Appraisal on Foreclosure Property

Posted By: Beckster

Appraisal on Foreclosure Property - 04/04/12 03:53 PM

We have an application for a loan to purchase a foreclosed property. The foreclosure is owned by HUD. Our bank wanted to schedule an appraisal on the property and we were told that they only perform appraisals every 4 months and if we would want one scheduled outside of this timeline, the applicant would have to pay $400 to have the house dewinterized.

Our question is in the case of a foreclosure owned by HUD, can the last appraisal be used being it is in HUD's name? The Interagency guidelines from December 2010 state the bank can use an appraisal prepared for another financial service institution provided certain conditions are met. What are those conditions? Any guidance would be appreciated.
Posted By: HRH Okie Banker

Re: Appraisal on Foreclosure Property - 04/04/12 06:48 PM

You might be able to use the existing HUD appraisal if you find it conforms the the requirement of the Dec 2010 Guidelines as follows:

Appraisals from Other Financial Services Institutions. The Agenciesí appraisal regulations specify that an institution may use an appraisal that was prepared by an appraiser engaged directly by another financial services institution, provided the institution determines that the appraisal conforms to the Agenciesí appraisal regulations and is otherwise acceptable. An institution should assess whether to use the appraisal prior to making a credit decision. An institution should subject such appraisals to at least the same level of review that the institution performs on appraisals it obtains directly for similar properties and document its review in the credit file. The documentation of the review should support the institutionís reliance on the appraisal. Among other considerations, an institution should confirm that:
o The appraiser was engaged directly by the other financial services institution.
o The appraiser had no direct, indirect, or prospective interest, financial or otherwise, in the property or transaction.
o The financial services institution (not the borrower) ordered the appraisal. For example, an engagement letter should show that the financial services institution, not the borrower, engaged the appraiser.
An institution must not accept an appraisal that has been readdressed or altered by the appraiser with the intent to conceal the original client. Altering an appraisal report in a manner that conceals the original client or intended users of the appraisal is misleading, does not conform to USPAP, and violates the Agenciesí appraisal regulations.

Hopefully you have something in your bank's appaisal policy that details what is required when accepting an appraisal prepared for another financial institution.