PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO

PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO
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Posted by Cochise on September 29, 2010 at 19:15:36:

PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO

PEMCO LTD Appraisal Guidelines
Thank you for working with PEMCO LTD as we strive to effectively and efficiently market and sell HUD homes. As appraisers, you are the eyes for PEMCO LTD and we rely on your professional opinions and expertise. While your appraisals will be reviewed by our staff, your quality of work will be trusted and expected now more than ever. Please read and review this reference material to help you provide reports that meet the needs of both PEMCO LTD and HUD. We will be happy to answer your questions and assist you in any way possible. Thank you again, and we look forward to a prosperous working relationship.

PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO
1.
Cover Page- Please include a cover page for all appraisal reports that includes address, appraiser name, effective date and preferably a photo of the subject property. A summary of salient features is also encouraged.
2.
URAR page 1- All information on page 1 should, as with all pages, be complete and accurate. Information on page 1 should match the sketch and sales grid for the subject. Please pay particular attention to Address, Legal Descr1ption, and Parcel number. PEMCO LTD will be the listed client and the assignment type will be indicated as “other.” PUD information must be complete if needed and further necessary comments clarifying any aspect of PUD or Condo included in the report.
-Flood Zone- Remember that if a property is noted in a FEMA Special Flood Zone
area, then it must be noted in the 100 year flood plain on the ECR.
Properties in a flood zone MUST contain a flood map.
-Septic/Well- Private Septic and Well systems require a comment about the system’s
effect (negative or not) on the subject’s marketability. locat1on should
be noted on the sketch (noted estimate is acceptable.) If locat1on is
unknown, a comment is required that includes a descr1ption of efforts
made to obtain this information.
3. Comparable Sales- Provide at least two comparable sales that have sold within 6
months from the effective date of appraisal. Provide at least two comparable sales
that have sold within 90 days and 2 current listings/pending sales if the market is noted
as declining. Note, over supply and over 6 month marketing times are indications of a
declining market. It is acceptable to expand your search for more similar comps. Overall, use
the best and most similar comps available, and if it necessary to expand parameters,
please make thorough comments.
Comparable sales over 1 year should only be used as support (if at all,) and may not
be used in positions 1-3.
Specific comments addressing the particular comp should be used for comparables over 6
months and over 1 mile. For example, “Comp #2 sold more than six months from the date
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of appraisal and was used due to the lack of more recent similar sales in close proximity to
the subject property and for its similarity to the subject property in design, age, site,
condition and overall market appeal.” Remember that these comments must state the specific
FNMA guideline as in the example.
Explain in the sales Comparison Comments each instance of: a) any LINE ITEM
adjustment in excess of 10% of the comparable sales price b) any NET adjustments in
excess of 15% of the comparable sales price and c) and GROSS adjustments in excess
of 25% of the comparable sales price. Refrain from using generic comments. As with
comments on age and proximity, the specific comparable sale or listing should be
addressed. For example, “Comp #2 has a line adjustment for GLA that exceeds 10% and
resulted in a net adjustment that exceeds 15%. This sale was used due to it being the most
recent sale in the subject’s neighborhood.
Use of REO comparable sales, listings and pending sales may be used to demonstrate the
subject market. Please note, it is not the intent of HUD for only REO comparables to be
utilized. For EVERY REO comparable utilized, the appraiser must provide a non-REO

PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO

comparable, and sufficient weighting should be employed. When an REO comp is used, it
also must include the following statement: “REO sales may be utilized ONLY when such
sales are deemed to be the best for the market area, AND they are: 1) In the subject
neighborhood or in reasonable proximity. 2) Subject to reasonable adjustment. 3) Sold with
a willing buyer and seller. 4) Exposed to the market for a reasonable period of time.
4. Opinion of Value- Appraisals completed for PEMCO LTD are, first and foremost, used
for marketing. Therefore, an opinion of value statement should be included in the additional
comments section. Be sure to include how the value was derived and if comparable
weighting was used, include the percentages for each comp. This comment is important
as it gives PEMCO LTD, HUD, Lenders, and Buyers insight into the appraiser’s valuation
process. An appraised value of $120,000 with comps ranging from $89,000-150,000 without
a comment is only going to cause questions and require additional information from the
appraiser. Make sure to verify that the value indicated by Sales Comparison corresponds to
the Final Opinion of Value, and that EVERY appraisal is indicated, “as is.”
5. Sales History- Include a comment on the sales history of both the subject and the
comparables. The comment should include whether the sale was a market sale, REO,
short sale, etc. and the impact on the market value. Verify that the correct box is indicated
for the subject and comparables.
6. Property Condition Report (PCR)- A PCR will be included with each appraisal order
and a copy must be attached to the appraisal report. The appraiser must review the PCR for
any discrepancies and inconsistencies with the appraiser’s findings and detail those in the
additional comments section or on attached addenda. The date of the PCR must also be
referenced in the appraiser’s comments.
-PCR Statement- The following statement must be included in every appraisal report:
“A property condition inspection was completed by the PCR inspector
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on [date]. The Property Condition Report (PCR) was provided to the
appraiser by the client and is included within this appraisal. The report
has been retained by the appraiser and is part of the appraiser’s
work file.”
-Mechanical Systems- The following statement must also be included in every report:
“The mechanical systems were not checked for functionality by the
appraiser; however, a visual inspection was performed. The PCR
indicated that all systems were listed in satisfactory condition unless
otherwise noted below. If this proves to be false, the appraiser has
the right to change opinion or estimated value of this report.”
7. Insurability- The statement of insurability should be provided in bold type, should be
worded EXACTLY as it is in 4150.2, Appendix A, and refer directly to the subject property. Insurable: Properties marketed as “insurable” are those that meet FHA’s Minimum
property Requirements (MPR) for existing housing and Minimum Property
standards (MPS) for new construction at the time of the appraisal in their as-is
condition without repairs being necessary.
-Subject property is insurable in its “as-is” state without repairs. Insurable With Repair Escrow: A property that requires no more than $5,000 for
repairs to meet FHA’s MPR or MPS as estimated by the PCR and as reviewed and
determined to be reasonable by the appraiser, is eligible to be marketed for sale in
its as-is condition with FHA mortgage insurance available, provided the
purchaser(s) establishes a cash escrow to ensure the completion of the required
repairs. Purchaser(s) are permitted to include in the mortgage an amount equal to
110% of the estimated cost of the repairs.
-Subject property is insurable in its “as-is” state with repairs costing $5,000 or less with repair escrow. Uninsurable: Properties offered for sale “Uninsured” do not meet, in their as-is
condition, FHA’s MPR or MPS and the cost of repairs identified by the appraiser,
to meet MPR or MPS, are estimated to exceed $5,000. Uninsurable properties can
qualify for FHA’s Section 203(k) rehabilitation program and, depending upon the
scope and extent of repairs needed, the Streamlined (k) Limited Repair Program.
(Select 1 or more of the following statements as they pertain to the subject property)
-Subject property is Uninsurable due to repairs exceeding $5,000.
-Subject property is Uninsurable due to garage conversion without a permit.
-Subject property is Uninsurable due to an addition without a permit.

PIMP’IN ain”t EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO

3
-Subject property is Uninsurable due to the subject’s REL being under 30 years, also
making the subject property ineligible for 203(k) financing.
-Subject property is Uninsurable due to the subject’s project not being on HUD’s
approved condominium list.
Please note that the absence of HUD tags on a manufactured home does not necessitate
Uninsurability. As of now, only a REL of less than 30 years makes a property ineligible
for 203(k) financing.
8. Minimum Property Requirements (MPR)- Any MPR in the PCR must be
discussed in the addendum and must state “according to the PCR dated…” with the date
of the PCR identified. Itemize MPR items with estimated cost to cure for each item
regardless of recommended insurability. Items are to be specific with locat1on, defect,
and action required. Use the Pricing Matrix provided by HUD as a guideline to MPR
costs. Make sure to clearly separate MPR items from non-MPR items (Cosmetic.)
9. 1004MC-Market Condition Addendum- The market trend indicated on page 1 of
the URAR must be consistent with the data on the 1004MC form. If information is
unavailable or misleading, thorough comments must be made explaining research and
findings. Provide supportive comments in the summary section of the 1004MC to detail
all information on all boxes indicated. Make sure condominium information including a
a screen print from the HUD Condo look-up screen is included, if needed.
10. Photos- Please take care to insure that all photos provided in the appraisal are clear and
focused. All listed MPR items should be accompanied by photos with a descr1ption of
MPR item. Any file photos used for comparables should include a comment as to the
source of the file photo and reason for its use.
11. Order of Report- Due to the number of appraisal reports and selection of appraisers,
it is imperative that each and every appraiser provide their reports in this order:
- Cover Page
- Report (1004, 1004C, 1073, etc.)
- Additional Comparables and Listings
- Text Addendum
- MPR Addendum
- 1004MC
- Sketch
- All Photos of the Subject Property
- Comparable Photos
- Maps (locat1on and Flood Map)
- Appraiser’s License
- Any other documents
- ECR
- PCR

PIMP’IN ain”t
EASY, HUD MAC’IN Appraisers, PIMPCO, PEMCO

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