A second-appraisal requirement that had been issued by the Federal Housing Administration at the height of the housing crisis has been repealed for loans that exceed $417,000 in declining markets and for cash-out refinances. A second-appraisal requirement will remain when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired.

The policy changes can be found in FHA Mortgagee Letter 09-48, which rescinds two previous Mortgagee Letters on the subject.

In an interview with Mortgage Wire at the National Association of Realtors' convention Nov. 14-15 in San Diego, FHA Commissioner David Stevens said that the FHA had not seen any benefit from the two-appraisal mandate and that it “really slowed down the [FHA loan] process.”

The two-appraisal mandate, which required two appraisals prior to an underwriting decision, had long been opposed by industry groups such as the National Association of Realtors.

The removal of the two-appraisal mandate is effective immediately.

For a copy of the Mortgagee Letter, visit www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-48ml.pdf .

Source: Appraisal Institute "News & Advocacy"