FHA Single Family Housing Appraisal Report and Data Delivery Requirements Table of Contents 1 FHA Single Family Housing Appraisal Report and Data Delivery Requirements 2 TABLE OF CONTENTS 3 A. APPRAISAL REPORT AND DATA DELIVERY REQUIREMENTS ........................................................................................ 1 4 B. UNIFORM RESIDENTIAL APPRAISAL REPORT FORM FOR ONE FAMILY RESIDENTIAL PROPERTIES ............ 2 5 1. Subject Section...................................................................................................................................................................................... 2 6 2. Contract Section .................................................................................................................................................................................... 6 7 3. Neighborhood Section .......................................................................................................................................................................... 8 8 4. Site Analysis Section .......................................................................................................................................................................... 11 9 5. Leasehold Interest/Ground Rent Section ............................................................................................................................................ 15 10 6. Description of Improvements Section ................................................................................................................................................ 15 11 a. Reporting Requirements for Attic ................................................................................................................................................. 16 12 b. Mechanical Systems...................................................................................................................................................................... 18 13 c. Exterior Materials/Condition ........................................................................................................................................................ 19 14 d. Amenities/Features ....................................................................................................................................................................... 20 15 e. Interior Materials/Condition ......................................................................................................................................................... 21 16 f. Car Storage.................................................................................................................................................................................... 22 17 g. Appliances..................................................................................................................................................................................... 22 18 h. Room Count .................................................................................................................................................................................. 23 19 i. Narrative Comments Section ........................................................................................................................................................ 24 20 7. Sales Comparison Approach Section .................................................................................................................................................. 27 21 a. Comparable Data Pool .................................................................................................................................................................. 27 22 b. Sales Adjustment Grid .................................................................................................................................................................. 27 23 c. Factual Data and Value Adjustments in Direct Sales Comparison Grid ...................................................................................... 29 24 8. Reconciliation and Conditions of Value Estimate Section ................................................................................................................. 43 25 a. Conditions of Value Estimate ....................................................................................................................................................... 43 26 9. Additional Comments Section ............................................................................................................................................................ 45 27 10. Cost Approach Section ....................................................................................................................................................................... 46 28 a. Requirements for Remaining Economic Life ............................................................................................................................... 46 29 11. Income Approach Section ................................................................................................................................................................... 47 30 12. Planned Unit Development Information Section ................................................................................................................................ 48 7/31/14 i FHA Single Family Housing Appraisal Report and Data Delivery Requirements Table of Contents 1 C. MANUFACTURED HOME APPRAISAL REPORT ................................................................................................................... 50 2 1. Subject Section.................................................................................................................................................................................... 50 3 2. Contract Section .................................................................................................................................................................................. 53 4 3. Neighborhood Section ........................................................................................................................................................................ 55 5 a. Neighborhood Boundaries ............................................................................................................................................................ 57 6 4. Site Section ......................................................................................................................................................................................... 58 7 5. Leasehold Interest/Ground Rent Section ............................................................................................................................................ 61 8 6. Improvements Section ........................................................................................................................................................................ 62 9 a. Reporting Requirements for Attic ................................................................................................................................................. 63 10 b. Foundation .................................................................................................................................................................................... 63 11 c. Basement ....................................................................................................................................................................................... 63 12 d. Mechanical Systems...................................................................................................................................................................... 65 13 e. Exterior Materials and Condition .................................................................................................................................................. 66 14 f. Interior Materials and Condition ................................................................................................................................................... 68 15 g. Car Storage.................................................................................................................................................................................... 69 16 h. Appliances..................................................................................................................................................................................... 69 17 i. Room Count and Gross Living Area ............................................................................................................................................ 70 18 j. Narrative Comments ..................................................................................................................................................................... 70 19 7. Cost Approach Section ....................................................................................................................................................................... 73 20 a. Cost Approach to Value ................................................................................................................................................................ 74 21 8. Sales Comparison Approach Section .................................................................................................................................................. 77 22 a. Adjustments to Comparable Properties ........................................................................................................................................ 79 23 b. Reporting Prior Sales .................................................................................................................................................................... 83 24 9. Reconciliation and Conditions of Appraisal Section .......................................................................................................................... 85 25 a. Conditions of Value Estimate ....................................................................................................................................................... 86 26 10. Additional Comments Section ............................................................................................................................................................ 88 27 11. Income Approach Section ................................................................................................................................................................... 88 28 12. Planned Unit Development Information Section ................................................................................................................................ 89 29 D. INDIVIDUAL CONDOMINIUM UNIT APPRAISAL REPORT ............................................................................................... 91 30 1. Subject Property Section ..................................................................................................................................................................... 91 31 2. Contract Data Section ......................................................................................................................................................................... 94 7/31/14 ii FHA Single Family Housing Appraisal Report and Data Delivery Requirements Table of Contents 1 3. Neighborhood Section ........................................................................................................................................................................ 96 2 4. Project Site Description Section ......................................................................................................................................................... 99 3 5. Leasehold Interest/Ground Rent Section .......................................................................................................................................... 103 4 6. Project Information Description Section .......................................................................................................................................... 103 5 7. Project Analysis Section ................................................................................................................................................................... 108 6 8. Unit Description Mechanical Systems Section ................................................................................................................................. 109 7 a. Interior Materials/Condition ....................................................................................................................................................... 110 8 b. Appliances................................................................................................................................................................................... 111 9 c. Car Parking/Storage .................................................................................................................................................................... 111 10 d. Gross Living Area ....................................................................................................................................................................... 111 11 e. Narrative Comments ................................................................................................................................................................... 112 12 9. Prior Sale History and Sale Data Section ......................................................................................................................................... 114 13 10. Sales Comparison Approach Section ................................................................................................................................................ 116 14 a. Comparable Data Pool ................................................................................................................................................................ 117 15 b. Value Adjustments ...................................................................................................................................................................... 119 16 11. Income Approach Section ................................................................................................................................................................. 130 17 12. Reconciliation and Conditions of Value Estimate Section ............................................................................................................... 130 18 a. Conditions of Value Estimate Section ........................................................................................................................................ 131 19 13. Additional Comments Section .......................................................................................................................................................... 133 20 E. SMALL RESIDENTIAL INCOME PROPERTY (TWO TO FOUR UNITS) APPRAISAL REPORT ............................... 134 21 1. Introduction to the Fannie Mae Form 1025/Freddie Mac Form 72 .................................................................................................. 134 22 2. Subject Property Data Section .......................................................................................................................................................... 134 23 3. Contract Section ................................................................................................................................................................................ 137 24 4. Neighborhood Analysis Section ....................................................................................................................................................... 138 25 5. Site Section ....................................................................................................................................................................................... 141 26 6. Leasehold Interest/Ground Rent Section .......................................................................................................................................... 144 27 7. Description of Improvements Section .............................................................................................................................................. 144 28 a. Reporting Requirements for Attic ............................................................................................................................................... 145 29 b. Foundation .................................................................................................................................................................................. 146 30 c. Basement ..................................................................................................................................................................................... 146 31 d. Mechanical Systems.................................................................................................................................................................... 147 32 e. Exterior Materials/Condition ...................................................................................................................................................... 148 7/31/14 iii FHA Single Family Housing Appraisal Report and Data Delivery Requirements Table of Contents 1 f. Interior Materials/Condition ....................................................................................................................................................... 150 2 g. Car Storage.................................................................................................................................................................................. 151 3 h. Appliances................................................................................................................................................................................... 151 4 i. Gross Living Area for the Units.................................................................................................................................................. 152 5 j. Gross Building Area (GBA) ....................................................................................................................................................... 152 6 k. Unit Room Count and Gross Living Area .................................................................................................................................. 152 7 l. Narrative Comments ................................................................................................................................................................... 152 8 8. Comparable Rental Data Section ...................................................................................................................................................... 154 9 9. Subject Rent Schedule Section ......................................................................................................................................................... 155 10 a. Rent Schedule ............................................................................................................................................................................. 156 11 10. Prior Sale History Section ................................................................................................................................................................. 157 12 11. Sales Comparison Approach Section ................................................................................................................................................ 159 13 a. Value Adjustments ...................................................................................................................................................................... 160 14 12. Income Approach Section ................................................................................................................................................................. 165 15 13. Reconciliation Section ...................................................................................................................................................................... 166 16 a. Conditions of Value Estimate ..................................................................................................................................................... 167 17 14. Additional Comments Section .......................................................................................................................................................... 169 18 15. Cost Approach Section ..................................................................................................................................................................... 169 19 16. Planned Unit Development Information Section .............................................................................................................................. 171 20 GLOSSARY........................................................................................................................................................................................... 173 21 ACRONYMS ......................................................................................................................................................................................... 178 22 7/31/14 iv FHA Single Family Housing Appraisal Report and Data Delivery Requirements 1 A. APPRAISAL REPORT AND DATA DELIVERY REQUIREMENTS 2 This document provides guidance to appraisers who are preparing residential appraisal reports utilizing the industry standard forms 3 and to lenders who are submitting the appraiser’s completed reports to FHA. FHA policy requires that the appraisal report be 4 submitted on the form appropriate for the property type. 5 FHA has procured an Electronic Appraisal Delivery (EAD) system, which provides portal to access all HUD approved lenders. The solution 6 will allow electronic appraisal files to be uploaded to a central location, processed, and checked against an FHA defined rule set. The 7 original file, as well as the results of the scoring process will be then securely transferred to HUD servers. 8 EAD shall only accept the industry standard open source file formats MISMO 2.6 with embedded PDF as created directly by the appraiser 9 (first generation). EAD does not accept private or proprietary data formats or appraisal reports that have been manipulated or “translated” 10 by anyone or any process. The table below defines the MISMO version required for each report type. 11 The EAD shall apply business rules, edits and handle overrides, based on the FHA’s requirements for rule sets that are applied to appraisals. 12 The portal will securely transmit discrepancies, findings, and other feedback messages to users based on FHA’s requirements. 13 The appraiser is required to follow HUD/FHA guidance and comply with the Uniform Standards of Professional Appraisal Practice 14 (USPAP) when completing appraisals of property used as security for FHA-insured mortgages. The Fannie Mae Form 1004 15 MC/Freddie Mac Form 71, Market Conditions Addendum to the Appraisal Report, must be completed for every appraisal. The 16 following table provides a list of the form type and MISMO format required for each property type. Property/Assignment Type Acceptable Reporting Form Single Family, Detached, Attached or Semi- Fannie Mae Form 1004/Freddie Mac Form 70, Uniform Residential Appraisal Detached Residential Property Report; MISMO 2.6 GSE format Single Unit Condominium Fannie Mae Form 1073/Freddie Mac Form 465, Individual Condominium Unit Appraisal Report; MISMO 2.6 GSE format Manufactured (HUD Code) Housing Fannie Mae Form 1004C/Freddie Mac Form 70B, Manufactured Home Appraisal Report; MISMO 2.6 Errata 1 format Small Residential Income Properties (Two- to Fannie Mae Form 1025/Freddie Mac Form 72, Small Residential Income Property Four-Units) Appraisal Report; MISMO 2.6 Errata 1 format Update of Appraisal Summary Appraisal Update Report Section of Fannie Mae Form 1004D/Freddie (All Property Types) Mac Form 442, Appraisal Update and/or Completion Report; MISMO 2.6 Errata 1 format 7/31/14 1 FHA Single Family Housing Appraisal Report and Data Delivery Requirements B. Uniform Residential Appraisal Report Form for One Family Residential Properties Property/Assignment Type Acceptable Reporting Form Compliance or Final Inspection for New Form HUD-92051, Compliance Inspection Report, in Portable Document Format Construction or Manufactured Housing (PDF) Compliance or Final Inspection for Existing Certificate of Completion Section of Fannie Mae Form 1004D/Freddie Mac Form Property 442, Appraisal Update and/or Completion Report; MISMO 2.6 Errata 1 format 1 The following sections provide instructions for completion of the forms and providing the data needed by FHA. 2 B. UNIFORM RESIDENTIAL APPRAISAL REPORT FORM FOR ONE FAMILY RESIDENTIAL PROPERTIES 3 This section provides specific instructions for completing the Fannie Mae Form 1004/Freddie Mac Form 70, Uniform Residential 4 Appraisal Report (URAR). The Federal Housing Administration (FHA) requires that this form be submitted in the Mortgage Industry 5 Standards Maintenance Organization (MISMO) 2.6 Government-Sponsored Enterprise (GSE) format, which is an Extensible Markup 6 Language (XML) document with an embedded Portable Document Format (PDF) as created by the appraiser. 7 This report form is designed to report an appraisal of a one-unit property or a one-unit property with an accessory unit, including a unit 8 in a Planned Unit Development (PUD), based on an interior and exterior inspection of the subject property. This form is not designed 9 to report an appraisal of Manufactured Housing or a unit in a condominium or cooperative project. 10 1. Subject Section 11 This section provides the factual data to identify the property, and the parties to the appraisal process. The FHA case number together 12 with the Borrower and/or property information will be supplied by the mortgagee/client who engages the appraiser. 13 The following table provides instruction for completing the “Subject” section of the form. Field Protocol FHA Case Number/  Insert the FHA case number at the top right corner of page 1 of the appraisal form. This may also appear in Appraiser Additional a similar place on the other pages of the report but it is not a strict requirement. File Number  The FHA appraisal may not be transmitted to the mortgagee without a case number.  In most software packages, this is formatted as an additional file number. 7/31/14 2 FHA Single Family Housing Appraisal Report and Data Delivery Requirements B. Uniform Residential Appraisal Report Form for One Family Residential Properties Field Protocol Appraiser’s File  This is the appraiser’s choice of file number/name. Number  This field occurs on every page of the form and must be consistent.  The placement of the header on the form varies from vendor to vendor. Property Address  It must conform to the Mailing Standards of the United States Postal Service, Publication 28 (USPS (Pub. 28)) – Postal Addressing Standards. The following address elements must be included in this field: o street number o street name (including applicable pre-directional indicator, suffix, and/or post-directional indicator) o address unit designator and number (if applicable)  This data is referenced more than once on the form and must be represented consistently.  If the property’s legal location is different from the property’s mailing address (for instance, the property is located in a different municipality or in an unincorporated area) explain this in the appraisal report. City  It must conform to USPS (Pub. 28). The following address element must be included in this field: City (Postal Address City).  This data is referenced more than once on the form and must be represented consistently. State  It must conform to USPS (Pub. 28). The following address element must be included in this field: USPS two-letter state or territory representation.  This data is referenced more than once on the form and must be represented consistently. Zip Code  It must conform to USPS (Pub. 28). The following address element must be included in this field: five-digit ZIP Code or ZIP+4 Code (with or without the dash).  This data is referenced more than once on the form and must be represented consistently. Borrower  Enter the name of the Borrower. Owner of Public  Enter the name of the owner as listed in public records. Record  If the seller is not the owner of public record, the appraiser must explain. County  If the subject property is not located in any county (e.g., the subject property is located in an independent city), enter the name of the local municipality or district in which the property is located. Legal Description  Enter the legal description of the property.  The four types of legal descriptions are lot and block system; geodetic survey; government survey system; and metes and bounds description.  If the space provided is insufficient, enter this information with the heading “Legal Description” in the “Additional Comments” section of the form report or attach this information as an addendum. 7/31/14 3 FHA Single Family Housing Appraisal Report and Data Delivery Requirements B. Uniform Residential Appraisal Report Form for One Family Residential Properties Field Protocol Assessor’s Parcel #  Enter the parcel number assigned by the local tax assessor.  For those areas that do not have an assessor’s parcel number, enter the tax identification number.  If more than one parcel number is applicable, each must be listed, separated by a semicolon. Tax Year  It must be in a four-digit year format.  Data Format: yyyy. R.E. Taxes $  Enter the dollar amount of the annual real estate taxes, including all relevant taxes (school district tax, fire district tax, etc.).  Use whole dollars only. Neighborhood Name  Enter the name of the subdivision, if applicable, or the commonly known local neighborhood designation.  If the subject property is in a PUD, provide the name of the development. Map Reference  Enter the location map reference, page number and coordinates from the source used.  This reference should relate to the location maps most commonly used in the locale. Census Tract  Enter the census tract number.  The census tract number must be provided.  Census tract numbers have four digits and may have a two digit decimal suffix.  Where the basic census tract number is less than four digits, the Census Bureau includes leading zeros except when displaying numbers on maps or printed reports.  To uniquely identify a census tract, a two-digit state code and three-digit county code precede the four or six-digit census tract number.  The Census Bureau has an Internet resource guide for locating census information at www.census.gov. Occupant  Mark the box signifying the occupancy status at the time of the appraisal.  If vacant, the appraiser must note, in the “Improvements” section under “condition of the property,” whether the utilities were on or off at the time of the appraisal.  With the exception of U.S. Department of Housing and Urban Development (HUD) Real Estate Owned (REO) properties, if utilities are not turned on the appraiser must: o condition the appraisal on a satisfactory re-inspection; o state that the utility was off at the time of the appraisal; and o include an extraordinary assumption that the mechanical equipment does not require alteration, repair or further inspection once the utilities are restored. 7/31/14 4 FHA Single Family Housing Appraisal Report and Data Delivery Requirements B. Uniform Residential Appraisal Report Form for One Family Residential Properties Field Protocol Special Assessments  Report the dollar amount of special assessments for the subject property, if any, and provide a brief $ explanation for the assessment.  Special assessments can include municipal bond debt for off-site improvements.  Larger than typical special assessments may affect marketability.  Use whole dollars only.  If there are no special assessments applicable to the subject property, the appraiser must enter 0 in this data field. PUD  Check the box if the property is located in a PUD. HOA $  Enter the dollar amount of the Homeowners’ Association (HOA) fee and mark the box indicating if the fees are paid “per year” or “per month.”  Use whole dollars only.  If there are no mandatory HOA fees applicable to the subject property, appraiser must enter 0 in this data field. Property Rights  Mark the appropriate box indicating the property rights appraised for the subject property as of the date of Appraised the appraisal.  “Other” includes Land Trust. Assignment Type  Mark the appropriate box indicating the assignment type: o Purchase Transaction o Refinance Transaction o Other (describe) Lender/Client  Enter the name of the mortgagee/client that ordered and will receive the appraisal report.  The intended use of the appraisal is to support FHA’s decision to provide mortgage insurance on the real property that is the subject of the appraisal; therefore, intended users include the mortgagee/client and HUD/FHA or its successors and assigns. Address  Enter the mortgagee/client’s address.  This data is referenced more than once on the form and must be represented consistently to the extent the available space permits.  The printed version of this field must appear completely in this location on the form, but may be truncated in the other locations. 7/31/14 5 FHA Single Family Housing Appraisal Report and Data Delivery Requirements B. Uniform Residential Appraisal Report Form for One Family Residential Properties Field Protocol UAD Days On  If there are no current or prior offerings in the 12 months prior to the effective date of the appraisal, then Market Description this field must indicate the data sources used to establish this fact. Currently offered for  The appraiser’s certification states in part, “I have researched, verified, analyzed and reported on any sale? current agreement of sale of the subject property, any offering for sale of the subject property in the twelve months prior to the effect date of the appraisal.”  Mark the appropriate box indicating whether the subject is currently offered for sale or has been offered for sale in the 12-month period prior to the effective date of the appraisal.  If there are multiple actions, report each instance.  Research may reveal an expired or withdrawn listing, which may provide a good indication of the upper limits of value. Report data source(s)  Enter the Days on Market in Uniform Appraisal Dataset (UAD) format. used, offering  Enter the listing date, offering price, and terms. Report changes to prices and terms, with the dates of those price(s), and date(s). changes.  Report the data source.  Report all relevant listing activity, including any prior listings within the last three years.  Additional information can be carried over into the addendum.  If there have been no offerings in the prior 12 months, this field must indicate the data sources used to establish this fact. 1 2. Contract Section 2 This section must be completed when the appraisal assignment involves a purchase transaction, otherwise enter “N/A” for not 3 applicable. FHA requires that the appraiser be provided with a complete copy of the ratified sales contract, including all addenda, for 4 the subject property. 5 The contract provides the agreed-on contract price (accepted offer), date of sale, and all financial terms implicit in the offer. If unable 6 to obtain this information, the appraiser is to state what efforts were made to obtain it. 7 The following table provides instruction for completing the “Contract” section of the report form. 7/31/14 6