With the new changes that became effective September 14, 2015 there is a perception of increased scope of work and liability. The perception is house appraisers are being asked to perform the work of property inspectors, and would be violating the competency rule of Uniform Standards of Professional Appraisal Practice (USPAP). As a result many house appraisers are choosing not to perform FHA appraisals or significantly increase their fees.
There are three main areas of concern:
- Crawl Spaces.
I talked about the appliances and offered up some suggestions that might be helpful and make things go a little smoother for an FHA appraisal. This appraisal post is going to address the attic observation and reporting requirements for an FHA appraisal.
Attic Observation Requirements
The Appraiser must observe the interiors of all attic spaces.
The Appraiser is not required to disturb insulation, move personal items, furniture, equipment or debris that obstructs access or visibility. If unable to view the area safely in their entirety, the Appraiser must contact the Mortgagee and reschedule a time when a complete visual observation can be performed, or complete the appraisal subject to inspection by a qualified third party. In cases where access through a scuttle is limited and the Appraiser cannot fully enter the attic, the insertion of at least the head and shoulders of the Appraiser will suffice.
If there is evidence of a deficient condition (such as a water-stained ceiling, insufficient ventilation, or smell of mold), the Appraiser must report this condition, and render the appraisal subject to inspection and repairs if necessary.
If there is no access or scuttle, the Appraiser must report the lack of accessibility to the area in the appraisal report. There is no requirement to cut open walls, ceilings or floors.
An observation performed in accordance with these guidelines is visual and is not technically exhaustive.
HUD HANDBOOK 4000.1, page 488
What’s The Problem?
The language complete visual observation and entirety is perceived by many house appraisers as they must walk or in most cases crawl the ceiling joists to be able to do that. Who wants to do that? Nobody wants to fall in plume of insulation or worse fall through the ceiling.
- Since we are not structural engineers or home inspectors if we were to indicate there is a support structure that is deficient in some way we would be in violation of the competency rule in USPAP as house appraisers do not have the expertise in uncovering defects in the structure and materials of various types of property.
I Understand But…
- We must pay closer attention to the word safely. HUD does not expect house appraisers to endanger themselves when doing an FHA appraisal. House appraisers can either make the appraisal subject to inspection by a qualified third party or at least perform a head and shoulders observation.
- HUD does not expect house appraisers to be structural engineers or home inspectors. They clearly state it’s a visual observation and not technically exhaustive. The way they wrote it gives house appraisers a method of dealing with this issue without speaking about something they are not trained or licensed for. House appraisers are simply to observe and report what they see. If they see something deficient the appraisal is made subject to an inspection of a qualified 3rd party that is trained and licensed.
- Below are some examples of deficient conditions that do not require house appraisers to be structural engineers or home inspectors. Make sure to watch the 60 second video which will show you what they look like.
- Evidence of holes.
- Missing insulation.
- Support structure not in tact or damaged.
- Wood rot.
- Water damage visible from the interior.
- No ventilation by vent, fan or window.
- Infestation (droppings).
- Fallen or disconnected heating & cooling vent pipes.
- Frayed or gnawed wiring.
- Evidence of prior fire damage.
What Can You Do?
Move all personal items, furniture or debris that obstructs access to the attic. If there are Christmas box decorations or anything else that would obstruct visibility inside the attic I would take it out. I would also recommend having a ladder that is proportionate in size with the scuttle.
My next post will address what a house appraiser must do when inspecting the crawl space for an FHA appraisal.
Do you have FHA appraisal questions? Give me a call or better yet I can come to your office and speak to your staff and clear up any misconceptions.
Did I leave anything out or do you want to join the conversation? Let me know in the comments below.
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Thanks for reading,