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.