U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 January 29, 1996 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER TI-437 TO: ALL TITLE I LENDING INSTITUTIONS SUBJECT: APPRAISALS OF MANUFACTURED HOMES AND LOTS Over the last four years, the Title I manufactured home loan program has experienced a dramatic reduction in loan volumes. During this same period, all of the States have established procedures for the licensing or certification of real property appraisers, and many appraisers have taken specialized courses in the valuation of manufactured homes. As a result, there is less need for a national contractor to furnish manufactured home appraisals. The Department has decided that its present contract with Policy Management Systems Corporation (PMSC), which expired on December 31, 1995, will not be renewed. However, any appraisals ordered by December 31, 1995 will be completed by PMSC. Effective January 1, 1996, the Department has revised the procedures for obtaining HUD-approved appraisals for existing and repossessed manufactured homes and for manufactured home lots. This letter describes the new procedures to be followed by all lenders in obtaining HUD-approved appraisals as required by §§ 201.10(b)(2), 201.10(c), 201.10(d)(1) and (2), 201.10(f)(3) and (5), 201.23(b), and 201.51(b)(3) of the Title I regulations. Appraiser Qualifications and Fees For all appraisals of manufactured homes classified as personal property, lenders must use independent fee appraisers who (a) have successfully completed a specialized course in manufactured home valuation based upon the N.A.D.A. appraisal system, and (b) are not engaged in the business of manufactured home retail sales. Evidence that the appraiser has successfully completed a manufactured home valuation course must be furnished to the lender. Appraisal services may be obtained from an appraisal company, as long as the individual appraiser meets the qualifications. Fees for manufactured home appraisal services will be negotiated between the lender and the appraiser. For manufactured home lot loans and other transactions where the home and/or lot are classified as real property, it will no longer be necessary for lenders to contact the local HUD field office to obtain an appraiser. Lenders may use any independent fee appraiser who is licensed or certified by the State to perform real property appraisals. All real property appraisals must be carried out in accordance with the current edition of the Uniform Standards of Professional Appraisal Practice, as adopted by the Appraisal 2 Standards Board of the Appraisal Foundation. Fees for real property appraisal services will be negotiated between the lender and the appraiser. Determination of Appraised Value All appraisals of manufactured homes that are classified as personal property shall be based on the current National Edition of the N.A.D.A. Manufactured Housing Appraisal Guide, which is published quarterly. The manufactured home appraisal must include pictures of the home and all of the worksheets and computations required by the N.A.D.A. appraisal system, and it must be signed and dated by the appraiser. The lender shall obtain a copy of the complete appraisal, including all exhibits, from the appraiser. The appraised value will be valid for a period of six months from the date of the appraisal. The complete appraisal must be retained by the lender for at least six years from the date of the appraisal. Procedure for Obtaining Appraisals Requests for appraisals are to be made directly to the appraiser on Form HUD-92802, Application for Manufactured Home Appraisal. A copy of this application form is enclosed; it may be reproduced as needed. The appraiser will complete the Statement of Appraised Value at the bottom of the application form and return it to you for retention in the loan file. The application form must contain the following information, as appropriate: o The name and address of your lending institution, your Title I contract of insurance number, and the name and telephone number of a contact person. o The type of property to be appraised, whether it is an existing manufactured home, a repossessed home, a home to be traded-in, a manufactured home lot, or an existing manufactured home and lot. o For an appraisal on a repossessed home, the names of the borrowers and the 12-digit Title I case number for the loan. You may also furnish your institution's loan number if desired. The application must be accompanied by copies of the manufacturer's invoice and the retail installment contract. o For all other appraisals, the names of the loan applicants in the box labelled "Names of Borrowers." The Title I case number will be assigned by HUD when the loan is reported for insurance; therefore, no Title I case number will appear on the form. The application must be accompanied by a copy of the purchase contract or retail installment contract for the sale of the manufactured home and/or lot to the borrowers. 3 o The location of the manufactured home and/or lot and the name and telephone number of the person to be contacted for the appraisal appointment. If the home is located in a manufactured home park or on a dealer's lot, provide the name and address of the park or dealer. o A description of the manufactured home to be appraised, including the manufacturer's name, model name and year, serial number, dimensions, and the year the home was purchased if it is a repossessed home. Waiver of Existing Regulations The Department's property appraisal regulations at 24 CFR 267.8(a)(3) require that the appraisal of a manufactured home classified as personal property shall be carried out under the terms and conditions of a contract between HUD and a contractor selected to perform such appraisals. As of January 1, 1996, the Department has waived this requirement in favor of the procedures described in this letter. In the near future, the Department will amend § 267.8(a)(3) to reflect the revised procedures for obtaining manufactured home appraisals outlined in this letter. For Further Information If you have any questions about this letter, please write to Robert J. Coyle, Director, Title I Insurance Division, 490 L'Enfant Plaza East, Suite 3214, Washington, DC 20024, or call the Division at 202-755-7400. Sincerely, Nicolas P. Retsinas Assistant Secretary for Housing- Federal Housing Commissioner Enclosure