On May 16, 2003, the Department of Housing and Urban Development (HUD) published a final rule FR-4620-F-02 in the Federal Register making several changes which affect licensing requirements for placement on the FHA Appraiser Roster. These changes were effective June 16, 2003.

On June 20, 2003 HUD issued Mortgagee Letter 2003-09. This Mortgagee Letter provides a synopsis of this final rule and updates the requirements contained in Mortgagee Letter 99-35, which covers appraiser reporting requirements contained in HUD Handbook 4150.2 CHG-1.

Here are the highlights of the rule and letter:

1. A 12 month phase-in of Appraiser Qualification Board (AQB) requirements for appraisers listed on the FHA roster as of June 16, 2003;
2. Automatic suspension of appraisers licensed or certified in multiple states;
3. Clarification of the scope of automatic suspensions not due to State disciplinary actions.

Explanation
An appraiser who is on the FHA Roster as of June 16, 2003 but does not meet the minimum AQB licensing/certification criteria, will have one (1) year to comply with the AQB criteria and submit evidence to HUD. This deadline is June 16, 2004. Failure to comply will result in removal from the FHA Roster.

An appraiser whose license/certification in any state has been revoked, suspended or surrendered as a result of a state disciplinary action will automatically be removed from the FHA Roster. The removal will stay in affect until HUD receives evidence that any state disciplinary action has been lifted.

An appraiser whose license/certification in a state has expired will be automatically removed from the FHA Roster in that state. The appraiser may continue to perform FHA appraisals in other states where he/she is licensed/certified. The appraiser will need to provide evidence to HUD of a license/certification renewal prior to resuming FHA appraisal work.

Reasons for removal from the FHA Roster:

• Significant deficiencies in appraisals.
• Losing standing in a state as an appraiser.
• Prosecution for fraud or other offenses that reflect negatively on an appraiser’s character or integrity.
• Failure to follow HUD instructions and standards.
• Failure to comply with any agreement between HUD and appraiser.
• Being issued a final debarment, suspension or denial of participation.
• Failure to maintain eligibility requirements for the FHA roster.
• Failure to comply with the HUD-imposed education requirements.

Anyone interested in the eligible requirements for placement on the FHA Roster or the procedure for submitting evidence of AQB compliance should view this hyperlink http://www.hud.gov/offices/hsg/mltrmenu.cfm.
(Click on the 2003 letters and go to 03-09)

Sales History Analysis
Mortgagee Letter 2003-09 also states that the appraiser is to report and analyze the three-year (3) sales history of the subject property and a one-year (1) sales history of a comparable. This letter amends HUD Handbook 4150-2 CHG-1. This letter also supercedes the reporting requirements noted in Mortgagee Letter 2003-07, Prohibition of Property Flipping. (continued below)