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.