## Chapter 10 Property Eligibility and Appraisal Requests

#### Overview

+------------+---------------------------------------------------------+
| ##### In   | > This chapter contains information about               |
| troduction |                                                         |
|            | -   the eligibility of property to be the security for  |
|            |     a VA guaranteed loan, and                           |
|            |                                                         |
|            | -   appraisal requests.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | This chapter contains the following topics.             |
| ### In thi |                                                         |
| s Chapter  |                                                         |
| {#in-this- |                                                         |
| chapter .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------------------------------------------------------- ------------
  Topic                                                      See Page

  10.01 Why An Appraisal Is Required                         10-2

  10.02 Who Can Request an Appraisal                         10-3

  10.03 The VA Assignment System                             10-4

  10.04 How to Request an Appraisal                          10-5

  10.05 Types of Property Eligible for Appraisal             10-8

  10.06 Properties Not Eligible for Appraisal                10-13

  10.07 Other Appraisal Request Restrictions                 10-15

  10.08 New Construction                                     10-18

  10.09 Ten-Year Insured Protection Plans                    10-20

  10.10 Construction Exhibits                                10-22

  10.11 Conversion of HUD Value Notices for VA Use           10-27

  10.12 Fees For Appraisals and Inspections                  10-28

  Figure 1: Builder Information and Certifications           10-30
  ---------------------------------------------------------- ------------

#### 10.01 Why An Appraisal Is Required {#why-an-appraisal-is-required .unnumbered}

+------------+---------------------------------------------------------+
| #          | > An appraisal is required to help ensure that any      |
| #### Value | > property which will become the security for a         |
|  and Condi | > VA-guaranteed loan                                    |
| tion  {#va |                                                         |
| lue-and-co | -   has a value of at least as much as the loan amount, |
| ndition .u |     and                                                 |
| nnumbered} |                                                         |
|            | -   is in a condition acceptable to VA.                 |
+------------+---------------------------------------------------------+

#### 10.02 Who Can Request an Appraisal {#who-can-request-an-appraisal .unnumbered}

+------------+---------------------------------------------------------+
| ####       | > VA prefers that the appraisal be requested by the     |
| # Lender P | > lender, although it can be requested by any other     |
| referred { | > party to the transaction, provided the appraiser is   |
| #lender-pr | > assigned by VA.                                       |
| eferred .u |                                                         |
| nnumbered} | > Lenders must ensure that agents and mortgage brokers  |
|            | > requesting VA appraisals on their behalf are familiar |
|            | > with the requirements in this chapter.                |
+------------+---------------------------------------------------------+

#### 10.03 The VA Assignment System {#the-va-assignment-system .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > The VA Assignment System (VAAS) allows appraisal      |
| Purpose of | > requesters to contact VA via the Internet any time of |
|  System {# | > the day or night to obtain VA assignment of a case    |
| purpose-of | > number and fee appraiser (and construction inspector, |
| -system .u | > if applicable).                                       |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### A    | > A VAAS User's Guide is available online. The Internet |
| ccess and  | > address is                                            |
| User's Gui |                                                         |
| de {#acces | > [http://vaas.vba.va.gov]{.underline}.                 |
| s-and-user |                                                         |
| s-guide .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > ***Correct web browser?***                            |
| ### Proble |                                                         |
| m Solving  | > Netscape Navigator 4.x or Microsoft Internet Explorer |
| {#problem- | > 4.x must be used to access VAAS.                      |
| solving .u |                                                         |
| nnumbered} | > ***Problem with user ID or password or fee            |
|            | > panel-related problem?***                             |
|            |                                                         |
|            | > Contact the VA office of jurisdiction for the         |
|            | > property (Appendix A is a list of VA offices).        |
|            |                                                         |
|            | > ***Technical problem with the VAAS software?***       |
|            |                                                         |
|            | > Contact the VA Help Desk in Philadelphia at (215)     |
|            | > 381-3050.                                             |
|            |                                                         |
|            | > ***No access to the Internet or unable to resolve     |
|            | > problem with VAAS?***                                 |
|            |                                                         |
|            | > Assignments can be requested on a limited basis by    |
|            | > telephone, telefax or in                              |
|            |                                                         |
|            | > writing.                                              |
|            |                                                         |
|            | > ***Reference***: See Section 10.04 for more           |
|            | > information.                                          |
+------------+---------------------------------------------------------+

#### 10.04 How to Request an Appraisal {#how-to-request-an-appraisal .unnumbered}

+------------+---------------------------------------------------------+
| ##### Proc | > Follow the steps in the table below to request an     |
| edure {#pr | > appraisal.                                            |
| ocedure .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Ensure that the property is eligible for appraisal **and**   |
|       | all other appraisal request requirements can be satisfied    |
|       | (Sections 10.05 through 10.10). Contact the VA office of     |
|       | jurisdiction for the property if there are                   |
|       |                                                              |
|       | -   questions about the property's eligibility, or           |
|       |                                                              |
|       | -   if the property is not eligible for appraisal but is     |
|       |     already the security for a VA loan.                      |
|       |                                                              |
|       |     Every property eligible for the Lender Appraisal         |
|       |     Processing Program (LAPP) should be processed under      |
|       |     LAPP.                                                    |
+-------+--------------------------------------------------------------+
| 2     | Access the VA Assignment System (VAAS) per Section 10.03,    |
|       | and provide all necessary information about the case. VAAS   |
|       | will:                                                        |
|       |                                                              |
|       | -   Assign                                                   |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   a case number (in liquidation cases, this will be the    |
|       |     existing VA loan number for the property, as provided by |
|       |     the requester)                                           |
|       |                                                              |
|       | -   an appraiser (since VA is required by law to select the  |
|       |     fee appraiser on a rotational basis from a panel         |
|       |     maintained by VA), and                                   |
|       |                                                              |
|       | -   an inspector, if appropriate, and                        |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   produce a completed VA Form 26-1805-1, VA Request for    |
|       |     Determination of Reasonable Value, which includes the    |
|       |     above information.                                       |
+-------+--------------------------------------------------------------+

Continued on next page

10.04 How to Request an Appraisal, Continued

  -----------------------------------------------------------------------
  Procedure (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 3     | The same day as the assignment is made, e-mail, telefax or   |
|       | mail the VAAS-generated VA Form 26-1805-1 and any other      |
|       | required documentation to the appraiser assigned. Keep a     |
|       | copy for your records.                                       |
|       |                                                              |
|       | If a liquidation appraisal, include the name and telephone   |
|       | number of the current or last known occupant. If the         |
|       | property is vacant, also include the keys to the property,   |
|       | or sufficient information to enable the appraiser to gain    |
|       | access to the property, for example, the name and telephone  |
|       | number of a local person to contact.                         |
|       |                                                              |
|       | If appraised as "Proposed or Under Construction", also       |
|       |                                                              |
|       | -   ensure that the construction exhibits meet the           |
|       |     requirements in Section 10.10                            |
|       |                                                              |
|       | -   mark the case number assigned on the outside of each set |
|       |     of the construction exhibits                             |
|       |                                                              |
|       | -   include a set of the construction exhibits with the      |
|       |     appraiser's VA Form 26-1805-1. This will be considered   |
|       |     the VA file copy, and                                    |
|       |                                                              |
|       | -   send the inspector, if assigned, a copy of VA Form       |
|       |     26-1805-1 and a set of the construction exhibits.        |
+-------+--------------------------------------------------------------+

Continued on next page

10.04 How to Request an Appraisal, Continued

+------------+---------------------------------------------------------+
| ##         | > If Internet access to VAAS is not available, complete |
| ### If No  | > Step 1 in the above procedure.                        |
| Access to  |                                                         |
| VAAS {#if- | > Then complete a [VA Form                              |
| no-access- | >                                                       |
| to-vaas .u | 26-1805](http://www.vba.va.gov/pubs/forms/26-1805.pdf), |
| nnumbered} | > VA Request for Determination of Reasonable Value. A   |
|            | > typed, fully completed form is required for every     |
|            | > request, except                                       |
|            |                                                         |
|            | -   properties already listed on a valid VA Form        |
|            |     26-1843a, Master Certificate of Reasonable Value    |
|            |     (See Section 13.03, Step 6)                         |
|            |                                                         |
|            | -   loans for alterations, improvements or repairs of   |
|            |     \$3,500 or less (See Section 10.05), or             |
|            |                                                         |
|            | -   partial release of the security for a VA-guaranteed |
|            |     loan (See Section 10.05)                            |
|            |                                                         |
|            |     > For LAPP Cases, write "LAP" as the prefix for the |
|            |     > case number in Item 1 of [VA Form                 |
|            |     >                                                   |
|            |  26-1805](http://www.vba.va.gov/pubs/forms/26-1805.pdf) |
|            |     > and write "LENDER APPRAISAL PROCESSING PROGRAM"   |
|            |     > in capital letters under the lender's name and    |
|            |     > address in Item 5. This lets the appraiser know   |
|            |     > to forward the appraisal report to the lender,    |
|            |     > not VA, for processing.                           |
|            |                                                         |
|            |     > For liquidation cases, write "LIQUIDATION         |
|            |     > APPRAISAL" in capital letters in Item 28 of [VA   |
|            |     > Form                                              |
|            |     >                                                   |
|            | 26-1805](http://www.vba.va.gov/pubs/forms/26-1805.pdf). |
|            |     > Also include the name and telephone number of the |
|            |     > current or last known occupant. If the property   |
|            |     > is vacant, the request must also include the keys |
|            |     > to the property, or sufficient information to     |
|            |     > enable the appraiser to gain access to the        |
|            |     > property (such as, the name and telephone number  |
|            |     > of a local person to contact.                     |
|            |                                                         |
|            |     > Then telephone the necessary information to the   |
|            |     > VA office of jurisdiction for the location of the |
|            |     > property, or telefax or mail the [VA Form         |
|            |     >                                                   |
|            |  26-1805](http://www.vba.va.gov/pubs/forms/26-1805.pdf) |
|            |     > and any exhibits to that office.                  |
|            |                                                         |
|            |     > Finally, for telephoned or telefaxed requests     |
|            |                                                         |
|            | -   enter the case number assigned by VA in Item 1 of   |
|            |     [VA Form                                            |
|            |                                                         |
|            |  26-1805](http://www.vba.va.gov/pubs/forms/26-1805.pdf) |
|            |     and the name of the appraiser (and inspector, if    |
|            |     assigned) in Item 43, and                           |
|            |                                                         |
|            | -   complete Step 3 in the above procedure.             |
+------------+---------------------------------------------------------+

#### 10.05 Types of Property Eligible for Appraisal {#types-of-property-eligible-for-appraisal .unnumbered}

+------------+---------------------------------------------------------+
| ####       | > If the lender fails to exercise due diligence in      |
| # Lender R | > determining appraisal eligibility, VA may deny or     |
| esponsibil | > reduce payment on a future claim based on the         |
| ity {#lend | > ineligibility of the property.                        |
| er-respons |                                                         |
| ibility .u | > Properties not eligible for appraisal and other       |
| nnumbered} | > appraisal request restrictions are described in       |
|            | > Sections 10.06 and 10.07.                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > A home which has either been previously               |
| # Existing | > owner-occupied or had all onsite and offsite          |
|  Construct | > improvements fully completed for one year or more is  |
| ion {#exis | > eligible.                                             |
| ting-const |                                                         |
| ruction .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Newly completed properties (completed less than one   |
| # New Cons | > year and never owner-occupied) are eligible if either |
| truction { |                                                         |
| #new-const | -   covered by a one-year VA builder's warranty         |
| ruction .u |                                                         |
| nnumbered} | -   enrolled in a HUD-accepted ten-year insured         |
|            |     protection plan, or                                 |
|            |                                                         |
|            | -   built by a veteran, as the general contractor, for  |
|            |     his/her own occupancy.                              |
|            |                                                         |
|            |     > ***Reference***: See Section 10.08 for details.   |
+------------+---------------------------------------------------------+

Continued on next page

10.05 Types of Property Eligible for Appraisal, Continued

+------------+---------------------------------------------------------+
| ##         | > Property is eligible for appraisal prior to           |
| ### Propos | > construction or during construction, based on         |
| ed or Unde | > proposed construction exhibits.                       |
| r Construc |                                                         |
| tion {#pro | > ***Reference***: See Section 10.10 for details        |
| posed-or-u | > regarding construction exhibits.                      |
| nder-const |                                                         |
| ruction .u | > These properties can be appraised either              |
| nnumbered} |                                                         |
|            | -   individually, or                                    |
|            |                                                         |
|            | -   as a group of 5 or more on a "master" appraisal.\   |
|            |     Each model or house type is appraised at the same   |
|            |     time by the same fee appraiser on a separate        |
|            |     appraisal report. All of the properties are         |
|            |     included on the same *VA Master Certificate of      |
|            |     Reasonable Value*.                                  |
|            |                                                         |
|            |     > These properties must be inspected by VA or HUD   |
|            |     > during construction (See Chapter 14) to ensure    |
|            |     > that the property                                 |
|            |                                                         |
|            | -   is built according to the construction exhibits     |
|            |     used in the appraisal, and                          |
|            |                                                         |
|            | -   meets VA Minimum Property Requirements for proposed |
|            |     construction (See Section 12.02).                   |
|            |                                                         |
|            |     > Only a final inspection is required if either     |
|            |                                                         |
|            | -   the property is to be covered by a ten-year insured |
|            |     protection plan (See Section 10.09), or             |
|            |                                                         |
|            | -   VA can rely on local building authority inspections |
|            |     in lieu of first and second stage VA inspections    |
|            |     (See Section 14.03).                                |
|            |                                                         |
|            |     > ***Note***: Properties which are fully completed  |
|            |     > except for the "customer preference" items        |
|            |     > described in Section 10.08 are eligible for       |
|            |     > appraisal as "new construction" as described      |
|            |     > above.                                            |
+------------+---------------------------------------------------------+

Continued on next page

10.05 Types of Property Eligible for Appraisal, Continued

+------------+---------------------------------------------------------+
| **Ma       | > To be eligible for a VA loan term of 30 years, a      |
| nufactured | > manufactured home must be                             |
| Home       |                                                         |
| Classified | -   classified and taxed as real property               |
| as Real    |                                                         |
| Estate**   | -   properly affixed to a permanent foundation (Section |
|            |     12.10)                                              |
|            |                                                         |
|            | -   substantially conform with VA MPRs (Chapter 12),    |
|            |     and                                                 |
|            |                                                         |
|            | -   conform with applicable building code and zoning    |
|            |     requirements for real estate.                       |
|            |                                                         |
|            |     > ***References***: See                             |
|            |                                                         |
|            | -   Section 10.10, *Construction* *Exhibits,*           |
|            |                                                         |
|            | -   Section 11.12, *Other Property Types and            |
|            |     Situations,*                                        |
|            |                                                         |
|            | -   Section 13.06, *notice of Value Conditions and      |
|            |     Requirements*, and                                  |
|            |                                                         |
|            | -   Section 14.04, *Manufactured Homes Classified as    |
|            |     Real Estate*.                                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Othe | > Modular homes are eligible, provided they are covered |
| r Manufact | > by a HUD structural engineering bulletin, or          |
| ured Homes | > constructed to the standards of the State in which    |
|  {#other-m | > the factory is located and receive that State's       |
| anufacture | > approval certification. They are delivered to the     |
| d-homes .u | > building site in sections, but are not attached to a  |
| nnumbered} | > chassis supported by wheels. For homes processed as   |
|            | > "proposed or under construction. (See "Modular        |
|            | > Construction" in Section 10.10.)                      |
|            |                                                         |
|            | > For traditional manufactured homes (not classified as |
|            | > real estate and attached to a chassis which is        |
|            | > supported by wheels), see Title [38 CFR               |
|            | > 36.4200]{.underline} series.                          |
|            |                                                         |
|            | > **\[[38 CFR 36.4200]{.underline}\]**                  |
+------------+---------------------------------------------------------+

Continued on next page

10.05 Types of Property Eligible for Appraisal, Continued

+------------+---------------------------------------------------------+
| ####       | > A VA-guaranteed loan may be acquired to alter,        |
| # Property | > improve or repair a property owned and occupied by    |
|  to be Alt | > the veteran as the veteran's home. The property is    |
| ered/ Impr | > eligible for appraisal either                         |
| oved/ Repa |                                                         |
| ired {#pro | -   prior to being altered, improved or repaired. (When |
| perty-to-b |     extensive alterations, improvements or repairs are  |
| e-altered- |     to be made, VA must determine on a case-by-case     |
| improved-r |     basis at the time of the appraisal request which of |
| epaired .u |     the construction exhibits in Section 10.10 are      |
| nnumbered} |     required. All work must be inspected, to the extent |
|            |     determined appropriate by VA on a case-by-case      |
|            |     basis.), or                                         |
|            |                                                         |
|            | -   after being altered, improved or repaired.\         |
|            |     ***Note***: This usually involves a VA-guaranteed   |
|            |     loan for refinancing purposes. No construction      |
|            |     exhibits or inspections are generally required, if  |
|            |     the work was completed prior to the appraisal.      |
|            |                                                         |
|            |     > In either situation, all work must be acceptably  |
|            |     > completed before VA guaranty of the loan.         |
|            |                                                         |
|            |     > ***Reference***: For energy efficiency-related    |
|            |     > alterations or repairs, see Section 7.03.         |
+------------+---------------------------------------------------------+

Continued on next page

10.05 Types of Property Eligible for Appraisal, Continued

+------------+---------------------------------------------------------+
| ##### Secu | > Property securing an existing VA loan is eligible for |
| rity for E | > appraisal for the following purposes:                 |
| xisting VA |                                                         |
|  Loan {#se | > ***Refinancing***:                                    |
| curity-for |                                                         |
| -existing- | > Either                                                |
| va-loan .u |                                                         |
| nnumbered} | -   cash-out, which requires both an appraisal and a VA |
|            |     notice of value, or                                 |
|            |                                                         |
|            | -   interest rate reduction only, which requires        |
|            |     neither an appraisal nor a notice of value.         |
|            |     However, if the new loan balance will exceed the    |
|            |     original loan amount by 5% or more, the lender may  |
|            |     wish to consider requesting an appraisal.           |
|            |                                                         |
|            |     > ***Partial release of security***:                |
|            |                                                         |
|            |     > The request must be in writing and include any    |
|            |     > information which the VA office of jurisdiction   |
|            |     > considers necessary. A formal appraisal is not    |
|            |     > required if there is sufficient information for   |
|            |     > VA staff to determine the reasonable value of the |
|            |     > property being released and the value of the      |
|            |     > security remaining.                               |
|            |                                                         |
|            |     > ***Foreclosure***:                                |
|            |                                                         |
|            |     > When the VA loan is in default. A liquidation     |
|            |     > appraisal should be requested at the time the     |
|            |     > notice of sale is forwarded to VA, but no later   |
|            |     > than 30 days prior to the estimated or scheduled  |
|            |     > sale date. The lender/holder/servicer is          |
|            |     > responsible for assisting the appraiser in        |
|            |     > gaining access to the interior of the property.   |
|            |                                                         |
|            |     > ***Reference***: See Section 11.13 for more       |
|            |     > information about interior access.                |
+------------+---------------------------------------------------------+

#### 10.06 Properties Not Eligible for Appraisal {#properties-not-eligible-for-appraisal .unnumbered}

.

+------------+---------------------------------------------------------+
| ##### Prop | > Property in a badly deteriorated condition is not     |
| erties Not | > eligible for appraisal unless VA agrees there is a    |
|  Likely to | > reasonable likelihood that it can be repaired to meet |
|  Meet MPRs | > VA Minimum Property Requirements (MPRs) prior to loan |
|  {#propert | > closing.                                              |
| ies-not-li |                                                         |
| kely-to-me | > Other MPR-related restrictions are outlined in        |
| et-mprs .u | > Chapter 12.                                           |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Loca | > Property is not eligible for appraisal if the         |
| tion-Relat | > improvements are or will be located in                |
| ed Problem |                                                         |
|  {#locatio | -   a Special Flood Hazard Area (SFHA) and either       |
| n-related- |                                                         |
| problem .u | ```{=html}                                              |
| nnumbered} | <!-- -->                                                |
|            | ```                                                     |
|            | -   it is proposed/under/new construction with          |
|            |     elevation of the lowest floor below the 100 year    |
|            |     flood level, or                                     |
|            |                                                         |
|            | -   flood insurance is not available                    |
|            |                                                         |
|            |     > ***Reference***: See Section 11.12.               |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   an area subject to regular flooding for whatever    |
|            |     reason, whether or not it is in an SFHA (See        |
|            |     Section 11.12)                                      |
|            |                                                         |
|            | -   a Coastal Barrier Resources System area (See        |
|            |     Section 11.12)                                      |
|            |                                                         |
|            | -   an airport Noise Zone 3, if proposed or under       |
|            |     construction (See Section 11.12)                    |
|            |                                                         |
|            | -   a transmission line easement involving              |
|            |     high-pressure gas or liquid petroleum or high       |
|            |     voltage electricity, if any part of the residential |
|            |     structure is located within the easement (See       |
|            |     Section 12.07), or                                  |
|            |                                                         |
|            | -   an area susceptible to geological or soil           |
|            |     instability (earthquakes, landslides or other       |
|            |     history of unstable soils), if proposed/under/new   |
|            |     construction and the builder cannot provide         |
|            |     evidence that either the site is not affected or    |
|            |     the problem has been adequately addressed in the    |
|            |     engineering design (See Section 10.10).             |
+------------+---------------------------------------------------------+

Continued on next page

10.06 Properties Not Eligible for Appraisal, Continued

+------------+---------------------------------------------------------+
| ####       | > A condominium must be acceptable to VA before any     |
| # Condo No | > unit in the project can be eligible for VA loan       |
| t Approved | > guaranty. To avoid an unnecessary appraisal fee, a    |
|            | > condominium unit should not be appraised unless there |
|            | > is a reasonable likelihood that the project will be   |
|            | > accepted by VA or HUD prior to loan closing.          |
|            | >                                                       |
|            | > ***Reference***: See Chapter 16.                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Owne | > Property involving a less than fee simple ownership   |
| rship Not  | > (for example**,** leaseholds, cooperatives, ground    |
| Fee Simple | > rental arrangements) is not eligible for appraisal    |
|            | > without prior VA approval of the specific legal       |
|            | > arrangement or project. Submissions to VA Central     |
|            | > Office (262A) must include                            |
|            |                                                         |
|            | -   details of the ownership arrangement                |
|            |                                                         |
|            | -   copies of leases or other instruments creating the  |
|            |     estate, and                                         |
|            |                                                         |
|            | -   recommendations of the VA office of jurisdiction.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > See Section 10.07.                                    |
| Other Inel |                                                         |
| igible Pro |                                                         |
| perties {# |                                                         |
| other-inel |                                                         |
| igible-pro |                                                         |
| perties .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### 10.07 Other Appraisal Request Restrictions {#other-appraisal-request-restrictions .unnumbered}

+------------+---------------------------------------------------------+
| ##### No   | > No new appraisal can be requested on property which   |
|  Duplicate | > already has a valid VA value determination.           |
|  Appraisal |                                                         |
| s {#no-dup | > The process for changing notices of value is outlined |
| licate-app | > in Chapter 13.                                        |
| raisals .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Buil | > For any property appraised as either "proposed or     |
| der ID Req | > under construction" or "new construction", the        |
| uired {#bu | > builder must have a valid builder identification      |
| ilder-id-r | > number prior to a VA notice of value being issued.    |
| equired .u |                                                         |
| nnumbered} | > To obtain and maintain a valid, VA-assigned builder   |
|            | > ID, all of the following must be fully-executed,      |
|            | > up-to-date and on file at the VA office of            |
|            | > jurisdiction over the location of the property:       |
|            |                                                         |
|            | -   [VA Form                                            |
|            |                                                         |
|            |   26-421](http://www.vba.va.gov/pubs/forms/26-421.pdf), |
|            |     Equal Employment Opportunity Certification.         |
|            |                                                         |
|            | -   VA Form 26-8791, VA Affirmative Marketing           |
|            |     Certification.                                      |
|            |                                                         |
|            | -   The identifying information and certifications      |
|            |     shown in Figure 1 of this chapter, as worded and in |
|            |     the order shown, and either on the builder's        |
|            |     letterhead or attached to a statement on the        |
|            |     builder's letterhead which references it.           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Property is ineligible for VA appraisal if any party  |
| # No Appra | > of interest to the transaction, other than the        |
| isal Due t | > purchaser, is debarred Government-wide, or otherwise  |
| o Sanction | > excluded from participation in the Loan Guaranty      |
|            | > program due to a VA-imposed sanction for              |
|            | > substantially prejudicing a veteran by either         |
|            |                                                         |
|            | -   failing to correct justified construction complaint |
|            |     items                                               |
|            |                                                         |
|            | -   violating VA Minimum Property Requirements          |
|            |                                                         |
|            | -   deviating from plans and specifications without VA  |
|            |     approval                                            |
|            |                                                         |
|            | -   failing to honor other contractual obligations on   |
|            |     houses previously built and sold with VA financing, |
|            |     or                                                  |
|            |                                                         |
|            | -   using a sales contract or marketing method or       |
|            |     practice which VA considered to be unfair or unduly |
|            |     prejudicial to the veteran involved.                |
+------------+---------------------------------------------------------+

Continued on next page

10.07 Other Appraisal Request Restrictions, Continued

+------------+---------------------------------------------------------+
| ##### No A | > When the sanctioned party is a builder, this          |
| ppraisal D | > restriction applies to any property still owned by    |
| ue to Sanc | > the builder, including houses under construction and  |
| tion (cont | > existing houses. VA's refusal to appraise will not be |
| inued) {#n | > affected by either the fact that                      |
| o-appraisa |                                                         |
| l-due-to-s | -   a fee inspector approved the work on which the      |
| anction-co |     sanction was based, or                              |
| ntinued .u |                                                         |
| nnumbered} | -   the builder changes the company's name or           |
|            |     organization or becomes a principal or officer in   |
|            |     another organization.                               |
|            |                                                         |
|            |     ***Note***: See Section 17.01. Lenders are          |
|            |     responsible for identifying builders on the GSA     |
|            |     list. For sanctioned builders not on the GSA list,  |
|            |     each VA office of jurisdiction will either          |
|            |                                                         |
|            | -   periodically provide lenders with a list of such    |
|            |     builders to check or                                |
|            |                                                         |
|            | -   assume responsibility for ensuring that those       |
|            |     builders do not participate in the VA loan guaranty |
|            |     program.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > If there are local building authority requirements    |
| ### Buildi | > due to building code enforcement or urban renewal,    |
| ng Code En | > either                                                |
| forcement  |                                                         |
| {#building | -   provide evidence with the appraisal request that    |
| -code-enfo |     those requirement(s) are satisfied, or              |
| rcement .u |                                                         |
| nnumbered} | -   the notice of value will be conditioned to require  |
|            |     such evidence.                                      |
|            |                                                         |
|            |     > ***Reference***: See Section 13.06.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Po   | > During times of heavy VA workload or limited          |
| tential Re | > resources, a VA field station may notify lenders that |
| striction  | > it will temporarily accept only appraisal requests    |
| to Veteran | > involving a veteran under contract. In that           |
| s Under Co | > situation, the appraisal request must either          |
| ntract {#p |                                                         |
| otential-r | -   be accompanied by a copy of the fully-executed      |
| estriction |     purchase agreement, or otherwise clearly identify   |
| -to-vetera |     the transaction with a proposed VA loan, or         |
| ns-under-c |                                                         |
| ontract .u | -   indicate that the appraisal is for a purpose not    |
| nnumbered} |     affected by this restriction (such as, proposed     |
|            |     construction, refinancing, foreclosure, or a loan   |
|            |     for alterations/improvements/repairs).              |
+------------+---------------------------------------------------------+

Continued on next page

10.07 Other Appraisal Request Restrictions, Continued

+------------+---------------------------------------------------------+
| ##         | > During times of heavy VA workload or limited          |
| ### Potent | > resources and with VA Central Office concurrence, a   |
| ial "Maste | > VA field station may temporarily refuse a builder's   |
| r" Apprais | > requests for "master" appraisals if experience with   |
| al Restric | > that builder or location indicates that a minority of |
| tions {#po | > the units will receive VA financing. In that          |
| tential-ma | > situation, the builder may obtain an individual       |
| ster-appra | > appraisal on any property sold to a veteran.          |
| isal-restr |                                                         |
| ictions .u | > With VA Central Office concurrence, a VA field        |
| nnumbered} | > station may also limit the number of                  |
|            |                                                         |
|            | -   units in a "master" appraisal to the number which   |
|            |     it believes can be successfully marketed during the |
|            |     validity period of the VA value notice, or          |
|            |                                                         |
|            | -   optional items of equipment or variations from      |
|            |     basic house types to be included in a "master"      |
|            |     appraisal.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > In areas where there is no qualified VA or HUD fee    |
| ### If No  | > inspector, properties cannot be appraised until they  |
| Inspector  | > qualify as                                            |
| Available  |                                                         |
| {#if-no-in | -   "new construction" (Section 10.08), or              |
| spector-av |                                                         |
| ailable .u | -   "existing construction" (Section 10.05).            |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

#### 10.08 New Construction {#new-construction-1 .unnumbered}

+------------+---------------------------------------------------------+
| ##         | > To be eligible for appraisal as "new construction",   |
| ### Defini | > the property must be fully                            |
| tion {#def |                                                         |
| inition .u | > completed or completed except for customer preference |
| nnumbered} | > items (such as, interior wall finishes, floor         |
|            | > covering, appliances, fixtures and equipment, etc.)   |
|            | > and those improvements for which escrows are          |
|            | > permitted (See Section 9.09). This eliminates the     |
|            | > need for construction exhibits.                       |
|            |                                                         |
|            | > ***Note***: Properties which have been previously     |
|            | > owner-occupied, regardless of date of completion, or  |
|            | > fully completed for at least one year are considered  |
|            | > to be "existing construction" for VA appraisal        |
|            | > purposes.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > VA will accept a one-year VA builder's warranty to    |
|  Builder's | > the veteran in lieu of VA or HUD inspections during   |
|  Warranty  | > construction. This will                               |
| Coverage { |                                                         |
| #builders- | -   allow veterans to purchase a newly constructed home |
| warranty-c |     of their choice, even though that home was not      |
| overage .u |     inspected by VA or HUD during construction, and     |
| nnumbered} |                                                         |
|            | -   provide veterans and the Government with a measure  |
|            |     of protection against defects in equipment,         |
|            |     material or workmanship.                            |
|            |                                                         |
|            |     > VA value notices for these cases will be          |
|            |     > conditioned to require                            |
|            |                                                         |
|            | -   the veteran purchaser's written acknowledgment      |
|            |     that, "I am aware that VA did not inspect this      |
|            |     property during construction and that VA assistance |
|            |     with construction complaints will be limited to     |
|            |     defects in equipment, material and workmanship      |
|            |     reported in writing during the one-year VA          |
|            |     builder's warranty period." See Section 13.06, "Not |
|            |     Inspected' Acknowledgment."                         |
|            |                                                         |
|            | -   a one-year VA builder's warranty on VA Form         |
|            |     26-1859, Warranty of Completion of Construction.    |
|            |     See Section 13.06.                                  |
|            |                                                         |
|            |     > VA acceptance of a builder's warranty in lieu of  |
|            |     > construction inspections is a privilege available |
|            |     > only to builders who routinely provide good       |
|            |     > quality construction. Builders who are required   |
|            |     > to obtain VA inspections during construction will |
|            |     > be notified by VA in writing. VA, not lenders,    |
|            |     > will monitor builder compliance with this         |
|            |     > restriction.                                      |
+------------+---------------------------------------------------------+

Continued on next page

10.08 New Construction, Continued

+------------+---------------------------------------------------------+
| #####      | > VA will accept a ten-year insured protection plan in  |
| Insured Pr | > lieu of the above one-                                |
| otection P |                                                         |
| lan Covera | > year VA builder's warranty.                           |
| ge {#insur |                                                         |
| ed-protect | > ***Reference***: See Section 10.09 for details.       |
| ion-plan-c |                                                         |
| overage .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Appraisal requests involving veterans who are acting  |
| # Veteran  | > as the general contractor in building a home for      |
| as Contrac | > their own occupancy must include                      |
| tor {#vete |                                                         |
| ran-as-con | -   any construction exhibits needed for appraisal      |
| tractor .u |     purposes, and                                       |
| nnumbered} |                                                         |
|            | -   the veteran's written agreement to pay for any      |
|            |     special VA fee inspections that may be needed to    |
|            |     ensure that the work meets VA Minimum Property      |
|            |     Requirements for existing (not proposed)            |
|            |     construction.                                       |
+------------+---------------------------------------------------------+

#### 10.09 Ten-Year Insured Protection Plans {#ten-year-insured-protection-plans .unnumbered}

+------------+---------------------------------------------------------+
| ####       | > A ten-year insured protection plan is required only   |
| # Policy { | > when the builder chooses to have a property appraised |
| #policy .u | > as either                                             |
| nnumbered} |                                                         |
|            | -   "proposed or under construction" with only a final  |
|            |     VA or HUD inspection during construction in an area |
|            |     where local building authority inspections are      |
|            |     **not** acceptable in lieu of VA first and second   |
|            |     stage inspections, or                               |
|            |                                                         |
|            | -   "new construction" with **no** VA builder's         |
|            |     one-year warranty coverage.                         |
+------------+---------------------------------------------------------+

Continued on next page

10.09 Ten-Year Insured Protection Plans, Continued

+------------+---------------------------------------------------------+
| #####      | > VA will accept a ten-year insured protection plan     |
| Details {# | > which is acceptable to HUD in lieu of a full          |
| details .u | > complement of VA or HUD inspections during            |
| nnumbered} | > construction. This will allow veterans to purchase a  |
|            | > newly constructed home of their choice, even though   |
|            | > that home received only a final VA or HUD inspection  |
|            | > or no VA or HUD inspection during construction.       |
|            |                                                         |
|            | > Appraisal requests can be made as either              |
|            |                                                         |
|            | -   "proposed or under construction" (Section 10.05).   |
|            |     Construction exhibits per Section 10.10 and a final |
|            |     VA or HUD construction inspection per Chapter 14    |
|            |     are required, or                                    |
|            |                                                         |
|            | -   "new construction" (Section 10.08). Neither         |
|            |     construction exhibits nor VA or HUD inspections are |
|            |     required.                                           |
|            |                                                         |
|            |     > VA value notices for these cases will be          |
|            |     > conditioned to require                            |
|            |                                                         |
|            | -   In all cases -- Evidence of enrollment of the       |
|            |     property in a ten-year plan acceptable to HUD       |
|            |     (Section 13.06).                                    |
|            |                                                         |
|            | -   If the property is appraised as "proposed or under  |
|            |     construction" -- A one-year VA builder's warranty   |
|            |     on VA Form 26-1859, Warranty of Completion of       |
|            |     Construction (Section 13.06).                       |
|            |                                                         |
|            | -   If the property is appraised as "new                |
|            |     construction"--The veteran purchaser's written      |
|            |     acknowledgment that, "I am aware that VA did not    |
|            |     inspect this property during construction and that  |
|            |     it does not qualify for VA assistance with          |
|            |     construction complaints." See Section 13.06 ("Not   |
|            |     Inspected Acknowledgement").                        |
|            |                                                         |
|            |     > VA acceptance of insured protection plan coverage |
|            |     > in lieu of construction inspections is a          |
|            |     > privilege available only to builders who          |
|            |     > routinely provide good quality construction.      |
|            |     > Builders who are required to obtain VA            |
|            |     > inspections during construction will be notified  |
|            |     > by VA in writing. VA, not lenders, will monitor   |
|            |     > builder compliance with the restriction.          |
+------------+---------------------------------------------------------+

#### 10.10 Construction Exhibits {#construction-exhibits .unnumbered}

+------------+---------------------------------------------------------+
| ##### Gene | > Construction exhibits are required for properties     |
| ral Requir | > appraised as "proposed or under construction". They   |
| ement {#ge | > are **not** required for properties appraised as      |
| neral-requ | > either "new construction" or "existing construction." |
| irement .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Each set of proposed construction exhibits must       |
| Required E | > include                                               |
| xhibits {# |                                                         |
| required-e | -   specifications on VA Form 26-1852, Description of   |
| xhibits .u |     Materials, signed and dated by the builder in all   |
| nnumbered} |     cases and by the veteran when one is under contract |
|            |     in an individual case processed as "proposed or     |
|            |     under construction". Other specification formats    |
|            |     are also acceptable, provided they are signed and   |
|            |     dated by the builder and veteran as described above |
|            |     and are sufficiently detailed for VA appraisal and  |
|            |     compliance inspection purposes. .                   |
|            |                                                         |
|            | -   plot plan which includes the location of the        |
|            |     well/septic systems, if applicable.                 |
|            |                                                         |
|            | -   all exterior building elevations.                   |
|            |                                                         |
|            | -   foundation or basement plan.                        |
|            |                                                         |
|            | -   plan of all floors.                                 |
|            |                                                         |
|            | -   sectional wall details.                             |
|            |                                                         |
|            | -   a certification signed and dated by a technically   |
|            |     qualified and properly identified individual (such  |
|            |     as, builder, architect, engineer, etc.) which       |
|            |     states, "I certify that the construction exhibits   |
|            |     for (identification of the property by house type,  |
|            |     lot, block, subdivision name, etc.) meet all local  |
|            |     code requirements and are in substantial conformity |
|            |     with VA Minimum Property Requirements, including    |
|            |     the energy conservation standards of the 1992       |
|            |     Council of American Building Officials' Model       |
|            |     Energy Code and the requirement for lead-free water |
|            |     piping." VA will accept [HUD Form                   |
|            |     92541]{.underline}, Builder's Certification of      |
|            |     Plans, Specifications and Site, in lieu of this     |
|            |     certification.                                      |
+------------+---------------------------------------------------------+

Continued on next page

10.10 Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| ##### Numb | > If inspections during construction are to be made by  |
| er and Dis |                                                         |
| tribution  | -   VA, then two sets of construction exhibits are      |
| of Exhibit |     required. See Section 10.04 (Step 3), regarding     |
|  Sets {#nu |     distribution details.                               |
| mber-and-d |                                                         |
| istributio | -   HUD, then only one set of construction exhibits is  |
| n-of-exhib |     required. The appraisal requester will include that |
| it-sets .u |     set with the assignment notice to the appraiser.    |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Re   | > VA highly recommends the use of reduced-size          |
| duced-Size | > construction drawings to save reproduction, mailing   |
|  Plans {#r | > and storage costs for all parties involved.           |
| educed-siz | > Electronic submission (E-mail Attachment, Diskette,   |
| e-plans .u | > or CD-ROM) is anticipated as the preferred process of |
| nnumbered} | > the future. Reduced size plans usage will enhance the |
|            | > transition to this business process.                  |
|            |                                                         |
|            | > Building plans, elevations and details, traditionally |
|            | > drawn at ¼ inch scale and larger, can be              |
|            | > photographically reduced or computer-drawn to be      |
|            | > clearly readable on 8½ by 14 inch sheets. While VA    |
|            | > will currently accept 11 by 17 inch sheets, this size |
|            | > is not compatible with standard industry scanner      |
|            | > equipment generally available to VA and program       |
|            | > participants. Therefore, this size is discouraged and |
|            | > in the future may be eliminated as an option. Other   |
|            | > exhibits normally provided in an 8½ by 11 inch format |
|            | > (such as specifications, certifications, etc.) must   |
|            | > not be further reduced.                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Chan | > See Section 14.07 for information about changing the  |
| ges to Exh | > construction exhibits after they are used for VA      |
| ibits {#ch | > appraisal purposes, but prior to loan closing.        |
| anges-to-e |                                                         |
| xhibits .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### "M   | > In addition to the other requirements in this         |
| aster" App | > section, a "master" appraisal request must include a  |
| raisals {# |                                                         |
| master-app | -   Pat showing the locations of each lot or unit to be |
| raisals .u |     included in the appraisal,                          |
| nnumbered} |                                                         |
|            | -   completed VA Form 26-1843b, Master Certificate of   |
|            |     Reasonable Value Worksheet, and                     |
|            |                                                         |
|            | -   Building Program Statement, which includes          |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   total number of dwellings to be built in the        |
|            |     project                                             |
|            |                                                         |
|            | -   number of dwelling contemplated in the primary      |
|            |     construction phase, and anticipated starting and    |
|            |     completion dates of that phase                      |
|            |                                                         |
|            | -   arrangements regarding the construction, dedication |
|            |     and maintenance of streets and utilities, and       |
|            |                                                         |
|            | -   information regarding any special assessments to be |
|            |     assumed by purchaser.                               |
+------------+---------------------------------------------------------+

Continued on next page

10.10 Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| ##         | > In addition to the other requirements in this         |
| ### Modula | > section, an appraisal request involving modular       |
| r Construc | > construction must include either                      |
| tion {#mod |                                                         |
| ular-const | -   evidence of coverage by a HUD structural            |
| ruction .u |     engineering bulletin, or                            |
| nnumbered} |                                                         |
|            | -   a certification of approval by the State in which   |
|            |     the unit is fabricated. This requirement will be    |
|            |     made a condition of the VA value notice if not      |
|            |     submitted with the appraisal request.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ma   | > Any case in which the foundation has not been fully   |
| nufactured | > completed and the manufactured home unit installed is |
|  Home Clas | > considered to be "proposed or under construction."    |
| sified as  |                                                         |
| Real Estat | > In those cases, each set of construction exhibits     |
| e {#manufa | > must include                                          |
| ctured-hom |                                                         |
| e-classifi | -   specifications for the foundation and a plot plan   |
| ed-as-real |     as required for conventional site-built homes       |
| -estate .u |                                                         |
| nnumbered} | -   in double-wide homes, a detail of the mating line   |
|            |     piers, if applicable                                |
|            |                                                         |
|            | -   a foundation plan showing the location and a        |
|            |     cross-sectional detail of the supporting piers. In  |
|            |     all cases, include drawings of the foundation       |
|            |     anchorage details.                                  |
|            |                                                         |
|            | -   a floor plan of the unit and exterior elevation     |
|            |     drawings/photographs of the front and rear of the   |
|            |     home, unless the unit is physically located on the  |
|            |     site to be appraised or the appraiser has access to |
|            |     the unit on the dealer's lot. These may be provided |
|            |     in the manufacturer's advertising or technical      |
|            |     installation manual.                                |
|            |                                                         |
|            | -   in States or localities that require the underside  |
|            |     of the unit to be completely enclosed, details of   |
|            |     the perimeter enclosure that comply with those      |
|            |     requirements.                                       |
|            |                                                         |
|            | -   since site conditions vary considerably from        |
|            |     location to location, any revision needed to        |
|            |     information provided in the manufacturer's          |
|            |     technical installation manual in order to comply    |
|            |     with local requirements.                            |
+------------+---------------------------------------------------------+

Continued on next page

10.10 Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| ##### Manu | -   appropriate construction exhibits for any other     |
| factured H |     on-site improvements, such as decks, enclosed       |
| ome Classi |     patios, garages and carports, etc., to be financed  |
| fied as Re |     with the loan proceeds.                             |
| al Estate  |                                                         |
| (continued |     > ***Reference***: Also See Section 12.02 for       |
| ) {#manufa |     > specific Minimum Property Requirement-related     |
| ctured-hom |     > information that could impact what is required in |
| e-classifi |     > the construction exhibits.                        |
| ed-as-real |                                                         |
| -estate-co |                                                         |
| ntinued .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Reference***: See Section 10.05.                   |
| Property t |                                                         |
| o be Alter |                                                         |
| ed/ Improv |                                                         |
| ed/ Repair |                                                         |
| ed {#prope |                                                         |
| rty-to-be- |                                                         |
| altered-im |                                                         |
| proved-rep |                                                         |
| aired-1 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Reference***: See Section 10.08.                   |
| Veteran as |                                                         |
|  Contracto |                                                         |
| r {#vetera |                                                         |
| n-as-contr |                                                         |
| actor-1 .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > In areas that have a history of geological or soil    |
| ### Geolog | > instability, the builder must submit either           |
| ical or So |                                                         |
| il Instabi | -   a certification that to the best of the builder's   |
| lity {#geo |     knowledge and belief, any geological or             |
| logical-or |     soil-related hazard and no portion of the           |
| -soil-inst |     construction will rest on fill, or                  |
| ability .u |                                                         |
| nnumbered} | -   evidence from a qualified geologist or engineer     |
|            |     that the subject site either does not present       |
|            |     unusual geological soils-related hazards or such    |
|            |     hazards have been compensated for in the            |
|            |     engineering design of the improvements.             |
|            |                                                         |
|            |     > Qualified geologists are State licensed or are a  |
|            |     > member of a national or State organization which  |
|            |     > requires responsibility, experience, education    |
|            |     > and demonstrated ability in the field of          |
|            |     > engineering geology.                              |
+------------+---------------------------------------------------------+

Continued on next page

10.10 Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| #####      | > If HUD will make the inspections during construction, |
| If Inspect | > the appraisal request must include                    |
| ions to be |                                                         |
|  Made by H | -   The construction exhibits required above, except    |
| UD {#if-in |     for the certification regarding those exhibits.     |
| spections- |                                                         |
| to-be-made | -   The certification directly above item 38 on VA Form |
| -by-hud .u |     26-1805.                                            |
| nnumbered} |                                                         |
|            | -   A certification by the builder or lender that the   |
|            |     construction exhibits submitted to VA, including    |
|            |     any HUD-accepted change orders, are identical to    |
|            |     those submitted to HUD.                             |
|            |                                                         |
|            | -   A copy of the final HUD inspection report           |
|            |     countersigned by HUD or a HUD Direct Endorsement    |
|            |     underwriter, or a letter from HUD that the property |
|            |     has been completed in accordance with the approved  |
|            |     plans and specifications and acceptable change      |
|            |     orders, if any. This requirement will be made a     |
|            |     condition of the VA notice of value if not          |
|            |     submitted with the appraisal request.               |
|            |                                                         |
|            | -   If the final HUD inspection report stipulates that  |
|            |     certain incomplete work, such as street             |
|            |     improvements, will be completed according to        |
|            |     requirements specified by HUD elsewhere, a copy of  |
|            |     the documentation that states those requirements    |
|            |     must be furnished. In that situation, there must    |
|            |     also be a VA-approved escrow agreement and a        |
|            |     subsequent VA or HUD reinspection report or other   |
|            |     acceptable evidence of satisfactory completion. The |
|            |     veteran cannot be charged the cost of that          |
|            |     reinspection.                                       |
|            |                                                         |
|            |     > If there is a question about HUD consistency with |
|            |     > VA in the interpretation                          |
|            |                                                         |
|            |     > and application of VA/HUD Minimum Property        |
|            |     > Requirements, the VA field                        |
|            |                                                         |
|            |     > station may impose a VA inspection, at an         |
|            |     > appropriate inspection stage, in                  |
|            |                                                         |
|            |     > addition to the HUD inspections.                  |
+------------+---------------------------------------------------------+

#### 10.11 Conversion of HUD Value Notices for VA Use {#conversion-of-hud-value-notices-for-va-use .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > Generally, HUD value notices cannot be converted for  |
| Policy {#p | > VA use, since VA is required by law to assign fee     |
| olicy-1 .u | > appraisers and HUD allows lenders to select           |
| nnumbered} | > appraisers.                                           |
|            |                                                         |
|            | > There is one exception.                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > To eliminate duplicative efforts and unnecessary      |
| #### Excep | > appraisal costs for veterans, VA staff will convert a |
| tion  {#ex | > HUD conditional commitment issued by either HUD staff |
| ception .u | > or a Direct Endorsement lender to a VA Certificate of |
| nnumbered} | > Reasonable Value (CRV) if **all** of the following    |
|            | > requirements are met:                                 |
|            |                                                         |
|            | -   The appraiser is                                    |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   a VA fee panel member, and                          |
|            |                                                         |
|            | -   not a staff employee of the lender.                 |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   The property                                        |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   was appraised as an individual case (that is, not   |
|            |     listed on a valid HUD "master" value determination) |
|            |                                                         |
|            | -   did not already have a valid VA value determination |
|            |     on the date of the purchase agreement, and          |
|            |                                                         |
|            | -   was appraised for HUD purposes and the lender       |
|            |     documents a legitimate need to change to VA         |
|            |     financing after the appraisal was made. That is,    |
|            |     the buyer changed from HUD to VA financing while    |
|            |     under contract, or the property is being purchased  |
|            |     with VA financing after a contract with a previous  |
|            |     buyer requiring HUD financing fell through.         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   The lender submits to the VA office of jurisdiction |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the lender's written request for conversion, which  |
|            |     includes a certification that identifies the        |
|            |     property and addresses **each** of the above        |
|            |     requirements                                        |
|            |                                                         |
|            | -   a completed VA Form 26-1805, Request for            |
|            |     Determination of Reasonable Value                   |
|            |                                                         |
|            | -   the HUD value notice, and                           |
|            |                                                         |
|            | -   the original appraisal report, including            |
|            |     photographs and all other addenda.                  |
|            |                                                         |
|            |     > VA will list applicable VA requirements and       |
|            |     > conditions on the CRV.                            |
+------------+---------------------------------------------------------+

#### 10.12 Fees For Appraisals and Inspections {#fees-for-appraisals-and-inspections .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > The maximum appraisal and inspection fees allowed by  |
| Policy {#p | > each VA field station is based on customary fees for  |
| olicy-2 .u | > similar services in that station's jurisdiction.      |
| nnumbered} | > Regardless of the amount of the maximum fee,          |
|            | > appraisers and inspectors must not charge veterans    |
|            | > more than they charge other clients for similar       |
|            | > services.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The appraisal requester will pay the appraiser's fee  |
| # Liquidat | > and the expense will be included in the claim under   |
| ion Apprai | > loan guaranty.                                        |
| sal Fees { |                                                         |
| #liquidati | > If the borrower attempts to pay the full arrears      |
| on-apprais | > after the appraisal is obtained, the holder must      |
| al-fees .u | > include the cost of the appraisal in its computation  |
| nnumbered} | > of the total amount delinquent.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Veterans cannot be charged for any portion of a       |
| "Master" A | > "master" appraisal fee.                               |
| ppraisal F |                                                         |
| ees {#mast | > Total maximum "master" appraisal fee = (Fee per House |
| er-apprais | > Type x Number House Types x Number Appraisers         |
| al-fees .u | > Assigned) + (Fee per Lot x Number Lots) + (Fee per    |
| nnumbered} | > Option x Number Options).                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Co   | > The builder, sponsor, or lender will pay the          |
| nstruction | > inspection fees, which are not to exceed \$65 per     |
|  Inspectio | > inspection unless otherwise specified by the VA field |
| n Fees {#c | > station.                                              |
| onstructio |                                                         |
| n-inspecti | > While the veteran can be charged for all regular      |
| on-fees .u | > inspections of an individual property, the veteran    |
| nnumbered} | > **cannot** be charged for reinspections due to        |
|            |                                                         |
|            | -   the builder's noncompliance with VA requirements    |
|            |                                                         |
|            | -   the builder's failure to provide access to the      |
|            |     property or have the work ready for inspection, or  |
|            |                                                         |
|            | -   the inspector's failure to arrive at the appointed  |
|            |     time.                                               |
+------------+---------------------------------------------------------+

Continued on next page

10.12 Fees For Appraisals and Inspections, Continued

+------------+---------------------------------------------------------+
| ####       | > If a property is located outside of the fee person's  |
| # Mileage  | > normal business area, an additional fee may be        |
| Fee {#mile | > charged **only** for that portion of travel beyond    |
| age-fee .u | > the normal business area and at a mileage rate not to |
| nnumbered} | > exceed that allowed for federal employee travel.      |
|            |                                                         |
|            | > That travel must be by the most direct route and the  |
|            | > billing must include a breakdown of the mileage. VA   |
|            | > offices will consider adding more fee panel members   |
|            | > to provide better coverage in areas where             |
|            | > mileage-related fees are excessive.                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > VA offices may allow a fee panel member to require    |
| ### Fee Pa | > payment in advance from a particular appraisal or     |
| yment Prob | > inspection requester if both                          |
| lems {#fee |                                                         |
| -payment-p | -   a regular, ongoing payment problem that is well     |
| roblems .u |     outside of normal business practices is documented  |
| nnumbered} |     by the fee person, and                              |
|            |                                                         |
|            | -   the party responsible for payment fails to          |
|            |     reasonably respond to the fee person's written      |
|            |     notice about the problem and its possible           |
|            |     consequences.                                       |
+------------+---------------------------------------------------------+

#### Figure 1: Builder Information and Certifications

\[on builder's letterhead\]

**Builder Information and Certifications**

**VA Loan Guaranty Program**

1.  This is to certify that this company:

```{=html}
<!-- -->
```
a.  Will not use any marketing practices or sales contracts which
    include features considered by VA to be unfair or prejudicial to
    veteran-purchasers per Section 9.08 of the VA Lenders Handbook. I
    understand that the closing of the loan denotes that the builder has
    determined that the contract is acceptable to VA.

```{=html}
<!-- -->
```
b.  Will construct every property which is to become the security for a
    VA-guaranteed loan to substantially conform to applicable building
    codes, applicable VA requirements and the standards of quality as
    measured by acceptable trade practices.

```{=html}
<!-- -->
```
2.  In cases processed by VA as "proposed or under construction", I
    understand that all construction must equal or exceed that shown or
    described in the construction exhibits used by VA to appraise the
    property and that, in any conflict between those construction
    exhibits and the applicable VA minimum property requirements, the
    latter will govern; and that VA will consider changes to those
    exhibits to be binding only when they are listed on a properly
    executed VA Form 26-1844, Request for Acceptance of Changes in
    Approved Drawings and Specifications; and that I will be proceeding
    at my own risk in changing or deviating from those exhibits without
    advance VA approval.

```{=html}
<!-- -->
```
3.  A fully executed VA Form 26-421, Equal Employment Opportunity
    Certification, and VA Form 8791, VA Affirmative Marketing
    Certification, is either attached or was previously submitted to VA.

```{=html}
<!-- -->
```
4.  Names of all persons who have a controlling or proprietary interest
    in this company or are principal shareholders, officers or
    directors. This company agrees to keep this list updated with VA:

    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name (*Type or print*) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Title \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date
\_\_\_\_\_\_\_\_\_

Access to VAAS, 10-7

Builder Information and Certifications, 10-30

Builder's Warranty Coverage, 10-18

Building Code Enforcement, 10-16

Construction Exhibits, 10-22

Construction Inspection Fees, 10-28

Conversion of HUD Value Notices for VA Use, 10-27

Fee Payment Problems, 10-29

Fees For Appraisals and Inspections, 10-28

Foreclosure, 10-12

Geological or Soil Instability, 10-25

How to Request an Appraisal, 10-5

HUD Conversion Exception, 10-27

HUD Inspections, 10-26

Insured Protection Plan Coverage. *See* Section 10.09

Liquidation Appraisal Fees, 10-28

Location-Related Property Problem, 10-13

Manufactured Home Classified as Real Estate, 10-24

Master Appraisal Fees, 10-28

Master Appraisals, 10-23

Mileage Fee, 10-29

Modular Construction, 10-24

New Construction, 10-18

No Appraisal Due to Sanction, 10-15

No Duplicate Appraisals, 10-15

Number and Distribution of Exhibit Sets, 10-23

Other Appraisal Request Restrictions, 10-15

Partial release of security, 10-12

Potential Master Appraisal Restrictions, 10-17

Potential Restriction to Veterans Under Contract, 10-16

Problem Solving with the Assignment System, 10-4

Properties Not Eligible for Appraisal, 10-13

Property Eligibility and Appraisal Requests, 10-1

Property Not Likely to Meet MPRs, 10-13

Property to be Altered. *See* Section 10.05

Purpose of the Assignment System, 10-4

Reduced-Size Plans, 10-23

Refinancing, 10-12

Required Construction Exhibits, 10-22

Security for Existing VA Loan, 10-12

Ten-Year Insured Protection Plans, 10-20

Types of Property Eligible for Appraisal, 10-8

User's Guide, 10-4

VA Assignment System, 10-4

Veteran as Contractor, 19. *See* Section 10.08

Who Can Request an Appraisal, 10-3

Why An Appraisal Is Required, 10-2