more transparency for appraisals conducted in declining markets.

• At least two comparable sales within 90 days of appraisal date.

• A minimum of two active listings or pending sales, in addition to three closed comparables.

• Bracketed listings using both dwelling size and sales price when possible.

• Adjust active listings to reflect the List To Sales Price Ratio.

• Adjust pending sales to reflect contract sales price when possible.

• Include original list price and any revised list prices.

• Reconciliation  of adjusted values of active or pending sales with adjusted values of closed comparable sales.

• Absorption Rate Analysis.

• Known  or reported sales concessions on active pending sales.

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How will this impact Las Vegas home buyers?

FHA states that a declining market is any “neighborhood, market area, or region that demonstrates a decline in prices or deterioration in other market conditions as evidenced by an oversupply of existing inventory or extended marketing times.” The 1004MC form will identify a declining trend in the market. FHA reminds Direct Endorsed lenders that both the lender and the appraiser are equally responsible for the integrity, accuracy, and thoroughness of an appraisal submitted to FHA.

How should real estate agents and sellers respond to the new FHA Appraisal Guidelines?

You can read how some real estate agents feel about this here and here.  Basically, agents need to be prepared to give a value of a property based on the most recent 90 days (three months) neighborhood comps to avoid complications on a new purchase transaction.

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Online Resources

What everyone ought to know about home appraisals

Appraisal Scoop – 1004MC – April Fools?

Revised Fannie Mae Guidelines

Appraiser Forum

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Top 5 Las Vegas Mortgage Links / Articles / Questions

1. Las Vegas First-Time Home Buyer Frequently Asked Questions
2. Las Vegas Mortgage – How Much Can I Borrow?
3. What Are The Current Mortgage Interest Rates?
4. Applying For A Las Vegas Mortgage – What Documentation Do I Need?
5. How Does The Mortgage Approval and Funding Process Work?

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Raintree Mortgage (Las Vegas)

9488 West Flamingo Rd. Suite 102
Las Vegas, NV 89147 | NV LIC 2511
702-432-5626 | Email

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