Banks Say New FHA Appraisal Rule on HECMs Has Had Minor Impact

By Jessica Guerin

It’s been just a few weeks since the Federal Housing Administration announced that it will now require a second appraisal on select reverse mortgage loans, but lenders are already feeling the effects.

And so far, it’s not all that bad.

On October 1st, FHA began pulling HECM loan appraisals that were flagged by its system as potentially having an inflated property valuation.

The industry was abuzz with speculation as to just how many files would be flagged, with appraisal experts predicting percentages on opposite sides of the spectrum.

But some lenders say, so far, it hasn’t been that bad.

Laura Almohandis, AVP of wholesale operations and underwriting at Finance of America Reverse, said FAR is diligently tracking its responses from HUD.

“So far, we have only seen about 15-20% where HUD’s requiring a second appraisal, and we usually get those answers back within 24 hours, sometimes the same day,” Almohandis said.

Nancy Davidson, VP of reverse operations at HighTechLending, also said their number of appraisals flagged was falling in the 15% range.

“We have sent a total of seven appraisals to HUD, and out of the seven we’ve only seen one come back needing a second,” Davidson said. “And we knew we were going to run into a problem with that appraisal, so it’s really not concerning to us.”

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