December 11, 2009 | Considering a Reverse Mortgage? Act Now Before FHA’s New Rules Go Into Effect January 1st, 2010

Considering a Reverse Mortgage? Act Now Before FHA’s New Rules Go Into Effect January 1st, 2010

To ensure appraiser independence, FHA-approved lenders in 2010 will be prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan. As a result, a random appraiser will be selected to appraise a borrower’s property and the borrower will have to pay for the appraisal in advance, with the average cost of an FHA appraisal of about $400.  In the past, originators were allowed to order appraisals directly and many lenders financed the appraisal fee for borrowers.

While the FHA is implementing this new rule to ensure accurate appraisals, there are many professionals in the field who have expressed concern that the HVCC has the potential to increase costs to borrowers (upfront appraisal) and significantly hinder a borrower’s ability to obtain legitimate and reliable appraisals. Since the implementation of the HVCC for conventional financing on May 1, there have been numerous examples of higher costs for appraisals, poor service, the inability to use one appraisal for more than one lender, questionable quality of appraisals, and the inability to make corrections to inaccurate information on an appraisal report. If you’ve considered a Reverse Mortgage in the past the time to move forward is now as the cost of waiting may be substantial.

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