From USDA 5/14/2015 clarification – Property and Appraisal Requirements
May 14, 2015
Property and Appraisal Requirements
This message provides three technical clarifications to Chapter 12 of the 3555 Guaranteed Loan Technical Handbook (HB-1-3555) concerning property and appraisal requirements. The 3555 Handbook will be updated in the near future to reflect these clarifications which are effective immediately.
• HB-1-3555 makes reference to appraisers using the cost approach when appraising residential property. The regulation, found at 7 CFR 3555, requires a fair market value approach and not a cost approach. The cost approach is not required for the Guaranteed Loan Program.
• Similarly, the regulation does not require that the Agency be listed by the lender’s appraiser as an “intended user.” Whether the Agency is listed as an intended user or not has no effect whatsoever on the fair market value. While the Agency may guarantee these loans, they are the lender’s loan, and the intended user is the lender.
• The Department of Housing and Urban Development (HUD) will soon replace two of its handbooks for property standards, HUD Handbooks 4105.2 and 4905.1. The successor replacing the two handbooks will be HUD Handbook 4000.1. Chapter 12 of HB-1-3555 refers to the two handbooks which will be replaced. When HUD Handbook 4000.1 becomes effective, it will also become effective for purposes of HB-1-3555.
Questions regarding this implementation may be directed to the Single Family Housing Guaranteed Loan Division at (202) 720-1452 or your State Guaranteed Coordinator. See “Contact Us” at the following website, and then click on “Guaranteed” to select a state representative: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
*this site is in no way affiliated with USDA and is only passing this notice along as a public service