Hello Paula,I can shed a little light on your issues. Firstly, HUD has a manual for their first trust deed lending program that is over 1100 pages long for loans insured under their FHA insurance (HUD) loan programs, of which the HECM reverse mortgage is one and a separate manual for the appraisal portion dealing with properties and their valuation that is over 900 pages long. DE-designated (Direct Endorsement) underwriters can issue underwriting approvals for FHA loans. They must have sufficient years of experience and have underwritten enough loans that HUD has reviewed that they have been given this designation, but most still need to learn all the rules contained in these manuals that are ever-changing/updating. There is yet another separate manual, the HUD 4235, which contains all the information for the reverse mortgage program. It is virtually impossible to give advance notice to every borrower of every situation about them or their property that could affect their application. I do wish that it would be possible to have everything in one place that would be quick and easy to read and that would allow all borrowers to know if they and their properties qualified or had any issues without waiting for an appraisal, but it just isn't possible. HUD counselors are not lenders or appraisers, and therefore, they are warned NOT to try to tell borrowers about loans or appraisal issues so as not to assure them something is OK or scare them away from a loan for which they would otherwise qualify simply because they don't know the rules and give borrowers bad information.Here you will find the appraisal checklist we give to all borrowers at the application. It may have covered most of your issues. Still, HUD does not require this disclosure, so not all lenders offer the same help. We have originated and closed only reverse mortgages for 19 years, so we find that this helps as you can see by the checklist, it mentions chipping and peeling paint, exposed electrical wiring, unpainted wood surfaces, water leaks, staircases without handrails, and common roof issues. It also says it is not a complete list; it is just some of the more common issues we run into, but many more things have come up over the years that we could not put into this notice. Borrowers still have a choice when some of these items are pointed out in advance to keep from having to fix or repair them later. Painted surfaces can be painted quickly and easily in most cases with a small amount of paint from your local hardware store to avoid the issue of chipped and peeling paint (many paints contain lead, and HUD will not allow it). Bare wood allows for termites and other wood-destroying pests, so it is another concern by HUD. Suppose these conditions are corrected before the appraiser comes. In that case, it saves you some money on reinspection, so we point them out in advance. Some repairs cannot be done before the appraisal due to the scope of the repair, because of weather, the time it takes to have the repair completed, or possibly the cost of the repair. Luckily, most needed repairs can be made after the loan closes if the borrower needs to do that using a "repair set aside." This is where the borrower gets an estimate from a contractor of their choice for the repair. The funds are left in the loan at an amount of 1.5 times the cost of the repair and then disbursed after the repair is completed. Funds above the repair cost are freed up for availability to the borrower in accordance with the loan terms. Just about the only time a repair set aside is not allowed is when the repair is health and safety related, and that would include such things as no stair railings where someone could fall, mold that is unhealthful, exposed electrical wiring that could cause shock or fires, etc. Most repairs are completed after the loan closes, though, and from what you are telling me, it sounds like all of yours would qualify for a repair set aside as well.It really isn't feasible to ask all the questions that could come up in an appraisal, which is why HUD considers the appraiser their eyes and ears in the field. Your lender did not give you a checklist like the one we use, but it sounds like your loan officer was pretty good about pointing out items that an appraiser may include in his/her report. The may is an important distinction because appraisal is an art, not a science. There is no way to know if the appraiser will state that the items need repair or just note them or consider them in the condition adjustment when the home's value is tallied and let it go. If you plan to do the repairs anyway, you may want to let the appraisal be completed and let the chips fall where they may, knowing you might need to get those items repaired later or you may want to put a little paint on the areas you know need it. No one can tell you for sure in advance what will be required, and from what you are telling me you can complete the repairs after closing anyway (which I cannot guarantee you because I can't see any of it and I don't see an appraiser's comment).Oh, and to answer your last comments/concerns, HUD and the lender are not overly concerned with how you maintain your home and will not ever check it in the future for paint, etc., but they do reserve the right to make sure that their security for the loan is adequately protected (just as is the case with any other loan). They can require you to keep your taxes paid, your homeowner's insurance paid, and the home maintained reasonably. I agree that the reasonable manner could be more specific, but they do not want to start checking to see if you are mowing your lawn or pulling the weeds in your flower beds! They do want to be able to intervene, though, if the city were to post notices that you are about to be red-tagged because the weeds and brush are so overgrown and dead that they have become a fire hazard. Or in the case of one home I was involved with many years ago, the people let the pool go for so long that it became a "swamp," the city determined that it was breeding mosquitoes and was a health and safety violation. In those instances, the city or municipality can enter the property, board it up if needed and take further actions so the lender or HUD can enforce provisions in the Deed of Trust or Mortgage to require the borrower to maintain the home in a reasonable manner. This is the only time in 45 years I have ever seen HUD move on a property owner due to them not maintaining the home in a reasonable manner. As the lender, our inspector would not approach the home due to the "stench and insects" coming from the backyard. The neighbors kept calling code enforcement for the city, and HUD became involved after they posted the red tags.I hope this explains things for you. There is no reason to be angry; the maintenance items are there, and how you deal with them is up to you. If you can do them before the appraiser arrives, it might save you some time and a little cost later (if the appraiser needs to come out and reinspect the home to check for completion, there is a fee for that). If you need to complete them after the closing, it is possible, and a procedure is set up to accommodate your needs. Let me know if you have any questions.

Hello Davis, The appraiser will do his or her best to assign a value to the home. Their job is not to determine whether the property meets HUD requirements for the loan but to use their professional training, education, and experience to give the lender and the borrower their estimate of value as of a certain time. A snapshot if you will as of the date, they compile their information and complete their report. Based on the appraiser's estimate of value, your home may be worth a certain amount, but that does not mean that it meets all requirements for the HUD insured loan. HUD requires that appraisers use properties that are similar, sold within certain timeframes and are located near the property being appraised. The fact that the appraiser was unable to find a similar sale closer to your home may not even mean that his or her estimate of value was not accurate, but without the requisite number of sales in the immediate area with the proximity to your home, HUD is not willing to insure the loan. If the lender does not believe they can get the required HUD insurance, they will not close the loan. Any loan that HUD will not insure within 9 months of closing would require the lender to call the loan due and payable and no lender wants to close a loan that they would need to call due or foreclose just 9 months later. The lender cannot close HUD Home Equity Conversion Mortgages (HECM's) that they know or firmly believe does not meet HUD underwriting requirements. However, you can take the appraisal to another lender to see if they are more willing to work with you and the appraiser to see if there are other sales available. If the lender has declined the loan, they are no longer willing to try to find other alternatives to close it. It could be that there really are no ways to make the property comply with HUD requirements based on the current sales data available at this time, but it surely doesn't hurt to get a second opinion. You already paid for the appraisal, and you can use the same one until it expires so my advice would be to contact a second lender to get another set of eyes on the situation to see if there is anything the first lender might have missed.

Hi Virginia, It's typically up to the appraiser to make this call. The unpermitted space would need to be built in a workmanlike manner, would need to conform to the neighborhood and zoning restrictions. There would also need to be adequate comparable sales available to support additional value for the appraiser to be able to give value to this space. If the unpermitted room didn't meet all these requirements, there is a possibility that the appraiser would not include the space in their calculations but may also need to consider tear down costs when computing value depending on the circumstances. In addition to it not being considered in the square footage for appraisal purposes, depending on what factors unpermitted space failed to meet HUD requirements, it is possible HUD would not allow the existence of the space/room in a property securing a loan that they were going to insure (such as a reverse mortgage) depending on the nature of the addition. You really should check with a lender in advance to discuss your specific circumstances if you have any unpermitted space. It might be something with which the lender can work with relative ease, or it could be something that could render the property ineligible for loan secured by HUD-insured financing.

Hello Greg, The lender can do a home inspection at their discretion but I have not heard of a servicer even doing them annually on a regular basis. Borrowers fill out an occupancy certification that is sent to the property and as long as there are no issues with the timely receipt of the signed form back from the borrower, the servicer does not usually schedule a personal visit. Typically, the inspection is done when the lender needs to do an occupancy inspection because they have not received an answer to their requested certification and is limited to a visual inspection of the exterior of the home. Unless their exterior inspection indicates noticeable damages or issues, an interior inspection is not normally warranted. My mother had her reverse mortgage for 13 years before she was forced to move to assisted living and she never had a physical inspection during that time. It would not have been an issue because she always lived there and her home was in better condition due to the improvements, she made with her reverse mortgage proceeds for the entire time she lived in the property after she got her loan than before she received the loan, but it just never happened. Can anyone promise you that the lender will never perform a physical inspection of your mom's home? No, they cannot but your mom doesn't need to worry even if they do as long as the property is maintained in a reasonable manner.

Hi Tinah, That right there is the $64 question! There was a time when lenders could give you one answer and tell you that if you were located more than 50 miles from a metropolitan area, there would also be a trip charge added to it based on the location. Those days are gone for now at least. The market has been so heated with the rates being as low as they have been for as long as they have been, that appraisers have been charging exorbitant fees in many areas of the country. Depending on where the property is in Texas, how unique the home is and if there are similar properties in the area that have sold recently, that appraisal could cost anywhere from $525 to $1,000 in some cases. The lender does not set the appraiser's fees and borrowers are certainly able to refuse an appraiser's cost, but in some cases it comes down to only a few appraisers in an area that are even able to take the assignment. In some parts of the country the costs are routinely higher and the timeframe to get an appraisal is typically 4 to 6 weeks and longer in some instances. We fully expect the costs to come back down and the timeframes to improve once the market slows a little but for the time being, appraisals are almost always the last piece of information we receive on each file. The best thing to do to find out what an appraisal would run for your individual home would be to contact a lender with the address and property type so they can contact the appraisal management company and get a quote to be accurate.

Hello Teri, Not only is the appraiser not given any details of the loan transaction, but the lender is also forbidden by law to discuss the valuation process with the appraiser. If it is a purchase transaction the appraiser would know the purchase price but that would be all. You can let the appraiser know about all recent improvements/upgrades to the property and then it will be up the appraiser to determine if your particular items warrant an adjustment based on the comparable sales used. For example, if all the sales used as comparables are original equipment, the appraiser may use a condition adjustment. To use a line-item adjustment for that particular item alone, according to HUD, the appraiser would need to be able to provide sales with and without those items to support the value of such upgrades. For example, properties with pools and patios may be easy to find sales with and without those amenities to determine what an informed buyer will pay for those items. Some of the other items you mention may help the overall condition of the home, but it would be very difficult for the appraiser to pinpoint the amount a buyer is willing to pay more for a home with shutters or screens than one without and therefore any adjustments for those specific items would be strictly subjective and HUD does not allow subjective adjustments. Appraisals are probably one of the most emotional and most questioned areas of the lending process. What many people feel should make their home appraise for more money than other homes are deemed more personal preference items or may help a home sell faster, but there really is no way for an appraiser to value those items. And in fact, on a sale between an informed seller and an informed buyer, it may even bring a higher price but on a refinance transaction, you don't have that meeting of the minds and agreement of a value. Therefore, the appraiser must stick to HUD appraisal requirements even if he or she also likes the improvements and may deep down truly believe that they will bring a higher price on a sale. If they cannot support that belief by using closed sales with actual data, there will not be positive adjustments beyond just the overall condition adjustment (assuming the comparable sales do not also have similar or other upgrades that offset the ones mentioned).

Hello Grant, Under normal circumstances, the process is usually a couple weeks from start to finish in most locations with rural areas taking even longer but we are not in normal times right now. The need of borrowers as a result of the pandemic combined with extreme volumes brought on by low rates on forward loans has caused a huge delay in appraisals and it is not uncommon to see some appraisals taking over 30 days to as much as 2 months in remote areas or if the property is unique with few similar sales available. An FHA appraisal is much more labor intensive than a forward loan and so appraisers can accept assignments for a few FHA loans (forward or reverse) or many properties being appraised for standard, non-government, forward loans. It is getting harder to find appraisers who will accept the assignments at this time and unfortunately, lenders and borrowers alike are stuck with extended processing times now. Some appraisers/appraisal management companies will allow a rush order for additional cost if they have the capacity but I do not recommend it unless you really have a dire need because it is not usually all that much faster and the fees are sometimes quite a bit higher. But it is something you can ask your lender to check on if you are in need.

Hello Judy, The lender would love to see the appraisal come in as high as possible while being supported for several reasons. The higher the value, the more money the borrower receives and therefore, the less chance the borrower will cancel, the less chance the loan will be insufficient to pay off any existing liens on the property and the more satisfied the homeowner will be. All lenders know the loan will be insured by HUD and so they are pleased when the value is supported at a number at or above the value the homeowner expected at the start of the transaction. But the lender has no control over the appraisal process by design. Since the meltdown of the mortgage market in 2008 -2009, many of the issues experienced by HUD and others were blamed on inflated property values (appraisals). Since that time, Appraiser Independence Laws and rules were passed that insulate appraisers from lenders, originators and borrowers that do not even allow them from talking to appraisers about the value. And now with the HUD reverse mortgage loans, the appraisal is delivered to HUD before it gets to the lender and HUD decides if a second appraisal must be performed if they believe the value is not sufficiently supported. HUD has made it mandatory that lenders do not deliver an approval under the reverse mortgage program to borrowers until after HUD has received and approved the appraisal. So, the bottom line is that there is no benefit whatsoever to a lender for your appraisal to come in low. In fact, a low appraisal is often the cause of much more work, friction with the borrower and in some cases cancellations if the value differential is too much for the borrower to accept or no longer allows the loan to work for their circumstances. HUD is very concerned that the value of the property is not inflated or over-stated. HUD insures the loan against loss to lenders, investors and borrowers and their heirs by ensuring that they will never be required to pay more than the property is worth at the end of the loan. Between 2012 and 2018 HUD suffered very large losses on the program that was attributed in part to inflated appraisals. Therefore I think it is safe to say that while HUD does not want the appraisal to come in "low", they are extremely cautious to be sure that the values are not overstated and that all values are fully supported. In some instances, the sales in the area make assessing a value extremely easy because they are all within a tight range and the houses are all very similar. Some cases are not so easy. When the houses vary more and the comparable sales are not nearly so homogeneous, I think that the appraisers are affected by the changes in the valuation environment and tend to not to bring in the higher values. But I also believe that when the sales exist to support the value, the good appraisers are still doing a good job of reporting a reasonable value and supporting their conclusion. And remember, if you do get an appraisal that is unreasonable, you can rebut the value by using factual information. You cannot say you disagree with an opinion of value based on your opinion, but if you find factual errors or better/more recent sales that support your opinion, you can request a reconsideration. Examples of rebuttals that would not be considered would be if you believe your home is in better condition than the appraiser stated, or you think your landscaping is better, or you like the style of your home much better than any of the sales he used because those are all personal opinions and preferences. Examples of things that might help you are sales the appraiser did not use that are more similar to your home that sold more recently than the sales the appraiser used and are closer, the appraiser used the wrong bedroom bathroom count for your home, the appraiser used the wrong square footage for your home, etc. These are all objective differences, not subjective and can be used to request reconsideration. While your lender cannot request the reconsideration for you, they are only too happy to help.

Hello Lorit, We do not sell reverse mortgage loans to FNMA and the rules for the federally insured product originate from HUD. HUD put out guidance in their Mortgagee Letter on March 27th (Friday of last week) regarding appraisals that allow for "drive-by" and "desk" appraisals and we are certainly going to interpret that guidance and put it into our procedures. There are still a few questions regarding the HUD notice regarding the full process that will be required and when, but it is clear that their intention is to allow for the use of a procedure that does not include the appraiser entering the property for valuations completed HECM reverse mortgage loans until May 17, 2020. Jumbo reverse mortgage loans would be determined by the investors that offer the products. There has been no indication at this time that they have changed their willingness to allow for a drive by appraisal only. For the time being, they still require a full appraisal with an interior inspection. They may follow the HUD policy but if the full appraisals with interior inspections become unavailable, they could also suspend the programs until the appraisals are available once again. We do not have that information currently.

Hello Patricia, Borrowers can cure any issues that can be cured as noted on the appraisal and often do. Most of the time, there is a reinspection required where the appraiser will need to reinspect the property and issue a completion certificate to the appraisal and there is a cost for the appraiser to visit the home again and do this inspection, but the time involved is usually fairly short and as long as borrowers make sure that they have the work completed when the appraiser makes the trip out, it doesn't usually present much of a delay. The delays really occur when the work takes a long time to complete, the borrowers don't complete what the appraiser lists (I.e. the appraiser lists mold and exposed wiring that need to be repaired and the borrowers only address the mold requiring a second trip from the appraiser later to inspect the wiring at an additional cost). It can also create a delay if the appraiser is gone or extremely busy when the time comes for the reinspection and the appraiser can't make it back out to the house for a week or two. For those reasons, we always recommend that borrowers try to do any work they know will be required before the appraisal if possible. Appraisers also use condition as one of the adjustments to determine value, so it is always to the borrower's advantage to present the best case when the appraiser appraises the home. However, if you must wait until afterward or you are concerned about approval and want to be sure before you do any additional work at added costs, it can be done after the appraisal and the repairs can be based on the requirements of the lender and the appraiser if you prefer.

Hello Austin, If there is a reinspection required, the appraiser will charge an additional fee for this. Depending on circumstances like what needs to be inspected and your location, the fee can vary. If you are in a remote area, the cost will go up if there is a substantial travel time.

Hello James, Every lender must set up their own appraisal management procedures within their company in accordance with HUD rules and state laws. HUD rules since about 2010 under their Appraiser Independence Guidelines state that no originator or borrower can choose the appraiser. The lender can use a panel of appraisers if an employee who has no tie to production chooses the individual appraiser and the company uses strict quality control measures. Otherwise, most companies use Appraisal Management Companies who are supposed to be independent companies that perform this function and are not governed by the lender and takes the appraiser choice out of the hands of the lender so that the company is not required to maintain a panel throughout the nation. We do not perform appraisals and must order our appraisals from an independent management company. They choose the appraiser and we have no input into the choice in advance nor can we suggest a value in any way to that appraiser. This gives the appraiser complete autonomy to determine a value, free from lender or borrower input or pressure. That's the way it is supposed to work but unfortunately, some companies have found a way to corrupt this process as well and HUD is not helping the matter. Some larger lenders own all of part of the Appraisal Management Company (AMC) they use for the appraisals. This does not violate HUD's rules because the person at the AMC who chooses the appraiser has no tie to the production division of the company and therefore, no conflict of interest to try to inflate appraisals so HUD allows it. However, we believe this hurts borrowers and have written about how but will tell you again now. When a borrower chooses to later move to another lender, the original lender must transfer the Case Number under the HUD rules to the new lender. In other words, if you decide you are not getting the best service or loan terms later and decide you want to go to another lender, you should be able to transfer the HUD Case Number and the appraisal you paid for and complete your loan with a different lender under the more favorable terms, right? Not always so. Lender owned AMC's will not allow the appraisers to complete any additional work for new lenders if the appraisal contains any deficiencies and for some reason, it seems all appraisal transfers from lender owned AMC's do! It may just be the skeptic in me but it sure seems that the lender owned AMC's almost intentionally make errors and omissions knowing that they can correct them to close the loan but that they will only do so if it is their company closing the loan. We have gotten to the point that we require the borrower's copy of the appraisal before we will even consider a case transfer request from some companies due to the errors we know are always present and those companies' appraisers and we know that we will not be able to use the appraisals when the AMC's refuse to correct errors. This just angers borrower because neither the law nor HUD will require appraisers to correct errors and omissions, regardless of how egregious, from appraisals assigned to subsequent lenders. When you throw in the fact that HUD now requires a second appraisal in a lot of circumstances, borrowers may receive a request for a second or even 3rd appraisal if this should happen. Therefore, not only do we not get involved in other lenders' appraisals, we often decline to accept Case Transfers now for just this reason. I strongly suggest that you do all your homework in advance to be sure that the lender you choose is the one with which you want to complete the transaction before you start.

Hello Mariloy, You have to right to apply anywhere you wish. I just would hate to see you spend money needlessly if the sales to determine a valid opinion of value really are not available. Make sure you let your new lender know that you did talk to one who was having a difficult time locating comparable sales so that they do some checking before they order an appraisal and start spending your money if the sales are not available to support a value or so that the property does not meet HUD requirements.

Hello Casey, You can always have an appraisal performed but I don't advise it unless it is in the course of a loan request and here's why. An appraisal is one person's opinion of value and it is a snapshot in time. The appraisal represents one appraiser's opinion of value based on the information he/she reviewed which led them to a value. There could be other information that they did not see or use that could lead another appraiser to another value or there could be other homes that sell the next week that could influence a higher or lower value. An appraisal is fine for lending purposes because you need the value to be established as of a certain date to decide, but the appraisal may start to become outdated as soon as the ink dries if more data becomes available. The lender will use it, but if you are making future that appraisal may no longer be valid for your purposes within a very short time. I suggest that you look online at recent sales and see what properties like yours in the area are selling for. This is the tricky part though, don't get emotionally invested in your research! If you see a house that has been completely remodeled from top to bottom and yours is not, or if it is quite a bit bigger, or has different bedroom and bathroom count, try not to use those houses in your estimate because an appraiser and a lender will not. Don't get caught in the trap of looking at all listings and think that your house is worth what other homes are listing for if none of them are selling for those listing prices. Try to find recent sales of similar homes to see what houses that have the same room count and square footage as your home, in similar condition have sold for. And don't think that if you do have a few upgrades that others do not, that will equate to more "value". If an appraiser can't find a similar home with those upgrades to justify a value for those upgrades, many times they cannot give them value. An example of this is an outbuilding that no other properties in your area have. It might be the best barn with all the goodies and it might be the best improvement you ever made, but if no one in the area has one and there have been no properties that have sold with a barn, the appraiser has no way to know what the average buyer would pay for such an amenity and may not be able to give it any value. Without a sale, HUD has no way of knowing if this is an over-improvement for the area and that it is not actually going to be a negative value not knowing if most buyers would have to pay to take it down. Enlist the aid of a local real estate professional. They can usually show you sales comparable (comps) relatively easily and don't mind doing so because they know that if they don't list your home today, they have made a contact for the future and hope that you will keep them in mind when you do want to sell. And then you can keep an eye on the for-sale signs that go up in your neighborhood and watch the online services when they do sell. We live in an information rich time. You can see what other homes sold for very quickly and you can see how long they are listed with no offers as well. All this information should give you a very good idea of your property's true value without having to pay for an appraisal.

Hello Dianna, HUD instituted a policy late 2018 that now requires appraisers to submit their appraisals to HUD through their electronic portal before it even goes to the lender. HUD, in its sole discretion, can now require a second appraisal if they have any issues with the appraisal, the value or the property. HUD is currently requiring a second appraisal on about 25% of all the appraisals it receives. HUD made the determination that they still believed they had value issues with the homes on which they received loans to insure. So they instituted this policy and lenders are not allowed to even give out a loan approval on the HUD HECM program until they have cleared the appraisal review process and that could mean one or two appraisals. Unfortunately, if borrowers start their loan with a lender that owns their own appraisal management company and later try to move to a new lender for a better deal, they can be even further dismayed by the process. Lender-owned appraisal management companies are now telling new lenders that they cannot address any conditions on the appraisal. Since most appraisals have some issues that requires either minor or sometime more major revision/correction, these management companies refuse to make corrections to the faulty work they provided making the appraisal worthless to the new lender and HUD sanctions this policy. If the new appraisal done is somehow kicked out by the HUD review as needing a new appraisal, then a 3rd appraisal is required! Unfortunately, the borrower and the lender have little to no control over this whole process. The moral of the story is that if you plan to use a company that owns its own appraisal management company, you really need to shop around and be sure you are getting the best deal up front. It may be too late after the appraisal has been completed unless you don't mind paying for another appraisal and waiting for another report to be completed.