ML 09-28 prohibits mortgage brokers and commission based lender staff from the appraisal process and has lead to wholesale reverse mortgage lenders requiring the use of Appraisal Management Companies to ensure compliance with FHA.
In addition, lenders are responsible for assuring that the appraiser who conducted the appraisal used for the loan is correctly identified in FHA Connection.
The enactment of the ML was originally scheduled for implementation on January 1, 2010 but was extended to allow FHA and lenders additional time to adjust systems to accommodate the changes.
According to the notice from FHA, detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter, which was delayed due to federal offices being shut down the week of February the 8th and will be released the week of February 15th.
However, lenders will be able to secure a case number assignment in FHA Connection via the Case Number Assignment Screen without inputting the appraiser information.
Many originators are concerned about the implementation and the effect it will have on the industry and especially senior borrowers. “The HVCC policy will create a process of uncertainty that will adversely affect property values and reduce benefit amounts,” said Dennis Haber, EVP, of Agency For Consumer Equity in an email to RMD.
“The individual appraiser will be working for a lot less, yet the price of an appraisal will cost more,” says Haber. He notes that appraisers that are not familiar with an area, will affectively cause an additional reduction in the principal limit. “I don’t see how this policy helps our elders.”