U. S. Department of Housing and Urban Development
                  Washington, D.C. 20410-8000
                        December 9, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
                                                          TI-460
 
TO:     ALL APPROVED TITLE I LENDERS
 
SUBJECT:     Appraisals on Repossessed Manufactured Homes
             Classified as Personal Property
 
   The purpose of this letter is to clarify TI-437 , issued
January 29, 1996, and amend some of its requirements to allow the
Department to process Manufactured Home claims in a more
expeditious manner.
 
   TI-437  advised lenders of the discontinuance of an appraisal
contract with Policy Management Systems Corporation (PMSC) and
announced that appraisals done by independent fee appraisers who
had completed a specialized N.A.D.A. course were now being
accepted on repossessed manufactured (mobile) homes that were
classified as personal property.
 
   Title I regulation 201.51(b)(3) requires an appraisal of the
property on the original homesite, except when a site owner
demands that the unit be moved before an appraisal can be
performed, and that the appraisal must be based on the RETAIL
value of comparable manufactured homes in similar condition and
in the same geographic area.  Some claim submissions submitted
since TI-437 was issued have used appraised values on the HUD-92802,
Application for Manufactured Home Appraisal, that were not
retail values.  Rather these values were derived by the appraiser
using one of the wholesale adjustment factors listed in the
N.A.D.A. appraisal guide.  Use of these wholesale value
adjustments is not allowable.
 
   We have contacted N.A.D.A. and they are notifying any
appraiser who has passed their course of this restriction.  In
addition, the course material is being modified to address this
issue.
 
   Lenders with pending manufactured housing claims may be
requested to submit the complete appraisal package on some of
their claims so the Department can verify the HUD-92802 reflects
the proper figure.
 
   Effective the date of this letter, you must submit with your
claim the entire appraisal package including the National
Appraisal System (N.A.S.) Field Worksheet Booklet Form #2
identifying all components and repairs with their assigned values
and the N.A.S. Certificate of Value Form #3 along with the HUD-92802
when submitting the HUD-637, Claim for Loss.  Lenders
should monitor the packages to make sure that appraisers are
using the correct value charts from the appropriate N.A.D.A.
Guidebook and condition adjustment percentages as listed in the
N.A.S. Field Instruction Manual, insuring that they are not
routinely omitting figures or features that increase the value
and that the information is legible.
                                                            2
 
    The HUD-92802 should reflect only the Estimated Market Value
in Present Condition and the Estimated Market Value If Repaired
in accordance with Section 201.51(b)(3) and 201.53(b).
Appraisals that reflect Wholesale figures will result in either
the claim being denied or adjusted to reflect Retail figures
prior to calculating the claim.
 
     If you have any questions about this letter, please contact
Maurice D. Gulledge, Chief, Home Improvement Branch, 451 Seventh
Street, S.W., Room 9272, Washington, D.C. 20410, or Mary Worthy
of his staff at 202-708-6396 or email to homeimpr@hud.gov.
 
                              Sincerely,
 
                              Nicolas P. Retsinas
                              Assistant Secretary for Housing-
                                Federal Housing Commissioner