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HUD Extends Eased FHA Appraiser/Employment Rules Through June

Most FHA property appraisals can be done without an appraiser physically entering the home under temporary rules that were extended from May 17 to June 30, 2020.

WASHINGTON – In order to keep FHA loans active during a time of social distancing, the Department of Housing And Urban Development (HUD) extended an existing order that eased requirements for appraisals of FHA loans.

The original order, Mortgagee Letter 2020-05, was issued on March 27, 2020, and expired on May 17. A new order issued on May 14, Mortgagee Letter 2020-14, extends the rules under the original order until June 30, 2020.

The order notes the following temporary changes for FHA loan appraisals:

• Most single-family forward and HECM (reverse mortgages) for purchase transactions may use an optional exterior-only or desktop-only appraisal inspection.

• Traditional HECM, HECM-to-HECM refinances, rate and term refinances and simple refinances of properties may also use an optional exterior-only inspection scope of work.

• All appraisals made in connection with the servicing of FHA’s forward or reverse mortgage portfolios may use either the exterior-only or desktop-only appraisal inspection scope of work.

• No changes are made to Streamline Refinances, which do not require appraisals or to the appraisal requirements for FHA’s CashOut refinance, 203(k), and certain purchase transactions.

HUD also changed some employment verification procedures temporarily, including a verbal verification of employment. The latter is mainly for companies in which the traditional employees that would verify employment aren’t in the office during the COVID-19 pandemic. It’s applicable for all FHA Title II forward and reverse mortgage programs in which re-verification of employment is required.

“These temporary measures allow lenders and appraisers to continue their necessary work for new FHA-insured mortgages in light of social distancing requirements,” HUD said in a release

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