Appraisal Portability, HUD Mortgagee Letter 2009-29
(Effective January 1, 2010)
This mortgagee letter addresses the portability of appraisals for the purpose of
facilitating the loan process when a borrower switches from one FHA approved
lender (first lender) to another (second lender) and an appraisal was ordered by
and completed for the first lender. The requirements set forth in this mortgagee
letter will be effective for all case numbers assigned on or after January 1, 2010.
Below is a link to the full text of this mortgagee letter.
In words we can all understand and relate to:
In cases where a borrower has switched lenders, the first lender must, at the borrower’s request, transfer the case to the second lender.
Once the FHA case number is assigned to a property, borrower and lender can it be transferred to another lender? Yes, it can be transferred.
Does the lender/client name have to be changed to the new lender? No, FHA does not require the lender/client name to be changed when transferred to another lender. The original report is sufficient with no revisions.
May the new lender utilize the original appraisal without any other revisions? Absolutely, there is no need to order a “client name change” or especially a new appraisal.
May the new lender request a new appraisal with using the same FHA case number? Yes, as long as it is not for the purpose of “appraiser shopping” where lenders are actually value shopping.
A second appraisal may be ordered by the “new” or “second” lender under the following limited circumstances:
1. The first appraisal contains material deficiencies as determined by the Direct Endorsement underwriter for the second lender.
2. The appraiser performing the first appraisal is on the second lender’s exclusionary list of appraisers.
3. Failure of the first lender to provide a copy of the appraisal to the second lender in a timely manner would cause a delay in closing, posing potential harm to the borrower.
Please note the following: In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. To effect a client name change, the second lender and the original appraiser may engage in a new appraisal assignment wherein the scope of work is limited to the client name change. A new client name should include the name of the client (lender) and HUD.
In other words, a client name change request is considered a new assignment. However, the new lender may limit the scope of work to only include the client name change. In this case, the effective date of the original appraisal will remain the same along will all other aspects of the report.