February
23
,
2022
It is not an everyday occurrence, but in the home loan industry it is sometimes necessary for a borrower to change from one financial institution to another after the home loan process has begun.
When the borrower wants to switch lenders, is it possible to transfer an FHA appraisal to the new lender? Appraisals cost money and it feels impractical to most borrowers to have to pay twice for the same service.
HUD 4000.1, the FHA Lender’s Handbook, says the following about these issues:
“In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrowers request, transfer the appraisal to the second Mortgagee within five business days.”
The phrase, “at the borrower’s request” is key--FHA loan rules say the appraiser is not automatically required to perform the transfer.
“The Appraiser is not required to provide the appraisal to the new Mortgagee. The client name on the appraisal does not need to reflect the new Mortgagee. If the original Mortgagee has not been reimbursed for the cost of the appraisal, the Mortgagee is not required to transfer the appraisal until it is reimbursed.”
There are limitations--your new lender cannot request a second appraisal simply to change the amount of the home loan. That is an issue the rules address specifically in the context of transferring to a new lender. From HUD 4000.1:
“The second Mortgagee may not request the Appraiser to re-address the appraisal. If the second Mortgagee finds deficiencies in the appraisal, the Mortgagee must order a new appraisal.”
And what about when the lender is interested in using an existing appraisal, but the borrower has changed? FHA loan rules indicate that the lender “must enter the new Borrowers information in FHAC. The Mortgagee must collect an appraisal fee from the new Borrower and refund the fee to the original Borrower.”
And we should also note the other portion of the rules in this area--the lender is instructed, “If a Case Transfer is involved, the new Mortgagee must enter the Borrowers information in FHAC. The new Mortgagee must collect an appraisal fee from the Borrower, and send the fee to the original Mortgagee, who, in turn, must refund the fee to the original Borrower.”
Appraisals are an important part of the home loan process and it is important to remember that no matter what the circ*mstances surrounding the appraisal, it is a service you pay for to get the appraisal done.
It is not a situation where you are paying for a specific outcome--if the appraisal goes in a different way than you expect you still owe the appraiser for the services rendered. And it is also very important to remember that the appraisal is a tool for the lender to determine the fair value of the home and not to give you a seal of approval that the home is defect-free. No appraisal can do that.
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FAQs
Only the current originating lender, sponsor, or agent on record in HUD's origination system can use Case/Appraisal Transfer. However, if a sponsor is not on record for a case but remits the upfront mortgage insurance premium (MIP), the remitting sponsor can transfer the case to one of its branches as the new sponsor.
Can a bank refuse to transfer an appraisal to another lender? ›
The original mortgage company has the right to refuse to transfer the appraisal to another lender. In this case, a new appraisal is needed.
How do I dispute an appraisal on my FHA loan? ›
“The lender's underwriter” can request a reconsideration of value from the FHA Roster appraiser. This means that an FHA loan applicant who disagrees with the appraisal would need to discuss the situation with the lender. That doesn't guarantee that an appeal or reconsideration of value will be submitted.
What is needed to transfer an FHA case number to another lender? ›
On the Case/Appraisal Transfer page, type the 10-digit case number assigned to the mortgage in the FHA Case Number field. Type the 10-digit FHA ID of the new FHA-approved lender originating the mortgage in the New Originator ID field. If there is a principal-agent relationship, the FHA ID of the principal is entered.
Can you transfer an appraisal to another lender? ›
Lenders have no obligation to share or “release” an appraisal with other lenders. New lenders often need a formal “release” of an appraisal from the previous lender, whose name is on the appraisal, before the new lender can use the appraisal for lending purposes.
How do I assign an appraisal to another lender? ›
The Appraisal Transfer Letter must be executed by the lender that ordered the appraisal and must be signed by an authorized officer of the company (See sample letter). Appraisal Transfer Letters signed by Loan officer(s), Loan Processor(s), etc. will not be acceptable.
How long is an FHA appraisal tied to a property? ›
How long is an FHA appraisal good for? In general, FHA appraisals are good for up to 180 days. In some instances, an appraiser can recertify the value if they agree to do so before the original appraisal expires.
Are lenders obligated to share appraisals? ›
Once the appraisal has been completed, a lender is required to provide you with a copy of the appraisal as soon as reasonably possible, but no later than three days prior to closing.
Does Fannie Mae allow transferred appraisals? ›
Yes. A lender may accept an appraisal transfer from a different lender in accordance with the requirements of AIR sections VI. and VIII., all Fannie Mae Selling Guide requirements, and related documents.
Can an FHA appraisal be Cancelled? ›
Reasons Cancellation can be completed:
An appraisal has not been completed and the borrower will not close the loan as an FHA Insured Mortgage. The FHA mortgage insurance will not be sought. The appraisal report has already expired.
Consumers should contact their lender to voice any concerns regarding their appraisals. Consumers have the option of filing a complaint regarding their appraisal or evaluation directly with their lender, or through the lender's federal regulator.
Can appraisal be waived on FHA loan? ›
Appraisal Waiver Requirements: No appraisal waiver will be granted unless a prior appraisal for the subject property can be found in Fannie's and Freddie's databases. The prior appraisal must have a “low CU” score (or no “overvaluation flag”), and it must be over 120 days old.
What happens if a lender refuses to transfer a FHA case number? ›
In case you are wondering about what happens if a lender is unresponsive to a request to transfer an FHA case number/appraisal report, it should be noted that HUD staff is empowered to cancel the existing case number so that a new case number can be obtained by the new lender.
Can a lender refuse to transfer an FHA case number? ›
Important: FHA requires the current lender to assign the case number to the new lender in FHA Connection immediately upon the Borrower's request but no later than within 5 business days of the request for transfer.
Do all lenders who issue FHA loan use the same? ›
Final answer: All lenders issuing FHA loans are required to use the same mortgage insurance program, though other factors such as down payment and interest rates may vary based on individual borrower circ*mstances and lender policies.
Can you transfer an FHA appraisal to a conventional loan? ›
The lender can do anything they want with that appraisal. If they can get the conventional loan done with an FHA appraisal that is fine. However, the moment they ask you to convert it to a conventional appraisal it becomes a new assignment with all that entails. Charge accordingly for the necessary changes.
How long does it take to transfer an FHA appraisal? ›
“In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrowers request, transfer the appraisal to the second Mortgagee within five business days.” The phrase, “at the borrower's request” is key--FHA loan rules say the appraiser is not automatically required to perform the transfer.
Can you reuse an FHA appraisal? ›
Appraisals cannot be re-used after the mortgage for which the appraisal was ordered has closed.
Can an FHA loan be transferred? ›
Request a transfer.
For example, if you have an FHA loan, you'll need to submit a “release of liability” form, and the new owner will have to meet creditworthiness criteria. Or if you have a VA loan, you'll have to be current on payments and submit a release of liability form, and the buyer will undergo a credit check.
