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Got UAD?

August 25, 2011 by Leave a Comment

Got UAD?  If you don’t, you certainly will by September 1st, 2011. 

What is UAD you might ask?  Well, UAD stands for Uniform Appraisal Dataset.  It is the new format in which all appraisal reports will be completed if the loan is to be sold to Fannie Mae or Freddie Mac.  The UAD was developed in an effort to standardize appraisal reports and to aide the GSEs (Fannie and Freddie) in better manage their loans and risk.  Since, most loans are sold to Fannie or Freddie, and since the VA and HUD have already agreed to adopt the new UAD format, almost all mortgage appraisals completed on or after September 1st will have to comply. 

The UAD will change the way appraisals are written and make understanding the reports even more complicated for the average homeowner.  Some of the changes are fairly minor; however, 0thers are more significant.  The biggest changes are in how certain data fields are populated.  Fields like Condition, Quality of Construction, Bathroom Count, Lot Size and View will see the most change.

Condition – rather than using terms like “Average” and “Good” to describe a property’s condition there will be a rating scale of C1 – C6.  Each rating will describe a specific degree of condition.  C1 will be at the high end and C6 will be at the low end of the range.

Quality of Construction – like Condition, this field will do away with descriptors like “Stone/Frame/Good” and “Vinyl/Average”.  There will be a quality range with standardized definitions from Q1 – Q6. 

Bathroom Count – the new UAD will standardize the format in which bathroom count is shown in the report.  Before, appraisers might use 2.5 or 2F1H to describe a home with 2 full and 1 half baths.  The new format will be shown as 2.1 baths.  If a property has 3 full and 2 half baths, it will say 2.2 baths.  Not that big a change.

Lot Size – lot size and acreage will be described in whole numbers.  Rather that an appraiser using 16’X 72’ to describe a lot in an urban setting they will use 1152 (square feet).  Acres will look like this, 3.2 to describe 3.20 acres.  Anything less than an acre will be in square feet.

View – the appraiser will have to use one of a number of abbreviations or acronyms to illustrate certain view attributes. They will also have to make a determination as to whether or not the view is “N” (Neutral), “B” (Beneficial) or “A” (Adverse).  So the UAD complaint View field describing a home with a residential, golf course location may look like this “B, Res, GlfCrs”.

Below is a guide that describes the Condition and Quality rating scales, Bathroom Count and some of the new abbreviations for View as well as other fields.

This new format may be confusing at first.  If you have any questions about the UAD or appraisals, please feel free to contact one of the appraisers at our office.

Please note that the UAD will not effect the way appraisals are completed for Divorce, Tax Appeal, Estates/Probate, Pre-Listing valuation, Commercial valuation, QRPTs or for determinations of Fair Market Value.

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FHA Q&A

January 10, 2011 by Leave a Comment
 

Also, take into consideration, that while the FHA may be OK with these conditions, most Buyers in the Philly region are not.  Would you be OK purchasing a property with either of these situations present?   

As more and more Buyers use FHA financing, Sellers and their Agents will have to educate themselves on the FHA repair guidelines and requirements.  This can be a daunting task.  As of today, the HUD Handbook, also known as Valuation Analysis for Single Family One-to-Four-Unit Dwellings (4150.2) is comprised of nine chapters and four appendices, totaling hundreds of pages.  And, it seems like the handbook is revised or updated on a weekly basis.  

When marketing your home, try to position it to appeal to the widest range of buyers.  If your home’s sale price is at or under the current FHA program limits for the Philadelphia region ($420,000) then you would be wise to make sure that your home is compliant with the FHA guidelines and be prepared to repair any FHA required repairs or inspections.  

If you don’t know the FHA Guidelines 4150.2 and how they apply to your situation, you may want to consider hiring an FHA Appraiser to visit your property prior to listing.  In addition to providing a Pre-Listing Appraisal, the Appraiser could point out potential FHA issues that might affect a potential Buyer’s ability to obtain funding as well as issues that could be addressed ahead of time…essentially taking them off the negotiating table and possibly speeding up the selling process.   

For answers to any other FHA related questions, please feel free to send us an email or just post to this site.   

 

Q: What do these two pictures have in common?  

A: They are both acceptable property conditions under FHA Guidelines.  Now, local laws and zoning may take issue with heaving concrete sidewalks and blood stained flooring surfaces but, not HUD/FHA.  In Mortgagee Letter 2005-ML-48, these conditions were cited along with a list of other “minimum property conditions that no longer require automatic repair.”

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FHA & Distressed Paint

December 3, 2010 by Leave a Comment

Appraising in Philadelphia, typically means that from time-to-time you will appraise a property for an FHA insured loan. That invariably brings up questions from realtors, lenders and homeowners about FHA Guidelines and, more specifically, those guidelines pertaining to distressed paint. The FHA guideline for peeling, chipping, “alligatored” and otherwise distressed paint on a residence is pretty straightforward.

In 1978, paint manufactures stopped using lead in their products. This was in reaction to studies that indicated lead paint was a contributor to a myriad of health issues among children and adults. It falls into the category of being a health issue. FHA doesn’t like issues that could affect the health or safety of  residents.

So, if a house was built prior to 1978, it can be assumed that there is lead based paint present. Given the age of the housing stock in Philadelphia, you can see what an issue distressed paint can be since the vast majority of Philadelphia’s homes were built prior to 1940.  If that paint is chipped, peeling, “alligatored” or otherwise distressed, the FHA Guidelines state that it must be properly cured. The FHA publishes guidelines on exactly how to properly cure lead based paint issues at a house.

Does that mean that homes built after 1978 are in the clear when it comes to distressed paint? Well, yes and no.

Yes, they are in the clear as far as the health and safety issues brought about by Lead Based Paint…and No, because if there is distressed paint (especially on an exterior surface), it can become an issue that would diminish the economic life of a property, especially if there is exposed wood that would be prone to decay if not properly painted. Distressed paint in a post 1978 house would also need to be properly cured.

Hopefully, this information will be useful to you. If you have any other questions regarding FHA insurability and guidelines, please feel free to call our office – 215.836.5500

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