Property with appraised value above market value?
I talked with the Director of FHA Single Family Asset Management last week. The reason was because I wrote a memo to the FHA discussing the problem in FHA Preforeclosure Sale Program (PFS) when the HUD Appraised Value is significantly greater than the Fair Market Value. (I have perhaps seven such properties, four FHA, two Fannie, and one Freddie.)
I said that for a FHA/PFS property, it is nearly impossible to dispute the appraised value, the Servicer rejects FMV offers, the price history supports a lower value, and the properties languish and them move into foreclosure.
I was asking for help on this, so together we can achieve the objectives of FHA PFS program.
Her response was that she had never hear of this before, that the Servicers have not reported this, so my issue must be an isolated event.
So, there was no reason to take action, because the HUD appraisals are well-formed.
Okay, this is the question.
1. Do any of you have properties where the appraised value exceeds market value? Yes or No?
2. If yes, how frequently? What percentage of the properties you handle?
3. Does this cause foreclosure of properties that you could have sold at FMV?
Replies to This Discussion
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Permalink Reply by Kevin - Greenville, SC on
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1. YES!! YES!!! and YESSS!
I've had one on the market over a year and have clearly demonstrated the FHA appraisal does not reflect FMV for this home.
2. Not really sure how to answer.
3. If the continue to stick to their current appraisal that will be the case. This is however a judicial state and I WILL let the Judge know about this if it comes to another hearing to schedule the Foreclosure Sale.
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Permalink Reply by Cheryl Bray on
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Yes! Often, Yes!I'm in the San Diego Market place. The issue you describe is a problem across the board in all valuations, not just FHA. Our market values spiked up during the first time home buyer credit era...then proceeded to adjust downward rather rapidly. The available comps that all appraisers (BPO appraisers,FHA Appraisers, Conventional appraisers) use are overpriced. The values are not holding up at all. It's a war zone...we are battling values left and right with short sales and high BPO's. ..Good for you for escalating the issue. The problem may not be as widespread in some areas. It likely depends on how much the market spiked during the homebuyer credit era and whether the area also had a state buyer credit incentive. In San Diego, the credit affect was very strong in conforming price ranges...buyer's were being outbid left and right....that all came to a screeching halt after credit expirations...SD prices have been trending downward since summer 2010.
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Permalink Reply by Richard Kirk on
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I don't know how many times this has happened to me, but at least 3 times. I would say that 1 out of 8 FHA deals get countered for value and you're right, virutally impossible to appeal these. I do not know off hand how many went to foreclosure, but it is likely at least one did...hope this helps, good luck.
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