3-3: REQUIREMENTS FOR APPRAISALS (11/18/1994)

Owned by Kacey Olson
Last updated: Nov 21, 2018
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© HUD Single Family Housing Policy Handbook 4235.1

The financial soundness of the HECM program requires an accurate determination of property value and property condition. The eventual recovery of the mortgage proceeds is highly dependent on receiving a predictable sum from the sale or refinance of the subject property.

A. The appraisal must be completed on the URAR in accordance with current HUD Valuation policy.

1) When estimating value, the appraiser should carefully analyze the condition of the property and the surrounding neighborhood.

2) Repairs required to allow the property to meet Minimum Property Standards for existing properties (see HUD Handbook 4905.1) and the presence of defective paint surfaces should be explicitly noted.

3) A property should not be rejected by the appraiser. If required repairs are estimated to cost more than 30% of the maximum claim amount (see Paragraph 3-8), the Valuation Branch of the local HUD office should review the property to determine if it is acceptable for the program.

4) The appraiser should include estimates of taxes and hazard insurance.

B. At the discretion of the local HUD office, appraisals performed for the Section 203(b) and 234(c) mortgage insurance programs may be used for HECMs.

C. A Certificate of Reasonable Value from the Department of Veterans Affairs (VA-CRV) cannot be substituted for an FHA appraisal.