While the rest of the industry is moving toward making purchasing a home easier, FHA seems intent on halting some of the progress already made. Appraisers valuing homes for FHA mortgages will be required to submit a more detailed reports.
The new FHA initiative includes a new form (what FHA initiative does not include a new form?) designed to advise the purchaser to obtain a home inspection on the property they are purchasing. In addition to the emphasis on home inspections, Appraisers will complete a new three-page form (see comment above) describing areas such as plumbing, walls, ceiling, roofs, foundations, electrical systems, termites and more.
Other elements of the plan include testing of FHA appraisers, mandatory disclosure of detected home defects and a consumer education campaign (sure to come with more forms).
The result? Increased appraisal costs for existing home purchases. Generally, appraisers are increasing the price of FHA reports by $50 to $100 for existing home appriasals. Additionally, we think many sellers will be more reluctant to sell to buyers who indicate they want (or need) FHA financing. Fortunately Fannie and Freddie have released programs which are as lenient as FHA guidelines for low-to-moderate income buyers. However, FHA is more liberal for non-permanent resident aliens, a growing segment of our population.
