What You Need to Know!
Maybe a prospective borrower has obtained a better interest rate/points with another lender OR maybe a Loan Officer has resigned his/her position with their current employer and has persuaded his/her loan applicants to seek a loan with their new employer?
It’s important for lenders to be aware of the established protocols for handling such requests.
In the recently issued 4000.1 Handbook (which became effective for all loans obtaining their case number on and after 9/14/15), HUD/FHA has established a goal for lenders to process case reassignment requests within five (5) business days of receipt.
Previously, HUD did not establish a specific timeframe for processing case reassignment requests but expected lenders to cooperate in these types of situations. The real objective is that FHA expects lenders to accommodate the borrower’s wishes in a timely manner and not hold their case number and/or appraisal hostage when approached by one of their competitors with a case reassignment request.
If an appraisal report has already been completed at the time a case reassignment request is received, the lender (not the appraiser) is responsible for providing the appraisal report to the new lender.
Also, the client name on the appraisal report does not need to reflect the new lender’s name. The appraiser’s fee can be retained by the appraiser.
However, if there is a new borrower – the new lender must collect an appraisal fee from the new borrower and send the fee to the original lender who, in turn, must provide a refund to the original borrower. If the new lender finds deficiencies (which must be documented) in the appraisal report, the new lender must then order a new appraisal.
In case you are wondering about what happens if a lender is unresponsive to a request to transfer an FHA case number/appraisal report, it should be noted that HUD staff is empowered to cancel the existing case number so that a new case number can be obtained by the new lender.
Documentation such as a letter from the new lender & borrower outlining what steps they took in trying to accomplish the transfer (to no avail) and a list fees involved can be sent via e-mail to “email@example.com”.
When transmitting such documentation, a lender should make sure that they provide their contact information and list “Case Transfer” and the case number in the subject line.
Also, if HUD begins to recognize a pattern or trend involving a particular lender that is not cooperating in making timely reassignments– that could result in that lender being targeted for an on-site review by HUD’s Quality Assurance Division staff.
So, the bottom line is that it is better for all parties involved to freely cooperate in transferring FHA case numbers and appraisals.
Lenders do NOT want to create more work for HUD staff and be viewed as uncooperative in the processing of case reassignment requests – only bad things can result from that approach!
A word to the wise!