**December 17, 2008**

> **MORTGAGEE LETTER 2008-39**

**TO: ALL APPROVED MORTGAGEES**

**ALL FHA ROSTER APPRAISERS**

**SUBJECT: Revised Eligibility Requirements for FHA Roster Appraisers**

Section 1404 of the Housing and Economic Recovery Act of 2008 (HERA)
(Public Law 110-289, approved July 30, 2008) amended Section 202 of the
National Housing Act to revise qualification standards for Federal
Housing Administration (FHA) approved appraisers. This mortgagee letter
sets forth the revised eligibility requirements for appraisers to
qualify for placement and retention on the FHA Appraiser Roster and
provides the timeline for implementation of those requirements.

Section 202(f) of the National Housing Act mandates that all appraisers
chosen or approved to conduct appraisals of properties that will be
security for FHA-insured mortgages must: (1) be "certified" by the State
in which the property to be appraised is located; *[or]{.underline}* by
a nationally recognized professional appraisal organization,
*[and]{.underline}* (2) have demonstrated verifiable education in the
appraisal requirements established by FHA. (Note that the term "state"
as used throughout this Mortgagee Letter includes U.S. Territories.)

**IMPLEMENTATION DATES**

Although Section 202(f) of the National Housing Act was made effective
upon enactment, FHA has determined that the loss of available FHA Roster
appraisers in certain locations will impede its ability to support
affordable mortgage financing in those areas, which would contravene the
goals of the HOPE for Homeowners Program and hinder use of other FHA
single family programs at a time when use of those programs has
increased significantly. Therefore, in order to implement this change in
appraiser eligibility requirements in a manner that is not disruptive to
the FHA mortgage lending process, the requirement will be phased in as
follows:

1.  **Effective October 1, 2008**, FHA stopped accepting applications to
    the FHA Appraiser Roster from licensed but uncertified appraisers.
    All applicants for the FHA Appraiser Roster must be state certified
    (certified residential or certified general) appraisers who meet the
    minimum certification criteria issued by the Appraiser
    Qualifications Board (AQB) of the Appraisal Foundation. The
    requirements that applicants not be listed on the General Service
    Administration (GSA) Excluded Parties List System (EPLS), HUD's
    Limited Denial of Participation List (LDP), or HUD's Credit Alert
    Interactive Voice Response System (CAIVRS) remain unchanged.

2.  **No Later than October 1, 2009**, **all** FHA Appraiser Roster
    appraisers in **all** states and territories must be state certified
    in order to be eligible to conduct appraisals for FHA-insured
    mortgages and remain on the FHA Appraiser Roster.

**FHA MORTGAGEE INSTRUCTIONS:**

**Commencing October 1, 2009**, all FHA-approved lenders must use state
certified appraisers for FHA-insured mortgages. The appraiser assignment
field within the Case Number Assignment screen in FHA Connection must be
input with an appraiser who is listed as either certified residential or
certified general on the FHA Roster for the state in which the property
is located. If, on or after October 1, 2009, an FHA-approved lender
enters an appraisal assignment into FHA Connection for a property from a
FHA Roster Appraiser who is licensed but not certified in accordance
with this Mortgagee Letter, the appraisal will be unacceptable for
FHA-insured financing and a second appraisal, performed by a state
certified appraiser, must be completed at the lender's expense.

When appraisal assignments (case \# assignments) are given to licensed
appraisers prior to October 1, 2009, but the appraisal is not completed
until after that date, the appraisal will be acceptable. However, the
lender must assure that the appraisal assignment date is entered
accurately into FHA Connection which must be a date prior to October 1,
2009. In these cases, the appraisal assignment must be submitted to the
lender no later than October 30, 2009.

Appraisals that were completed by licensed appraisers prior to the
deadline, which are transferred to a new lender, may be used as long as
the original assignment date occurred prior to October 1, 2009.

**ADDITIONAL INFORMATION - CERTIFICATION AND EDUCATION OF APPRAISERS**

Currently, FHA allows both licensed and certified appraisers to conduct
appraisals for FHA-insured mortgages as long as they qualify under the
minimum criteria issued by the Appraiser Qualifications Board (AQB) of
the Appraisal Foundation as authorized under the provisions of Title XI
of the Financial Institutions, Reform, Recovery and Enforcement Act of
1989 (FIRREA). (See the FHA Appraiser Roster regulations at 24 CFR
200.202.) Under FIRREA, the AQB establishes the minimum education,
experience and examination requirements for real property appraisers to
obtain a state certification. In addition, the AQB performs a number of
ancillary duties related to real property and personal property
appraiser qualifications.

To meet the new eligibility requirement, FHA appraisers must be
certified by the state in which the property to be appraised is located,
or by a nationally recognized professional organization. Under new
section 202(f) of the National Housing Act, licensed appraisers would no
longer be authorized to conduct appraisals of properties securing an
FHA-insured mortgage.

Through FIRREA, Congress authorized the Appraisal Foundation to
establish minimum qualification requirements for state certification of
appraisers as well as promote minimum uniform appraisal standards. The
Appraisal Foundation serves as the parent organization to AQB and the
Appraisal Standards Board (ASB) to accomplish this mission. The AQB
promulgates and maintains appraiser qualification criteria and the ASB
promulgates and maintains the Uniform Standards of Professional
Appraisal Practice (USPAP). The FHA Appraiser Roster regulations
acknowledge this national role by requiring that appraisers applying for
placement on the roster meet the minimum AQB education, examination, and
training criteria. Given these unique responsibilities, FHA has
determined that the Appraisal Foundation is a "nationally recognized
professional appraisal organization" within the meaning of new section
202(f) of the National Housing Act. Moreover, FHA has determined that
appraisers meeting the AQB criteria, as required by the FHA Appraiser
Roster regulations, have "demonstrated verifiable education in the
appraisal requirements established by FHA" under the new law.

FHA recognizes that there may be other national professional
organizations that satisfy the requirements of section 202(f), and that
there may be additional means of demonstrating verifiable education in
FHA appraisal requirements. HUD will publish a notice in the
[Federal]{.underline} [Register]{.underline} inviting the public to
comment on nationally recognized professional appraisal organizations
that FHA should consider as meeting the new statutory requirements.

##### Appraiser Qualification Criteria

##### 

#####  Appraisers seeking to become state certified should review the 2008 Real Property Appraiser Qualification Criteria at:

[http://www.appraisalfoundation.org](http://www.appraisalfoundation.org/)

**Procedures to Obtain Placement on the FHA Appraiser Roster**

Applicants who meet all eligibility criteria may apply on-line at:
<http://www.hud.gov/>[appraisers]{.underline}

If you have any questions concerning this Mortgagee Letter, please call
1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech
impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD
(1-877-833-2483).

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner