2018 Reverse Mortgage Update and Considerations
A second appraisal may be required on HECM (the FHA version) loans - Effective 10/1/18
On September 28, HUD issued Mortgagee Letter 2018-06. This had a change with moderate impact.
FHA will require a second appraisal be conducted where a collateral risk assessment (a computer estimate) of the initial appraisal submitted for use determines that appraisal may be too high.
At a NRMLA (National Reverse Mortgage Lenders Association) during the week of October 29, 2018, Cheryl Walker, Director of HUD's Home Valuation Policy Division provided some initial statistics on this change.
Initial results indicate the percentage of loans needing a second appraisal was approximately 20%.
Of that 20%, roughly a third had second appraisals that were higher than the first, another third were about the same and a third were less than the first.
When a second appraisal is used, the lower value of the first and second is used.
