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c. Standard 203(k) and Limited 203(k) Rehabilitation Mortgages (09/14/2015)
The Appraiser may be asked to perform two separate types of valuation by the Mortgagee for Standard 203(k) and Limited 203(k) Rehabilitation Mortgages. The Mortgagee may order both reports from the same Appraiser or select two different Appraisers for the two valuation assignments.
If a Mortgagee requires both an as-is and an after-improved value of the Property, the case will require two separate appraisal assignments and reports:
• an analysis to provide the as-is value; and
• a separate analysis performed under the hypothetical condition that the repairs have been completed.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
11. Programs and Products
i. Appraisal of the Property “As Is”
(A) Standard
Assignment conditions for this appraisal are the same as in all FHA appraisal assignments, except that the value of the Property is to be estimated “as is” even though the Property may not meet the Property Acceptability Criteria required for FHA-insured Properties.
(B) Required Analysis and Reporting
The Appraiser must provide an analysis and report of the value of the subject Property “as is.” If the Appraiser observes property conditions that do not meet the Property Acceptability Criteria, the Appraiser must report those items or conditions and note that the Property, in its “as is” condition, does not meet the Property Acceptability Criteria for an FHA-insured Mortgage. This appraisal must not be rendered “subject to repairs.”
ii. After Improved Value of the Property
(A) Definition
After Improved Value refers to the value as determined by the Appraiser based on a hypothetical condition that the repairs or alterations have been completed.
(B) Standard
The Appraiser must provide an “After Improved Value.” The Appraiser must make the appraisal “subject to the following repairs or alterations on the basis of a hypothetical condition that the repairs or alterations have been completed.”
(C) Required Analysis and Reporting
The Appraiser must review the 203(k) Consultant’s Work Write-Up or the contractor’s proposal and Cost Estimates. The Appraiser must notify the Mortgagee of any health and safety issues in the Property that are not addressed in the Work Write-Up or proposal. When the Consultant or contractor has modified the Work Write-Up or proposal, the Appraiser must complete the appraisal based on the final Work Write-Up or the contractor’s final proposal and Cost Estimates.
The Appraiser must include the Work Write-Up or proposal as an exhibit to the appraisal report.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
11. Programs and Products