http://www.trulia.com/voices/Financing/If_nd_appraisal_for_FHA_loan_is_higher_than_st_whi-109236We have been working with lender for FHA refinance loan over 2 months. The appraiser could not find a recent sale to compare to our home so our appraisal came up $10,000 low. We got a 2nd appraisal and it was on target. Lender is now saying first appraisal isbinding and appraiser will not withdraw. Told them it was not working and we were going with another lender and to transfer case to new lender. Now, 1st appraiser is offering to add $5,000 more. I don't like being jerked around--what's the deal? Finally, got the case transerred and was told that we would still have to use 1st appraisal. Is this correct? Told them I would still not use them as a lender because I don't trust them any longer. This has been a nightmare and an emotional roller coaster. Hopefully, our new lender can get things going.en-ushttp://www.trulia.com/voices/profile/Real_Estate_Pro-Daytona_Beach_FL-280249/http://www.trulia.com/voices/profile/Real_Estate_Pro-Daytona_Beach_FL-280249/Hi Margaita: Some background: Once an FHA appraisal is completed, it is stored in a system called FHA Connection, which keeps track of all matters related to FHA loans, appraisers, underwriters, etc. FHA Connection can only be accessed by FHA lenders, and only the lender which originated your FHA insured transaction may access your file (which is why your FHA Case Number must be transferred to proceed with a new lender). Once the appraisal is completed, the appaiser provides both the lender and FHA with a copy. The underwriter must carefully review the accuracy of the report and verify that the report and your home meet FHA guidelines. The underwriter may also add comments in FHA Connection regarding the appraisal. The comments become part of the appraisal report file stored in FHA Connection. Without knowing the details, my thought is that it is important to know how "close" your application is to an FHA Direct Endorsement (aka FHA DE) underwriter. All FHA insured transactions must be signed off by a DE underwriter, and only a DE underwriter may approve an appraisal. An FHA DE underwriter must be an officer of the lender or have the authority to bind the lender to a contract with FHA (loose quote from HUD's policy manual on lender eligibility). Many lenders (and all mortgage brokers) are sponsored by another FHA lender. Simplifying greatly, that FHA DE underwriter who reviewed your first appraisal may not work directly for the lender who is processing your application. This means that it may be more difficult to get the DE underwriter to request the appraiser to update the appraisal with additional sales comparables or to remove a certain sales comparable. What to do: The point is that if you choose another lender, find out first if the lender has a DE underwriter on staff or is sponsored by another lender. The loan originator should be able to answer that question without hesitation. All banks offering FHA insured mortgages will have at least one FHA DE underwriter on staff in every processing center. I would disclose the appraisal dispute upfront with the new lender's loan originator since this is the logjam on getting your loan closed. It is important to have the new lender's DE underwriter take a look at the disputed sales comparable and resulting value estimate as early as possible to see if she is willing to overrule the first underwriter's analysis. However, your FHA Case Number must be transferred to the new lender before the underwriter may access the report, unless you've been given a copy of it. Keep in mind that both the DE underwriter and the appraiser are held responsible by HUD for inaccurate appraisal estimates - especially if there is a loss to FHA - and that their FHA licenses are on the line. That's the main reason why the appraiser and first lender appear to unwilling to revise the appraisal estimate. If you enjoy reading Gov't manuals, here is a link to the relevant chapter in HUD's policy manuals on the proceedure for underwriting FHA appraisals. http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4000.4/40004c03.pdf Caution: HUD policy manuals are not revised. HUD issues Mortgagee Letters periodically on changes to FHA policies... so to get the most recent FHA policy on appraisal matters, one would have to read through the library of letters. However, the basic proceedure in the link above will give you an idea of what is happening behind the scenes, so to speak. If the first appraiser is willing to withdraw, a competent FHA DE underwriter should be able to approve the reason for the change in appraisers, approve the second appraisal in place of the first, and sign off on your transaction (assuming everything else meets guidelines). By "competent" I mean a DE underwriter who knows her business... probably someone who has been underwriting FHA insured mortgages for many years. This paragon of virtue is most likely employed by a bank. Last note: Sometimes getting an FHA Case Number transferred is a pain. It only take seconds in FHA Connection, but some originators out there refuse to move quickly in the hopes of keeping your loan. You may need to request the transfer in writing to the old lender with a copy to the local HUD Field Office. Check with your new lender to see if the Case Nmber has been transferred. Your local Field Office is here: http://www.hud.gov/local/index.cfm?state=ky&topic=offices Good luck to you...Sun, 12 Apr 2009 07:46:11 -0700http://www.trulia.com/voices/profile/Other-Kentucky-717284/http://www.trulia.com/voices/profile/Other-Kentucky-717284/Deep River: Yes, the second appraiser was an FHA licensed appraiser and yes, we are refinancing more than 85% of our home value. The first lender told us that we could get the second appraisal and if it were more, than they would ask the 1st appraiser to withdraw appraisal. Of course, the 1st appraiser would not, but when we called him/her out on using one foreclosed sale, he/she finally e-mailed us saying he/she would withdraw. Then the lender said we still had to use 1st appraisal. When we told the lender we were through with them and requested the case be transferred to another lender, then they said the 1st appraiser would add $5,000, but would not until we said we were through with them. What I cannot figure out is if the appraisal was actually submitted or not since we were first told that the appraisal was withdrawn. I guess this is a wait and see game.Sat, 11 Apr 2009 18:08:57 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Daytona_Beach_FL-280249/http://www.trulia.com/voices/profile/Real_Estate_Pro-Daytona_Beach_FL-280249/Lending answer: Doug's response below is correct. Your application, property, and appraisal are all registered with FHA under a unique case number. Any lender to whom you go MUST use the original appraisal until six months have expired from the date of the inspection. This is an FHA regulation; lenders have no wiggle room around it all. The original appraiser could update the appraisal with new sales comparables, but any updates must still comply with FHA's regulations on determining value. Was the second appraiser an FHA licensed appraiser? Are you refinancing more than 85% of your home's value?Fri, 10 Apr 2009 18:15:52 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Independence_KY-177397/http://www.trulia.com/voices/profile/Real_Estate_Pro-Independence_KY-177397/A FHA appraisal stays with the property, not the lender, for 6 months.Fri, 10 Apr 2009 08:08:13 -0700