Posts Tagged “fha appraisal”

HUD homes are those being sold by HUD.
If such homes are indicated as “IE” this means that the FHA loan on it (203b) can be insured by HUD with Escrow Repairs. So “IE” means “Insured With Escrow Repairs”.
Only repairs below a total of $5,000 can qualify for this type of FHA financing and meet minimum property standards required for an FHA mortgage.
The “repair escrow” that’s set up will be done in coordination with the FHA Lender and the work has to be completed within 90 days. The amount of money to be deposited into that “escrow” is determined based on Contractor ‘bids’ and has to be funded at the same time the FHA 203b Purchase money mortgage loan is funded.

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How Does FHA Look at Garage Conversions & Other Unpermitted Additions?

If a home has something about it that is different to it’s original structure, you may have a problem getting an FHA loan on it. What’s an FHA Underwriter going to do?

Typically the Underwriter is going to
(i) Ask for confirmation from the Appraiser that the work was done in a workmanlike manner i.e it doesn’t pose a hazard of some sort
(ii) Make sure the Appraiser has not used that living space in this final value determination.
Make sure the Appraiser mentions whether the current use is in compliance with the zoning ordinances. Appraiser has to mark the box indicating whether it is a Legal, Legal Non-Conforming (Grandfathered Use), No Zoning, or an Illegal Use.
“If the existing property does not comply with all of the current zoning regulations (use, lot size, improvement size, off street parking, etc.) but is accepted by the local zoning authority, enter “Legal Non-Conforming” and provide a brief explanation. If the use is not legal, the property is not eligible for FHA mortgage insurance.” Here is a link to HUD/FHA rule http://www.hud.gov/offices/adm/hudcl…02appdHSGH.pdf
(iii) check If work has to be done to restore the property to a safe/original condition, what’s the “cost to cure” the defect? An Appraiser has to estimate this and sometimes there might be a need for a full blown Contractor bid in writing.

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