FHA Reverse Mortgage Appraisal Guidelines

FHA requires an interior and exterior inspection for HECM loans.FHA requires an interior and exterior inspection for HECM loans.

Among its many insurance programs, the Federal Housing Administration offers a reverse mortgage known as the Home Equity Conversion Mortgage. HECM allows senior citizens to access their paid-off, or nearly-paid, home's equity. Borrowers can supplement their income with installment payments from the lender, or collect a lump sum. The senior makes no repayment on the HECM loan until he stops living in the home. An appraisal is conducted before the loan is approved and insurance endorsement.

The Basics

Created by the government to insure home loans for borrowers of modest means, FHA is an agency within the Department of Housing and Urban Development. HUD creates underwriting guidelines for FHA programs, including HECM. It requires an appraisal inspection and report, completed by an FHA-approved appraiser. HUD maintains a list of eligible appraisers on its online roster database. The lender must also have FHA approval to make HECM loans.

Function

"The financial soundness of the HECM program requires an accurate determination of property value and property condition, " HUD says. HUD valuation policy helps ensure the property is sufficient collateral for the loan, and the sale or refinance of the property will generate enough proceeds to pay off the loan. The appraiser must carefully analyze the property condition and its neighborhood when estimating value. He must also include estimates for property taxes and hazard insurance, according to guidelines.

Repairs

A property free of health and safety hazards is required for the HECM program. The appraiser must note any defects in the report that fail to meet HUD's minimum standards. Rather than be rejected outright for HECM, a property that the appraiser determines has repair amounts that total more than 30 percent of the maximum claim amount, must be referred to a HUD office for further review. The appraiser must note and require repair of items in the report to meet HUD minimum standards. Repairs must typically be completed before FHA can provide HECM insurance.

HUD Standards

To meet HUD minimum standards, a home must have no signs of lead-based paint, such as chipping and peeling paint surfaces. Each home must contain safe and potable water, sanitary facilities with a safe method of sewage disposal, domestic hot water and electricity. Wells and septic tanks are acceptable if they meet local code requirements. The appraiser may require further inspection by a licensed professional of such systems and mechanical units that are beyond the scope of an appraisal inspection.


Higher rates = Higher Home prices?

2011-08-23 15:15:52 by irvinerealtor

The Federal Housing Administration (FHA) will reduce single-family loan limits in the highest-cost metropolitan areas from $729,750 to $625,500 starting Oct. 1. The reduction, announced Friday afternoon, will affect 669 of the 3,234 jurisdictions in which the FHA insures loans.
The current floor loan limit in areas where housing costs are relatively low will remain unchanged, at $271,050 for one-unit properties. The mortgage loan limit and maximum claim amount for FHA-insured reverse mortgages will also remain unchanged, at $625,500.
The current maximum loan limits were to be retired in January 2009, but legislation delayed implementation of the loan-limit...

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Just Approved: Recent FHA buyers refinance to remove mortgage insurance  — San Francisco Chronicle
Mortgage consultant: Ty Cabalsi. Loan type: 30-year and 15-year fixed-rate refinance mortgages.

FHA lowering loan limits in Chicago area  — Chicago Tribune
Combined, the moves taken by the FHA this year will force some homebuyers in 2014, particularly first-time homebuyers, to expand their search for mortgage financing or put their planned home purchases on hold.

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  • Avatar Gene How much I will approve for FHA Home Loan?
    Sep 15, 2010 by Gene | Posted in Personal Finance

    I ve a good credit score 700 and I m planning to get FHA home loan and my monthy income before tax is $2600. How much I will qualify for FHA loan? Any tips will helpful to move forward thanks all.

    • Depending on the state you will have to buy a home that meets the requirements for an FHA loan. You can discuss this with your Realtor. You will have to submit, on several occasions, proof of employment, tax records and some additional information.