Some minor repairs no longer mandated
By MortgageDaily.com staff
12/23/2005

FHA appraisal standards have been eased to allow some minor defects on homes to remain in need of repair at funding.

The appraisal guideline changes were outlined in a recent Federal Housing Administration mortgagee letter offering lenders additional guidance regarding recent appraisal revisions. In September, the Department of Housing and Urban Development said it eliminated two appraisal forms and replaced them with Fannie Mae forms.

FHA lenders were told there would no longer be mandated repairs on "minor property deficiencies, which generally result from deferred maintenance and normal wear and tear, do not affect the safety of the occupants or the security and soundness of the property."

Examples of minor defects include missing handrails, cracked or damaged exit doors that are operable and cracked window glass, according to the letter.

The shift from its historical emphasis on requiring minor repairs is a "continuing effort to reform and standardize its appraisal requirements," FHA said.

As part of that effort, the FHA recently adopted four of Fannie's updated appraisal forms, required starting Jan. 1, that will eliminate two appraisal-related forms and reduce burdensome and duplicative work on the loans it insures.

The additional guidance on relaxed inspection requirements, also effective at the year's start, said FHA no longer mandates automatic inspections for termites, wells, and septic systems, among other things, on existing properties.

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