FHA Loan Appraisals to Raise Costs for Homebuyers
by Pete Belcastro.
At one time in 2009-10, FHA backed mortgage loans were making up three quarters of the real estate market. Today, FHA backed loans made up a much smaller percentage of the market so this information won’t effect all new home sales. But if, after September 15, you use an FHA loan the appraisal of that property changes in big ways. For examples, appraisers will be required to sign off on a number of items that before this they have not had to use in reaching an appraised price. We’re not talking little stuff either.
Appraisers for example will have turn on lights, flush toilets, check for hot water, check electrical wiring for ample wattage and even check septic systems for any signs of repair. They must also check all the plumbing in the house to make sure its up to code and and even report if the roof is not fully visible to the appraiser,giving the underwriter the authority to obtain a roof inspection.
It may sound reasonable, but here’s what will happen. Appraisers could refuse to perform work for FHA loans. Or, appraisers are going to simply say the electrical system needs an inspection, or the plumbing does or certainly the septic system needs a full inspection.
This isn’t the appraisers job, but underwiters say they need this information to better determine the true value of the proeprty they are securing. Which do you believe? Will appraisers take this burden on or will they opt out from FHA loan appraisals? Will they revolt enough to keep some of the new federal rules from taking effect? I doubt it but expect homebuyers to have to pay for unwanted inspections in areas appraisaers won’t take the risk of signing off on when they aren’t an expert. Too much is on the line. So big government steps in and in trying to determine better value will for buyers and sellers to pay for additional, unwanted, inspections. If underwriters can’t get value out of current appraising rules, then fire the underwriters and those who came up with this horrible idea.