Mortgage Compliance

FHA Changes its Mind about Reporting 3 Year Sales Comps History

FHA-3-Year-Comps
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FHA-3-Year-CompsWhat will come as welcome news to FHA Roster Appraisers – FHA has decided to rescind its short-lived policy to require appraisers to report the date(s) and sales price(s), that occurred within three years of the effective date of the appraisal, for each comparable sale.

In its much-publicized implementation of the 4000.1 Handbook and the accompanying Single Family Appraisal Report and Data Delivery Guide, many industry groups questioned the necessity of providing 3-year sales histories on comparable sales as this was not the industry standard.

Although a 3-year sales history is required to be provided on the subject property that is being appraised, having to research the sales histories for each comparable sale would prove to be time-consuming and unnecessary according to many FHA appraisers.

FHA’s Property Flipping Rule focuses on the property being acquired within 90 days and being sold for more than double in a year’s time.  Why then should a three-year sales history of the comparable sales be deemed necessary? Although it may be beneficial to track trends in home values – that type of information is provided in the Market Conditions Addendum that is provided along with every appraisal report.

This existing policy has only been in effect for less than 2 months and was the topic of much discussion at the various industry webinars and conferences conducted by HUD/FHA staff prior to the September 14, 2015, implementation date.

What is most troubling, however, is the way that FHA has “announced” this revision in policy.  In a Notice dated November 5, 2015 (FHA Info #15-86) – the major topic being discussed is the Electronic Appraisal Delivery (EAD) Portal Onboarding Phase Two that begins November 15, 2015.

Near the bottom of this Notice, there is a reference to changes made to the Single Family Housing Appraisal Report and Data Delivery Guide.  The third bulleted item indicates that this Guide has been aligned for “the reporting of comparable sales from “within three years to within one year of the effective date of the appraisal”.

Were you aware of this FHA policy change before reading this Blog Post?

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You are encouraged to keep reading LoanLogics Blog Posts and Newsletters to stay current on the significant Agencies & GSE’s policy changes.

For those of you that want to obtain something in writing relative to this FHA policy change, the SF Housing Appraisal Report & Data Delivery Guide can be accessed by clicking this link.

Gerry Glavey

About the Author

Gerry Glavey

Gerard (Gerry) Glavey is Senior Vice President / Chief Credit Officer for LoanLogics. Gerry has decades of experience working in residential mortgage credit and compliance and brings insights that few in the industry can match. In his role, he develops new services and provides support for all post close quality control and quality assurance, pre-close quality control, due diligence services, and document processing services. He spent 37 years with the US Department of Housing and Urban Development, where most recently he was the Director, Processing and Underwriting Division for the Home Ownership Center (HOC) in Philadelphia. In this capacity, Mr. Glavey was responsible for the administration of all HUD/FHA Single Family Loan Origination activities, including underwriting, appraisal and endorsement for the 16 state jurisdiction of this HOC.
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Gerry Glavey

About Gerry Glavey

Gerard (Gerry) Glavey is Senior Vice President / Chief Credit Officer for LoanLogics. Gerry has decades of experience working in residential mortgage credit and compliance and brings insights that few in the industry can match. In his role, he develops new services and provides support for all post close quality control and quality assurance, pre-close quality control, due diligence services, and document processing services. He spent 37 years with the US Department of Housing and Urban Development, where most recently he was the Director, Processing and Underwriting Division for the Home Ownership Center (HOC) in Philadelphia. In this capacity, Mr. Glavey was responsible for the administration of all HUD/FHA Single Family Loan Origination activities, including underwriting, appraisal and endorsement for the 16 state jurisdiction of this HOC.
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