FHA Appraisal Guidelines

I can remember when appraisals were first becoming an issue. Mortgage brokers and loan officers were sitting in their offices faxing over a pre-comparison to get an estimated value on homes that they were trying to lend money on. The idea behind getting this pre-comparison is that the loan officer and the borrower would know if the estimated value of the home was worth enough to do the loan that they wanted. Many borrowers were trying to estimate how much they would need to borrow in order to bail themselves out of debt. This was never good for a few reasons:




1) You would have loan officers and brokers cherry picking neighborhoods according to where the more valuable properties were located. Then, they would know exactly what they could do to up sell their proposals to the client. It was hard for a family in deep credit card debt to believe that they could get out of their situation unless their home was worth a certain amount of money.

2) Lenders that were contracted with certain appraisers were able to pass loans through very quickly. They had very tight relationships that were based upon the premise of “You scratch my back, and I will scratch yours”. This was a favor type system to keep business moving on both sides, and it seemed to be very effective, yet it wasn’t for the borrower. In many cases, the appraisal values were inflated in order to get more money on the deal.

This is very sad, but new FHA appraisal guidelines implemented don’t allow room for that to happen. FHA appraisal guidelines now state that when doing an FHA loan, the mortgage broker is not allowed to request the appraisal.



FHA appraisal guidelines are now geared to benefit everyone, and they no longer allow the lender to use their own appraisers.

-Mayer Dallal