The Federal Housing Administration (FHA) has issued a temporary partial waiver to the Single Family Housing Policy Handbook 4000.1 requirement in Section II.D.4.c.iii.(F)(2) that an appraiser must include, analyze, and report a minimum of two active listings or pending sales on the appraisal grid, in addition to including three recently completed sales. Other requirements for comparable selection and reporting of market conditions would still apply.
FHA reports that the temporary partial waiver is a response to current housing market conditions in many areas, which have seen a shortage of available housing and increased property values. The FHA Office of Single Family Program Development requested the temporary waiver to alleviate appraisers from having to include overpriced comparable properties in their report when more similar listings are not available to meet the requirements.
HUD Handbook 4000.1 Section II.D.11 requires appraisers to provide an analysis of the appraised property’s value and the market trends in the property’s area. The analysis could be misleading if supported by data from overpriced comparable properties due to a lack of options. Appraisals are still required to include information regarding three recently completed sales.
The temporary partial waiver is only applicable in “changing markets with increasing property values and shortage of housing supply” and will be in place for one year, beginning on April 26, 2021. If you have any questions, please contact DocMagic’s Compliance Department.
