MORTGAGEE LETTER 2010-17
TO: ALL FHA APPROVED MORTGAGEES
ALL FHA ROSTER APPRAISERS
SUBJECT: UPDATED HUD REO LEAD-BASED PAINT APPRAISAL REPORTING REQUIREMENTS
The purpose of this Mortgagee Letter is to amend Handbook 4150.2, Valuation Analysis for Home Mortgage Insurance for Single Family One-to-Four Unit Dwellings, Appendix A. The amendment will affect how appraisers disclose defective paint in HUD’s real estate owned (REO) properties. This change is effective on all appraisals performed on HUD REO properties with an effective date on or after June 1, 2010. HUD will only order a lead-based paint evaluation for HUD REO properties constructed before 1978, and purchased with FHA-insured financing.
Appendix A, Section A-3, bullet two is being replaced in its entirety with the language below:
If the appraiser observes defective paint in a home that was built before 1978, in the physical deficiencies or adverse conditions section of the appraisal report, the appraiser must enter an "X" in the "Yes" box, and note all areas affected. However, if the appraiser does not observe defective paint in a home that was built before 1978, an explanation is not required in the physical deficiencies or adverse conditions section of the appraisal report.