Reverse Mortgage FHA Appraisals

FHA APPRAISALS ON REVERSE MORTGAGES

Sometimes an FHA appraisal may come back recommending certain home repairs.

  • Depending on the type of repair, health and safety repairs may be required to be fixed prior to closing.
  • When it comes to cosmetic repairs, monies from the Reverse Mortgage will be set aside for repairs to be completed within 1 year of the loan closing.
  • Repairs cannot be done for HECM Purchases.
  • Repairs that may be required to be fixed prior to closing could include repairs such as the ones seen here:
    • Health and safety concerns
    • Structural integrity
    • No heat (exceptions)
    • Plumbing that doesn’t work
    • Sewer backups
    • No electricity
    • Mold issues
    • Roof repairs
  • Repair Set Aside amounts will be multiplied by 1.5 times the contractor bid or the appraisers cost to cure regardless of the amount.
  • The repairs cannot be greater than 15% of the maximum claim amount.
  • All work must be done by a qualified professional and bids must include the contractors name, address, phone number, license number and must be itemized.
  • Anytime a repair is required, the loan file must be documented with satisfactory proof of repair completion.
  • This can be done by obtaining a letter from a licensed professional, authorized to complete such repairs, or a 1004D completed by the appraiser.

It is also important to find out the property use. If an appraiser finds that a property is non-residential, it will be necessary to look further into the details before moving forward with the application. Non-residential refers to property other than housing. This includes office buildings, shopping centers or hotels. For example, an apartment building derives 25% of its revenues from a first-floor lunchroom. This might be considered a commercial, non-residential building.

MIXED USE BUILDINGS FOR REVERSE MORTGAGES

If the property is mixed use, we will look for the highest and best use of the property.