![](media/image2.wmf)

Kenneth Beaudoin, Valuation Officer

Kathleen Fleckenstein, Staff Appraiser

Jim Hanley, Staff Appraiser

Bob Nelson, SAH Agent

Bill Staffiere, Staff Appraiser

Frank Warden, Program Clerk

**Appraisal Section Phone Number: (800) 827-6311 extension 6**

**Appraisal Section Fax Number: (603) 666-7549**

**Appraisal Section e-mail Address: nh_appr@vba.va.gov**

**[CONTENTS]{.underline}**

**PART 1-APPRAISAL ISSUES**

**A. PROPERTY ELIGIBILITY FOR VA FINANCING Page 3**

B.  **PROCEDURES FOR ORDERING VA APPRAISALS Page 8**

**C. THE APPRAISAL PROCESS Page 10**

**D. VA MINIMUM PROPERTY REQUIREMENTS Page 11**

**E. THE NOTICE OF VALUE Page 15**

**F. REQUESTS FOR RECONSIDERATION OF VALUE Page 20**

**G. REQUEST FOR WAIVER OF REPAIRS Page 20**

**H. VA INSPECTION PROCEDURES Page 20**

**I. APPRAISAL AND INSPECTION FEES Page 21**

**J. VA LAPP AUTHORITY Page 22**

**J. QUESTIONS AND ANSWERS Page 23**

**A. PROPERTY ELIGIBILITY FOR VA FINANCING**

**1. A veteran may use his or her VA home loan guaranty benefit to
obtain a loan to purchase or refinance the following types of
properties:**

-   A one to four family residential dwelling

-   A one-family residential unit in a condominium which has been
    accepted by VA

-   A manufactured (mobile) home affixed to a permanent foundation on
    its own lot.

**2. A loan for the purchase of a dwelling solely for investment
purposes is [not]{.underline} eligible.**

3.  **What about proposed construction?**

The following procedure applies to proposed construction cases
(construction not started) located in New England (CT,MA, ME, NH, RI,
VT) and New York.

Please note that most of these steps are based on instructions contained
in Chapter 10 of the revised VA Lender's Handbook. This handbook is
available on VA Internet site
[http://homeloans.va.gov/handbook.htm]{.underline} .

-   Lender checks VA Internet site [cpb.vba.va.gov]{.underline} to see
    if builder has VA Builder ID.

-   If no Builder ID indicated on Internet site, lender requests VA
    assign a builder ID by submitting to VA the builder information on
    Figure 1, next page. *Reference*: VA Lender's Handbook , Section
    10.07.

-   Lender assigns case number, appraiser, and inspector from the
    Internet-based The Appraisal System (TAS),
    [tas.va.vba.gov]{.underline}. If lender has Lender Appraisal
    Processing Program (LAPP) authority, it is expected that appraisal
    will be processed by lender.

-   Lender sends VA Form 26-1805, purchase agreement, and 1 set of
    construction exhibits to appraiser. See page 5 for a list of
    required construction exhibits. *Reference* : VA Lender's Handbook,
    Section 10.10.

-   Lender sends copy of construction exhibits to assigned VA inspector
    and notifies inspector that stage inspections will be required
    **unless** the property will be covered by an approved 10 year plan
    **or** is located in a community that issues a Certificate of
    Occupancy. In the latter two cases only a final VA inspection is
    required.

-   Appraiser completes report and required certification and sends
    report and exhibits to LAPP lender or VA. The required certification
    by appraiser is specified in Section 11.11 of the revised VA
    Lender's Handbook.

**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:

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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 7.07 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.

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```
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.

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```
2.  In cases processed by VA as "proposed or under construction", I
    understand that in any conflict between construction exhibits and
    applicable VA 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}
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```
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.
    (Note: these forms may be downloaded from VA Internet site at
    [http://www.vba.va.gov/pubs/homeloanforms.htm]{.underline}.)

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```
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
\_\_\_\_\_\_\_\_\_

**Construction Exhibits**

> Construction exhibits are required for properties appraised as
> "proposed or under construction". They are **not** required for
> properties appraised as either "new construction" or "existing
> construction."
>
> Each set of proposed construction exhibits must include

-   Specifications on VA Form 26-1852, Description of Materials, signed
    and dated by the builder in all cases and by the veteran when one is
    under contract in an individual case processed as "proposed or under
    construction". Other specification formats which substantially
    conform to VA Form 26-1852 are acceptable.

-   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.

    Two sets of construction exhibits are required. One set is sent to
    the appraiser and one set is sent to the VA inspector.

**NOTES CONCERNING VA PROPOSED CONSTRUCTION:**

-   If the veteran already owns the land or will purchase it prior to
    construction, a VA guaranteed construction loan is possible. We will
    require all the above exhibits (deed and construction contract
    substituted for purchase agreement if applicable.) Please refer to
    paragraph 3.02 of the VA Lender\'s Handbook for processing
    information on this type of loan.

-   If the property is not on a finished street and not part of a condo
    or PUD, submit a statement from the builder addressing plans for
    completion, dedication and maintenance of streets and utilities.

4**. What are VA guidelines for appraisal of properties newly
constructed and less than one year old?**

VA instructions relative to processing appraisal requests are contained
in Chapter 10 of the Lender's Handbook. VA has essentially provided
procedures for lenders to follow depending upon whether the property is
proposed/under construction, new construction less than one year old,
and existing construction. These guidelines will try to clarify the
procedures involving new existing construction cases.

**Definition of "new" existing construction:**

> **To be considered as "new existing construction", the property must
> less than one year old, never occupied, and be fully completed or
> completed except for customer preference 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 of Lenders Handbook). 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.

**Section 10.08 of the VA Lender's Handbook appears to indicate there
are different options for processing new existing construction depending
upon the warranty provided or not provided by the builder. Is there any
way to simplify this?**

See the chart in VA Lender's Handbook, chapter 10, section 10.09 for
various scenarios concerning new/proposed construction and VA
requirements.

**5. When is a condominium unit eligible for VA financing?**

-   The organizational documents that establish a property as a
    condominium must be reviewed and accepted by VA prior to guaranty of
    a loan. Although it is not required that the condominium be
    VA-accepted prior to the appraisal, it is recommended that this be
    accomplished. NOTE: VA condominium project acceptance is required
    regardless of the number of units. A two unit condex still requires
    VA review and acceptance of the organizational documents.

-   The VA Internet site at [cpb.vba.va.gov]{.underline} allows anyone
    to check to see if a condominium has been approved. One can obtain a
    list of VA approved condominiums by state by simply putting an \* in
    the box for the condominium name and choosing the specific state.

-   If the project has not been accepted by VA, all applicable
    information listed in the table in Section 16-A.03 of the VA
    Lender's Handbook must be sent to our office. Once the documents
    have been reviewed we will either advise you of acceptance,
    disapproval, or request additional information. [VA processing time
    for most condominium reviews is approximately 2 weeks]{.underline}.
    Please note that acceptance of new projects under Declarant control
    will be subject to specific conditions including a 70% presale
    requirement.

**B. PROCEDURE FOR ORDERING VA APPRAISALS**

The [lender or VA approved agent]{.underline} will access our
Internet-based appraisal system (TAS) which is available 24/7 at
[tas.vba.va.gov]{.underline}. Initial users will go the "New Users: Set
Up Your Account" section of the log in screen and establish a user ID
and password based on the VA assigned lender ID for their firm.

Once the user has access they will go the "Requester" tab to order
either a VA appraisal or a case number only for a Interest rate
Reduction Refinancing Loan. The User will enter information in the
appropriate screen and hit a "submit" button. The screen will then
provide a copy of VA Form 26-1805, Request for Determination of
Reasonable value, which will list the VA Case Number and appraiser
information, if applicable. The user will then print this form and send
it to the assigned appraiser.

It is noted that TAS, not the requester, selects the appraiser for VA
loans. VA has a panel of approved appraisers and it is required by law
that assignments be made on a rotational basis. Appraisers can receive
application information to join our VA fee appraiser panel by contacting
our office. Please note that we must first determine there is a need for
an additional appraiser before adding an appraiser.

If the appraisal must be re-assigned for any reason (input error,
appraiser conflict of interest, etc.), the requester must send the
request for re-assignment to our office via e-mail or fax. We will then
confirm the re-assignment and inform parties of the new appraiser.

VA FORM 26-1805

+--------+--------+--------+--------+--------+--------+-----------------+
| **Depa |        | **VA   |        |        |        | 1\. Case Number |
| rtment |        | R      |        |        |        | **\-- LAPP**\   |
| of\    |        | EQUEST |        |        |        | **73            |
| Ve     |        | FOR    |        |        |        | -73-6-05xxxxx** |
| terans |        | D      |        |        |        |                 |
| Af     |        | ETERMI |        |        |        |                 |
| fairs\ |        | NATION |        |        |        |                 |
| **     |        | OF\    |        |        |        |                 |
|        |        | REAS   |        |        |        |                 |
|        |        | ONABLE |        |        |        |                 |
|        |        | VALUE  |        |        |        |                 |
|        |        | (Real  |        |        |        |                 |
|        |        | Est    |        |        |        |                 |
|        |        | ate)** |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 2\.    |        |        | 3\.    |        |        | 4\. Title       |
| Pr     |        |        | Legal  |        |        | Limits &        |
| operty |        |        | Descri |        |        | Restrictive\    |
| A      |        |        | ption\ |        |        | Covenants       |
| ddress |        |        | see    |        |        |                 |
| *(I    |        |        | deed   |        |        |                 |
| nclude |        |        |        |        |        |                 |
| ZIP    |        |        |        |        |        |                 |
| Code   |        |        |        |        |        |                 |
| and    |        |        |        |        |        |                 |
| Cou    |        |        |        |        |        |                 |
| nty)*\ |        |        |        |        |        |                 |
| 23 xyz |        |        |        |        |        |                 |
| S      |        |        |        |        |        |                 |
| TREET\ |        |        |        |        |        |                 |
| BURLI  |        |        |        |        |        |                 |
| NGTON, |        |        |        |        |        |                 |
| VT     |        |        |        |        |        |                 |
| 05401\ |        |        |        |        |        |                 |
| CHIT   |        |        |        |        |        |                 |
| TENDEN |        |        |        |        |        |                 |
| County |        |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 5.     |        |        | 6\.    |        |        |                 |
|   Name |        |        | Lot    |        |        |                 |
|        |        |        | Dimen  |        |        |                 |
|    and |        |        | sions: |        |        |                 |
|     A  |        |        | x 1.   |        |        |                 |
| ddress |        |        | Irre   |        |        |                 |
|     of |        |        | gular/ |        |        |                 |
|        |        |        | Square |        |        |                 |
|   Firm |        |        | Feet:  |        |        |                 |
|     or |        |        | 2.     |        |        |                 |
|        |        |        | Acres: |        |        |                 |
| Person |        |        |        |        |        |                 |
|     M  |        |        |        |        |        |                 |
| aking\ |        |        |        |        |        |                 |
|     R  |        |        |        |        |        |                 |
| equest |        |        |        |        |        |                 |
| /Appli |        |        |        |        |        |                 |
| cation |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
|    *(I |        |        |        |        |        |                 |
| nclude |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
|    ZIP |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
| Code)* |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
|  **\-- |        |        |        |        |        |                 |
|     L  |        |        |        |        |        |                 |
| APP**\ |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
|    XYX |        |        |        |        |        |                 |
|     Mo |        |        |        |        |        |                 |
| rtgage |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
|  Corp. |        |        |        |        |        |                 |
|        |        |        |        |        |        |                 |
| 1      |        |        |        |        |        |                 |
| Apple  |        |        |        |        |        |                 |
| St\    |        |        |        |        |        |                 |
| Home   |        |        |        |        |        |                 |
| Town,  |        |        |        |        |        |                 |
| USA    |        |        |        |        |        |                 |
| 11111\ |        |        |        |        |        |                 |
| LAPP   |        |        |        |        |        |                 |
| e-mail |        |        |        |        |        |                 |
| a      |        |        |        |        |        |                 |
| ddress |        |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 16\.   |        |        |        |        | 17\.   |                 |
| Name   |        |        |        |        | Pro    |                 |
| of     |        |        |        |        | perty: |                 |
| Owner: |        |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 18\.   | 19\.   |        |        |        | 20\.   |                 |
| Rent   | Name   |        |        |        | Tel    |                 |
|        | of     |        |        |        | ephone |                 |
|        | Occ    |        |        |        | No.:   |                 |
|        | upant: |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
|        | 21\.   |        |        |        | 22\.   |                 |
|        | Name   |        |        |        | Tel    |                 |
|        | of     |        |        |        | ephone |                 |
|        | B      |        |        |        | No.:   |                 |
|        | roker: |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 23\.   |        |        |        | 24\.   |        |                 |
| Date   |        |        |        | Keys   |        |                 |
| and    |        |        |        | At:    |        |                 |
| Time   |        |        |        |        |        |                 |
| Ava    |        |        |        |        |        |                 |
| ilable |        |        |        |        |        |                 |
| for    |        |        |        |        |        |                 |
| Inspe  |        |        |        |        |        |                 |
| ction: |        |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 25\.   |        |        | 26\.   |        | 27\.   |                 |
| O      |        |        | Spon   |        | In     |                 |
| rigina |        |        | sor\'s |        | stitut |                 |
| tor\'s |        |        | Ident. |        | ion\'s |                 |
| Ident. |        |        | No.:   |        | Case   |                 |
| No.:   |        |        |        |        | No.:   |                 |
| 6051   |        |        |        |        |        |                 |
| 815002 |        |        |        |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+
| 28\.   |        |        | *      |        |        |                 |
| Purcha |        |        | *EQUAL |        |        |                 |
| ser\'s |        |        | OPPOR  |        |        |                 |
| Name   |        |        | TUNITY |        |        |                 |
| and    |        |        | IN     |        |        |                 |
| Ad     |        |        | HOU    |        |        |                 |
| dress\ |        |        | SING** |        |        |                 |
| M      |        |        |        |        |        |                 |
| ichael |        |        | **N    |        |        |                 |
| L      |        |        | OTE:** |        |        |                 |
| Jones\ |        |        | F      |        |        |                 |
| 20     |        |        | ederal |        |        |                 |
| West   |        |        | laws   |        |        |                 |
| St\    |        |        | and    |        |        |                 |
| Any    |        |        | regul  |        |        |                 |
| where, |        |        | ations |        |        |                 |
| VT     |        |        | pr     |        |        |                 |
| 0xxxx  |        |        | ohibit |        |        |                 |
|        |        |        | di     |        |        |                 |
|        |        |        | scrimi |        |        |                 |
|        |        |        | nation |        |        |                 |
|        |        |        | b      |        |        |                 |
|        |        |        | ecause |        |        |                 |
|        |        |        | of     |        |        |                 |
|        |        |        | race,  |        |        |                 |
|        |        |        | c      |        |        |                 |
|        |        |        | olor,\ |        |        |                 |
|        |        |        | rel    |        |        |                 |
|        |        |        | igion, |        |        |                 |
|        |        |        | sex,   |        |        |                 |
|        |        |        | or     |        |        |                 |
|        |        |        | na     |        |        |                 |
|        |        |        | tional |        |        |                 |
|        |        |        | origin |        |        |                 |
|        |        |        | in the |        |        |                 |
|        |        |        | sale   |        |        |                 |
|        |        |        | or     |        |        |                 |
|        |        |        | rental |        |        |                 |
|        |        |        | of     |        |        |                 |
|        |        |        | resid  |        |        |                 |
|        |        |        | ential |        |        |                 |
|        |        |        | pro    |        |        |                 |
|        |        |        | perty. |        |        |                 |
|        |        |        | Nu     |        |        |                 |
|        |        |        | merous |        |        |                 |
|        |        |        | State\ |        |        |                 |
|        |        |        | st     |        |        |                 |
|        |        |        | atutes |        |        |                 |
|        |        |        | and    |        |        |                 |
|        |        |        | local  |        |        |                 |
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|        |        |        | nances |        |        |                 |
|        |        |        | also   |        |        |                 |
|        |        |        | pr     |        |        |                 |
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|        |        |        | such   |        |        |                 |
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|        |        |        | ation. |        |        |                 |
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|        |        |        | s      |        |        |                 |
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|        |        |        | 805    |        |        |                 |
|        |        |        | of\    |        |        |                 |
|        |        |        | the    |        |        |                 |
|        |        |        | Civil  |        |        |                 |
|        |        |        | Rights |        |        |                 |
|        |        |        | Act of |        |        |                 |
|        |        |        | 1968   |        |        |                 |
|        |        |        | pro    |        |        |                 |
|        |        |        | hibits |        |        |                 |
|        |        |        | di     |        |        |                 |
|        |        |        | scrimi |        |        |                 |
|        |        |        | natory |        |        |                 |
|        |        |        | pra    |        |        |                 |
|        |        |        | ctices |        |        |                 |
|        |        |        | in     |        |        |                 |
|        |        |        | conn   |        |        |                 |
|        |        |        | ection |        |        |                 |
|        |        |        | with   |        |        |                 |
|        |        |        | the\   |        |        |                 |
|        |        |        | fin    |        |        |                 |
|        |        |        | ancing |        |        |                 |
|        |        |        | of     |        |        |                 |
|        |        |        | hou    |        |        |                 |
|        |        |        | sing.\ |        |        |                 |
|        |        |        | If VA  |        |        |                 |
|        |        |        | finds  |        |        |                 |
|        |        |        | there  |        |        |                 |
|        |        |        | is     |        |        |                 |
|        |        |        | n      |        |        |                 |
|        |        |        | oncomp |        |        |                 |
|        |        |        | liance |        |        |                 |
|        |        |        | with   |        |        |                 |
|        |        |        | any    |        |        |                 |
|        |        |        | antidi |        |        |                 |
|        |        |        | scrimi |        |        |                 |
|        |        |        | nation |        |        |                 |
|        |        |        | laws   |        |        |                 |
|        |        |        | or     |        |        |                 |
|        |        |        | regula |        |        |                 |
|        |        |        | tions, |        |        |                 |
|        |        |        | it     |        |        |                 |
|        |        |        | may\   |        |        |                 |
|        |        |        | disco  |        |        |                 |
|        |        |        | ntinue |        |        |                 |
|        |        |        | bu     |        |        |                 |
|        |        |        | siness |        |        |                 |
|        |        |        | with   |        |        |                 |
|        |        |        | the    |        |        |                 |
|        |        |        | vio    |        |        |                 |
|        |        |        | lator. |        |        |                 |
+--------+--------+--------+--------+--------+--------+-----------------+

Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z ZZ ZZ

  ----------------- ------------- ----------------------- -------------------- ----------- ------------
  31\. Annual Real  32\. Mineral                                                           
  Estate Taxes      Rights                                                                 
                    Reserved?\                                                             
                    NO                                                                     

  34\. Sale Price   34A. Is Buyer                         35\.                 36\.        
  of Property       Purchasing                            Refinancing-Amount   Proposed    
                    Lot\                                  of\                  Sale        
                    Separately?                           Proposed Loan:       Contract\   
                    NO                                                         Attached?   
                                                                               NO          

  CERTIFICATIONS                                                                           
  FOR SUBMISSIONS                                                                          
  TO VA                                                                                    

  On receipt of                                                                            
  \"Certificate of                                                                         
  Reasonable                                                                               
  Value\" or advice                                                                        
  from the                                                                                 
  Department of                                                                            
  Veterans Affairs                                                                         
  that a                                                                                   
  \"Certificate of                                                                         
  Reasonable                                                                               
  Value\"\                                                                                 
  will not be                                                                              
  issued, we agree                                                                         
  to forward to the                                                                        
  appraiser the                                                                            
  approved fee                                                                             
  which we are                                                                             
  holding for this                                                                         
  purpose.\                                                                                
  **CERTIFICATION                                                                          
  REQUIRED ON                                                                              
  CONSTRUCTION                                                                             
  UNDER FHA                                                                                
  SUPERVISION**\                                                                           
  I hereby certify                                                                         
  that plans and                                                                           
  specifications                                                                           
  and related                                                                              
  exhibits                                                                                 
  including                                                                                
  acceptable FHA                                                                           
  Change Orders, if                                                                        
  any, supplied to                                                                         
  VA in this case\                                                                         
  are identical to                                                                         
  those FHA, and                                                                           
  that FHA                                                                                 
  inspections made                                                                         
  pursuant to FHA                                                                          
  approval for                                                                             
  mortgage                                                                                 
  insurance on this                                                                        
  basis of proposed                                                                        
  construction                                                                             
  under SEC.                                                                               

  38\. Signature of                                       39\. Title:                      41\. Date\
  Person                                                                                   03/26/2002
  Authorizing This                                                                         
  Request\                                                                                 
  BILL                                                                                     

                                                          40\. Telephone                   
                                                          Number:                          
                                                          (603)666-7502                    

  42\. Date of                    43\. Name of Appraiser:                                  
  Assignment:                     (0008) EBENEZAR                                          
  02/20/2002                      SCROOGE\                                                 
                                  (O): (800)111-1111                                       
                                  E.Mail:                                                  
                                  imthrifty@valueit.com                                    
  ----------------- ------------- ----------------------- -------------------- ----------- ------------

**C. THE APPRAISAL PROCESS**

#### VA Reasonable Value

+-------------+--------------------------------------------------------+
| #####       | For VA loan guaranty purposes, the "reasonable value"  |
|  Definition | of a property is that figure which represents the      |
|             | amount a reputable and qualified appraiser, unaffected |
|             | by personal interest, bias or prejudice, would         |
|             | recommend to a prospective purchaser as a proper price |
|             | or cost in the light of prevailing conditions.         |
+-------------+--------------------------------------------------------+
| #####       | > VA considers reasonable value and market value to be |
|   "Reasonab | > synonymous. VA's definition of market value is       |
| le" vs. "Ma | > consistent with that used by Fannie Mae, Freddie Mac |
| rket" Value | > and major appraisal organizations.                   |
+-------------+--------------------------------------------------------+

#### 

#### VA Appraisal Requirements

+-------------+--------------------------------------------------------+
| ####        | > Every VA appraisal must                              |
| # General R |                                                        |
| equirements | · be performed in a timely manner                      |
|             |                                                        |
|             | · conform to USPAP (Uniform Standards of Professional  |
|             | Appraisal Practice), and                               |
|             |                                                        |
|             | · meet the additional requirements (chapter 11 of VA   |
|             | Lender's Handbook) that VA considers to be             |
|             | supplemental to USPAP.                                 |
+-------------+--------------------------------------------------------+
| #####       | > Appraisal Requesters must notify the fee appraiser   |
| Timeliness  | > on the same day as the appraisal assignment is made  |
|             | > by VA .                                              |
|             | >                                                      |
|             | > Fee appraisers must complete VA assignments as       |
|             | > quickly as appraisals for conventional loans are     |
|             | > completed in the area where the property is located. |
|             | > An exception may be allowed in a particular case if  |
|             |                                                        |
|             | · valid extenuating circumstances are documented, and  |
|             |                                                        |
|             | · VA (or the lender's staff appraisal reviewer in LAPP |
|             | cases) is notified by the appraiser.                   |
+-------------+--------------------------------------------------------+

#### 

#### 

#### 

#### 

#### 

## D. VA MINIMUM PROPERTY REQUIREMENTS

#### Key examples of VA MPRs for Existing Construction- See Chapter 12 of Lender's Handbook for complete list of VA MPRs

+------------+---+---+--------------------------------------------------------+
| ####       |   |   | Any nonresidential use of the property must be         |
| # Nonresid |   |   | subordinate to its residential use and character.      |
| ential Use |   |   |                                                        |
|            |   |   | If any portion of a property is designed or used for   |
|            |   |   | nonresidential purposes, that property is eligible     |
|            |   |   | only if the nonresidential use does not                |
|            |   |   |                                                        |
|            |   |   | · impair the residential character of the property, or |
|            |   |   |                                                        |
|            |   |   | · exceed 25 percent of the total floor area.\          |
|            |   |   | \                                                      |
|            |   |   | ***Note***: In making this calculation, the total      |
|            |   |   | nonresidential area must include storage areas or      |
|            |   |   | similar spaces that are integral parts of the          |
|            |   |   | nonresidential portion.                                |
+------------+---+---+--------------------------------------------------------+
| ####       |   |   | > Each living unit must have the space necessary to    |
| # Space Re |   |   | > assure suitable                                      |
| quirements |   |   |                                                        |
|            |   |   | · living                                               |
|            |   |   |                                                        |
|            |   |   | · sleeping                                             |
|            |   |   |                                                        |
|            |   |   | · cooking and dining accommodations, and               |
|            |   |   |                                                        |
|            |   |   | · sanitary facilities.                                 |
+------------+---+---+--------------------------------------------------------+
| ####       |   |   | > Mechanical systems must                              |
| # Mechanic |   |   |                                                        |
| al Systems |   |   | · be safe to operate                                   |
|            |   |   |                                                        |
|            |   |   | · be protected from destructive elements               |
|            |   |   |                                                        |
|            |   |   | · have reasonable future utility, durability and       |
|            |   |   | economy, and                                           |
|            |   |   |                                                        |
|            |   |   | · have adequate capacity and quality.                  |
+------------+---+---+--------------------------------------------------------+
| ###        |   |   | > Heating must be adequate for healthful and           |
| ## Heating |   |   | > comfortable living conditions:                       |
|            |   |   | >                                                      |
|            |   |   | > If the property has an **unvented space heater**,    |
|            |   |   | > see the requirements in Section 11.12.               |
|            |   |   | >                                                      |
|            |   |   | > Homes with a **wood burning stove** as a primary     |
|            |   |   | > heat source must also have a permanently installed   |
|            |   |   | > conventional heating system that maintains a         |
|            |   |   | > temperature of at least 50 degrees Fahrenheit in     |
|            |   |   | > areas with plumbing.                                 |
+------------+---+---+--------------------------------------------------------+
| ##         |   |   | > Each unit must have                                  |
| ### Water  |   |   |                                                        |
| Supply and |   |   | · domestic hot water                                   |
|  Sanitary  |   |   |                                                        |
| Facilities |   |   | · a continuing supply of safe and potable water for    |
|            |   |   | drinking and other household uses, and                 |
|            |   |   |                                                        |
|            |   |   | · sanitary facilities and a safe method of sewage      |
|            |   |   | disposal.                                              |
+------------+---+---+--------------------------------------------------------+
| ##### Roo  |   |   | > The roof covering must                               |
| f Covering |   |   |                                                        |
|            |   |   | · prevent entrance of moisture, and                    |
|            |   |   |                                                        |
|            |   |   | · provide reasonable future utility, durability, and   |
|            |   |   | economy of maintenance.                                |
|            |   |   |                                                        |
|            |   |   | > When a defective roof with three or more layers of   |
|            |   |   | > shingles must be replaced, all old shingles must     |
|            |   |   | > first be removed.                                    |
+------------+---+---+--------------------------------------------------------+
| **Crawl    |   |   | > The crawl space must                                 |
| Space**    |   |   |                                                        |
|            |   |   | · have adequate access                                 |
|            |   |   |                                                        |
|            |   |   | · be clear of all debris, and                          |
|            |   |   |                                                        |
|            |   |   | · be properly vented.                                  |
|            |   |   |                                                        |
|            |   |   | > The floor joists must be sufficiently above the      |
|            |   |   | > highest level of the ground to provide access for    |
|            |   |   | > maintenance and repair of ductwork and plumbing.     |
|            |   |   | >                                                      |
|            |   |   | > Any **excessive dampness or ponding of water** in    |
|            |   |   | > the crawl space must be corrected.                   |
+------------+---+---+--------------------------------------------------------+
| **Ven      |   |   | > Natural ventilation of structural spaces such as     |
| tilation** |   |   | > attics and crawl spaces must be provided to reduce   |
|            |   |   | > the effect of excess heat and moisture which could   |
|            |   |   | > cause decay and deterioration of the structure.      |
+------------+---+---+--------------------------------------------------------+
| ##### E    |   |   | > Each unit must have electricity for lighting and for |
| lectricity |   |   | > necessary equipment.                                 |
+------------+---+---+--------------------------------------------------------+
| #####      |   | > |                                                        |
|  Access to |   |   |                                                        |
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|            |   | . |                                                        |
+------------+---+---+--------------------------------------------------------+
| *          | > |   |                                                        |
| *Hazards** |   |   |                                                        |
|            | T |   |                                                        |
|            | h |   |                                                        |
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|            | n |   |                                                        |
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|            | f |   |                                                        |
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|            | n |   |                                                        |
|            | t |   |                                                        |
|            | a |   |                                                        |
|            | m |   |                                                        |
|            | i |   |                                                        |
|            | n |   |                                                        |
|            | a |   |                                                        |
|            | t |   |                                                        |
|            | e |   |                                                        |
|            | d |   |                                                        |
|            | p |   |                                                        |
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|            | . |   |                                                        |
+------------+---+---+--------------------------------------------------------+

#### 

+------------+---------------------------------------------------------+
| **High     | > No part of any residential structure may be located   |
| Voltage    | > within a high voltage electric transmission line      |
| Electric   | > easement.                                             |
| Tra        | >                                                       |
| nsmis-sion | > Any detached improvements even partially in a         |
| Lines**    | > transmission line easement will not receive value for |
|            | > VA purposes.                                          |
+------------+---------------------------------------------------------+
| ###        | > Connection to a public or community water/sewage      |
| ## Connect | > disposal system is required whenever feasible.        |
| ion to Pub |                                                         |
| lic System |                                                         |
+------------+---------------------------------------------------------+
| ##### Wate | > Water quality for an individual water supply must     |
| r Quality  | > meet the requirements of the health authority having  |
|            | > jurisdiction. If the local authority does not have    |
|            | > specific requirements, the maximum contaminant levels |
|            | > established by the Environmental Protection Agency    |
|            | > (EPA) will apply.                                     |
|            | >                                                       |
|            | > If the health authority is unable to perform the      |
|            | > water quality analysis in a timely manner, a          |
|            | > commercial testing laboratory or a licensed sanitary  |
|            | > engineer acceptable to the health authority may take  |
|            | > and test the water sample.                            |
+------------+---------------------------------------------------------+
| ##### Sh   | > The following requirements must be met for a shared   |
| ared Wells | > well:                                                 |
|            |                                                         |
|            | · The well must be capable of providing a continuing    |
|            | supply of safe and potable water to each property       |
|            | simultaneously, so that each dwelling will be assured a |
|            | sufficient quantity for all domestic purposes.          |
|            |                                                         |
|            | · There must be a permanent easement which allows       |
|            | access for maintenance and repair.                      |
|            |                                                         |
|            | · There must be a well-sharing agreement which          |
|            |                                                         |
|            | \- makes reasonable and fair provisions for maintenance |
|            | and repair of the system and the sharing of those costs |
|            |                                                         |
|            | \- is binding on the signatory parties and their        |
|            | successors in title, and                                |
|            |                                                         |
|            | \- is recorded in local deed records.                   |
+------------+---------------------------------------------------------+
| ##### Se   | > An individual sewage disposal system must adequately  |
| wage Dispo | > dispose of all domestic wastes in a manner which will |
| sal System | > not create a nuisance, or in any way endanger the     |
|            | > public health.                                        |
+------------+---------------------------------------------------------+

#### 

**E. THE NOTICE OF VALUE**

**Individual NOV**.

The TAS system will generate the Notice of Value issued by the LAPP
lender or VA. The NOV is used to notify the veteran of the reasonable
value and any required appraisal conditions. The base loan amount cannot
exceed the value listed on the NOV.

**Validity Period**

An NOV for existing construction is valid for 6 months and for proposed
construction it is valid for 12 months. When a veteran enters into a
contract to purchase within the validity period, the NOV remains
effective after the expiration of the validity period until the sale is
either completed or otherwise terminated.

**Energy Conservation Improvements**

-   Item 1 of the NOV provides updated information relative to
    increasing the loan amount to make energy efficiency improvements to
    the property. The mortgage may be increased by (a) up to \$3,000
    based solely on documented costs; (b) up to \$6,000 provided the
    increase in monthly payment does not exceed the likely reduction in
    monthly utility costs; or (c) more than \$6,000 subject to a value
    determination by VA.

-   VA does not require a formal escrow for these funds. Only the amount
    necessary to complete the improvements must be withheld. Please
    refer to chapter 7, sec. 7.03 of VA Lender\'s Handbook for more
    detailed instructions.

**Requirements Commonly Placed on the Notification of Value**

[Wood Destroying Insect Information Report]{.underline}

-   All NOV\'s for existing construction located in areas subject to
    termite infestation will require completion by a Pest Control
    Operator on National Pest Control Association From 1 (NPCA-1).

-   A Pest Control Operator must be licensed for such activities by a
    state or a member of a national or state organization which requires
    at least two years of experience in the insect control field as a
    prerequisite of membership, or be generally acknowledged by
    experience or reputation as technically qualified in the field of
    insect control, and who, by performance, is so recognized.

-   LENDERS MUST ASSURE THAT ANY [ACTIVE]{.underline} INFESTATION IS
    TREATED AND ANY STRUCTURAL DAMAGE IS REPAIRED.

[Health Authority Approval]{.underline}. If the NOV indicates that
health authority approval of an individual water and/or individual
sewage disposal system is required, the approval should be indicated on
the health authority\'s form or letterhead. If there are no local
requirements, the maximum contaminant levels established by the
Environmental Protection Agency apply. When the health authority does
not provide this service, a licensed laboratory may be used for testing
and certification. The veteran should sign the report.

[Flood Insurance]{.underline}. The lender must require flood insurance
when the security is located in an area designated by FEMA (Federal
Emergency Management Agency) as a special flood hazard area. VA fee
appraisers assist lenders in making this determination by indicating on
the appraisal report whether or not the property is located in such an
area.

**What about local requirements that Lender Appraisal Processing Program
(LAPP) staff appraisal reviewers (SARs) must adhere to for properties in
New England and New York?**

-   Our office requires a wood destroying insect inspection (existing
    construction) or soil treatment guarantee (proposed construction) in
    all of MA, RI, and CT and parts of southern VT (Bennington and
    Windham counties) and southern NH (Cheshire, Sullivan, Merrimack,
    Rockingham, Belknap, Hillsborough, and Strafford counties). Counties
    in New York that require a wood destroying insect inspection are:
    Bronx, Broome, Columbia, Delaware, Dutchess, Greene, Kings, Nassau,
    New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk,
    Sullivan, Ulster and Westchester. An inspection or treatment is not
    required for properties in Maine or the NH and VT counties not
    listed unless the appraiser notes evidence of infestation. An
    inspection or treatment is also not required for low or high rise
    condominium units located anywhere in New England or New York.

-   If the property is located in Massachusetts and has an individual
    sewage disposal system, VA requires evidence the system meets
    Massachusetts Department of Environmental Protection Title 5
    requirements. This requirement only pertains to properties that
    require a VA appraisal and is not applicable in Interest Rate
    Reduction Refinancing loans.

  ---------------------- ---------------------------- ------------------- ----------- ------------------- -- --
  **DEPARTMENT OF                                                                                            
  VETERANS AFFAIRS\                                                                                          
  VARO NORRIS COTTON                                                                                         
  FEDERAL BUILDING 275                                                                                       
  CHESTNUT ST.\                                                                                              
  MANCHESTER NH 03101**                                                                                      

                                                                                                             

  **[NOTICE OF                                                                                               
  VALUE]{.underline}**                                                                                       

                                                                                                             

  03/22/2002                                          LENDER LOAN NO:                 VA CASE NO:            
                                                                                      73-73-6-05xxxxx        

  APPRAISAL REVIEWER:                                                                                        
  Santa J. Claus                                                                                             

  Mr. Todd D Veteran                                                      PROPERTY                           
                                                                          ADDRESS: 85                        
                                                                          ABC Street                         

  250 Main Street                                                         Anytown,                           
                                                                          USA xxxxx                          

  Nicetown, USA xxxxx                                                                                        

                                                                                                             

  Dear Mr. Veteran:                                                                                          

                                                                                                             

  The above property has                                                                                     
  been appraised by a                                                                                        
  fee appraiser assigned                                                                                     
  by the VA regional                                                                                         
  office in MANCHESTER,                                                                                      
  NH.\                                                                                                       
  On 03/22/2002, our                                                                                         
  VA-authorized                                                                                              
  appraisal reviewer                                                                                         
  personally reviewed                                                                                        
  the fee appraiser\'s                                                                                       
  report and determined                                                                                      
  the property\'s                                                                                            
  estimated reasonable                                                                                       
  value to be \$114,900.                                                                                     
  The maximum repayment                                                                                      
  period for a loan to                                                                                       
  purchase this property                                                                                     
  is 30 years.                                                                                               

                                                                                                             

  **The VA appraisal was                                                                                     
  made to determine the                                                                                      
  reasonable value of                                                                                        
  the property for loan                                                                                      
  purposes. It must not                                                                                      
  be considered a                                                                                            
  building inspection.                                                                                       
  Neither VA nor the                                                                                         
  lender can guarantee                                                                                       
  that the home will be                                                                                      
  satisfactory to you in                                                                                     
  all respects or that                                                                                       
  all equipment will                                                                                         
  operate properly. A                                                                                        
  thorough inspection of                                                                                     
  the property by you or                                                                                     
  a reputable inspection                                                                                     
  firm may help minimize                                                                                     
  any problems that                                                                                          
  could arise after loan                                                                                     
  closing. In an                                                                                             
  existing home,                                                                                             
  particular attention                                                                                       
  should be given to                                                                                         
  plumbing, heating,                                                                                         
  electrical and roofing                                                                                     
  components.**                                                                                              

                                                                                                             

  **REMEMBER: VA                                                                                             
  GUARANTEES THE LOAN,                                                                                       
  NOT THE CONDITION OF                                                                                       
  THE PROPERTY.**                                                                                            

                                                                                                             

  **(x)**                1\. **ENERGY CONSERVATION                                                           
                         IMPROVEMENTS.** You may wish                                                        
                         to contact the utility                                                              
                         company or a reputable firm                                                         
                         for a home energy audit to                                                          
                         identify needed energy                                                              
                         efficiency improvements to                                                          
                         this previously occupied                                                            
                         property. Lenders may                                                               
                         increase the loan amount to                                                         
                         allow buyers to make energy                                                         
                         efficiency improvements such                                                        
                         as: Solar or conventional                                                           
                         heating/cooling systems,                                                            
                         water heaters, insulation,                                                          
                         weather-stripping/caulking                                                          
                         and storm windows/doors.                                                            
                         Other energy-related                                                                
                         improvements may also be                                                            
                         considered. The mortgage may                                                        
                         be increased by up to                                                               
                         \$3,000 based solely on                                                             
                         documented costs; or up to                                                          
                         \$6,000 provided the                                                                
                         increase in monthly mortgage                                                        
                         payment does not exceed the                                                         
                         likely reduction in monthly                                                         
                         utility costs; or more than                                                         
                         \$6,000 subject to a value                                                          
                         determination by VA.                                                                

                                                                                                             

  \_\_\_\_\_             2\. **WOOD-DESTROYING INSECT                                                        
                         INFORMATION**                                                                       

  \_\_\_\_\_             a\. **Inspection Report                                                             
                         (Existing Construction).**                                                          
                         The property must be                                                                
                         inspected at no cost to you                                                         
                         by a qualified pest control                                                         
                         operator using Form NPCA-1,                                                         
                         or other form acceptable to                                                         
                         VA. Any reported infestation                                                        
                         or structural damage                                                                
                         affecting the value of the                                                          
                         property must be corrected                                                          
                         to VA\'s satisfaction prior                                                         
                         to loan settlement. You must                                                        
                         acknowledge receipt of a                                                            
                         copy of the inspection                                                              
                         report in the space provided                                                        
                         on the form.                                                                        

  \_\_\_\_\_             b\. **Soil Treatment                                                                
                         Guarantee (Proposed or Under                                                        
                         Construction).** A properly                                                         
                         completed Form NPCA-99a is                                                          
                         required. If the soil is                                                            
                         treated with a termiticide,                                                         
                         a properly completed Form                                                           
                         NPCA-99b is also required.                                                          
                         The lender will provide you                                                         
                         with a copy.                                                                        
  ---------------------- ---------------------------- ------------------- ----------- ------------------- -- --

  ------------ ------------------------------------------------------------------------------------------ -------------------------------------------------------------------
  \_\_\_\_\_   3\. **LIEN-SUPPORTED ASSESSMENT.** This property is subject to the lien-supported          
               assessment(s) indicated below. The lender is responsible for ensuring that assessments are 
               subordinate to the VA-guaranteed mortgage.                                                 

  \_\_\_\_\_   a\. **Homeowner Association Fee.** Estimated fee of \$ per month.                          

  \_\_\_\_\_   b\. **Other.**                                                                             
               **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**   

                                                                                                          

  \_\_\_\_\_   4\. **CONDOMINIUM REQUIREMENTS.** Evidence that VA requirements have been met for this     
               condominium. There may be additional information in \"Other Conditions/Requirements\"      
               below.                                                                                     

                                                                                                          

  \_\_\_\_\_   5\. **WATER/SEWAGE SYSTEM ACCEPTABILITY.** Evidence from the local health authority or     
               other source authorized by VA that the individual \_\_\_\_\_ water supply, \_\_\_\_\_      
               sewage disposal system(s) is/are acceptable.                                               

                                                                                                          

  \_\_\_\_\_   6\. **CONNECTION TO PUBLIC WATER/SEWER.** Evidence of connection to \_\_\_\_\_ public      
               water, \_\_\_\_\_ public sewer, if available, and that all related costs have been paid in 
               full.                                                                                      

                                                                                                          

  \_\_\_\_\_   7\. **ROAD/COMMON-USE DRIVEWAY.** Evidence that use of the private road or common-use      
               driveway is protected by a recorded permanent easement or recorded right-of-way from the   
               property to a public road, and that a provision exists for its continued maintenance.      

                                                                                                          

  \_\_\_\_\_   8\. **FLOOD INSURANCE.** Since improvements on this property are located in a FEMA Special 
               Flood Hazard Area, flood insurance is required.                                            

                                                                                                          

  \_\_\_\_\_   9\. **"AIRPORT" ACKNOWLEDGEMENT** our written acknowledgement that you are aware that this 
               property is located near an airport and that aircraft noise may affect the livability,     
               value and marketability of the property.                                                   

                                                                                                          

  \_\_\_\_\_   10\. **REPAIRS.** The \_\_\_\_\_ lender \_\_\_\_\_ fee appraiser                           
               (\_\_\_\_\_\_\_\_\_\[name\]\_\_\_\_\_\_\_\_\_\_) \_\_\_\_\_ fee compliance inspector       
               (\_\_\_\_\_\_\_\_\_\[name\]\_\_\_\_\_\_\_\_\_\_) is to certify that the following repairs  
               have been satisfactorily completed. See the above second paragraph about your              
               responsibility concerning the condition of the property.                                   

               \[List repairs recommended by fee appraiser which are necessary to make the property meet  
               VA minimum property requirements for existing construction. In the case of defective paint 
               conditions, the completed repairs must be inspected by the fee appraiser, not the lender.  
               Inspections/certifications should not be required unless there is an indication of a       
               potential problem.\]                                                                       

  \_\_\_\_\_   11\. **LOCAL HOUSING/PLANNING AUTHORITY CODE REQUIREMENTS.** Evidence that local housing   
               or planning authority code requirements, if any, have been met.                            

                                                                                                          

  \_\_\_\_\_   12\. **"NOT INSPECTED" ACKNOWLEDGEMENT.** Your written Acknowledgement that, you are aware 
               that since this new property was not inspected during construction by VA,                  

  \_\_\_\_\_   a\. VA assistance with construction complaints will be limited to defects in equipment,    
               material and workmanship reported during the one-year builder's warranty period.           

  \_\_\_\_\_   b\. VA will not intercede on your behalf in the processing of any construction complaints. 

  \_\_\_\_\_                                                                                              13\. **TEN-YEAR INSURED PROTECTION PLAN.** Evidence of enrollment
                                                                                                          of this new property in a 10-year insured protection plan
                                                                                                          acceptable to the Department of Housing and Urban Development
                                                                                                          (HUD).

                                                                                                          

                                                                                                          

  \_\_\_\_\_                                                                                              14\. **ENERGY EFFICIENT CONSTRUCTION.** Builder\'s certification
                                                                                                          which identifies this new dwelling and states that it was
                                                                                                          constructed to meet the energy conservation standards of the
                                                                                                          Council of American Building Officials (CABO) 1992 Model Energy
                                                                                                          Code (MEC).

                                                                                                          

  \_\_\_\_\_                                                                                              15\. **LEAD/WATER DISTRIBUTION SYSTEM.** Builder\'s certification
                                                                                                          which identifies this new dwelling and states that the solders and
                                                                                                          flux used in construction did not contain more than 0.2 percent
                                                                                                          lead and that the pipes and pipe fittings used did not contain more
                                                                                                          than 8.0 percent lead.

                                                                                                          

  \_\_\_\_\_                                                                                              16\. **OFFSITE IMPROVEMENTS.** Evidence that the streets,
                                                                                                          sidewalks, drains, water, sewer, etc. have been completed and
                                                                                                          accepted for maintenance by the local authority.

                                                                                                          

  \_\_\_\_\_                                                                                              17\. **PROPOSED CONSTRUCTION.** To be completed based on
                                                                                                          construction exhibits identified as \_\_\_\_\[model name; or type
                                                                                                          of construction, square footage, rooms, bedrooms and bathrooms\]

                                                                                                          

  \_\_\_\_\_                                                                                              18\. **CONSTRUCTION INSPECTIONS.** By VA fee compliance inspector (
                                                                                                          None Assigned ) or HUD fee inspector (with prior VA approval).
                                                                                                          \_\_\_\_\_ Only a final inspection is required if local building
                                                                                                          authority inspections are acceptable to VA, or if builder to
                                                                                                          provide you with a ten-year insured protection plan acceptable to
                                                                                                          HUD.

                                                                                                          

  \_\_\_\_\_                                                                                              19\. **CONSTRUCTION WARRANTY.** One-year VA builder\'s warranty on
                                                                                                          a fully completed VA Form 26-1859, Warranty of Completion of
                                                                                                          Construction.

                                                                                                          

  \_\_\_\_\_                                                                                              20\. **OTHER CONDITIONS/REQUIREMENTS**

                                                                                                          

                                                                                                          

  Sincerely,                                                                                              

                                                                                                          

                                                                                                          

  Santa J                                                                                                 
  Claus                                                                                                   
  ------------ ------------------------------------------------------------------------------------------ -------------------------------------------------------------------

**F. REQUEST FOR RECONSIDERATION OF VALUE**

-   VA will not refuse to reconsider the value if requested in writing
    by a party of interest.

-   VA requires that the request be sent directly to the fee appraiser.
    VA shall not require the requester to submit comparable sales or
    other market data with a request for reconsideration of value, but
    any supporting sales or other market data will assist the appraiser
    in reviewing the reconsideration request. All supporting
    documentation voluntarily submitted by the requester, including any
    additional appraisals of the property, will be carefully considered
    by the appraiser. When the requester supports a request for
    reconsideration of value by submitting an additional appraisal, the
    veteran cannot be [required]{.underline} to pay all or any portion
    of the cost of the additional appraisal.

-   The appraiser will inform VA or the LAPP lender of the results of
    the review and a final determination will be made and appropriate
    parties notified.

G.  **REQUEST FOR WAIVER OF REPAIRS**

VA and LAPP lenders will consider requests for waiver of repairs. The
request must be in writing and be signed by the veteran borrower. If the
waiver request cannot be made by a LAPP lender, the veteran's waiver
request and lender concurrence must be sent to VA. VA will determine
whether approval is appropriate based on the effect the repair has on
livability. [You are cautioned that if the repair is waived the
property\'s value could possibly be reduced.]{.underline}

**H. VA INSPECTION PROCEDURES**

**Proposed Construction**

The Notice of Value will be subject to completion of improvements in
accordance with approved plans and specifications. The name of the
assigned VA inspector will be listed. Except for properties covered by
an approved 10-year protection plan or located in a community that
issues a Certificate of Occupancy, it is imperative that the assigned
inspector be contacted to make the required VA stage inspections. The
[initial inspection]{.underline} is the foundation prior to backfill.
The [second inspection]{.underline} is when the house is enclosed, but
structural members, rough plumbing, heating and electrical can be
observed. Any changes to the plans and specifications must be approved
by VA. This will require submission of a Change Order, VA Form 26-1844,
and any revised structural plans.

**Existing Construction**

The Notice of Value will list any required repairs and either the name
of the assigned VA appraiser or \"Lender to Certify.\" If the appraiser
is listed as the inspector, he or she must be contacted by the
appropriate party (realtor, seller, etc.) when the work is complete. The
appraiser will then send a report of work completion directly to the
lender.

**I. APPRAISAL AND INSPECTION FEES**

1\. The most common appraisal origination fees from our current fee
schedule in New England are as follows:

-   One-family dwelling appraisal \$300

-   2,3,0r 4 family dwelling appraisal \$450

-   Condominium Unit \$350

-   VA Compliance Inspection \$100

-   Unusual/complex cases Negotiated

-   Mileage \$.325 per mile Up to \$36

New York Appraisal fees are:

  ------------------------ --------------- --------------- ---------------
                           **Metro NY**    **Upstate**     **Buffalo
                                                           Area**

  Single Family            300             275             275

  Multi Family             475             450             400

  Condo                    325             300             300

  Compliance Inspection    100             100             100

  Mileage                  Up to 30        Up to 30        Up to 30
  ------------------------ --------------- --------------- ---------------

2\. Lenders are reminded that the fee must be paid to the appraiser upon
receipt of the results of the appraisal. This is required either when VA
issues a NOV or notifies the lender the property is not eligible.

**J. VA  LAPP AUTHORITY**

**Eligibility of the lender**

Only supervised lenders and those non-supervised lenders who have been
approved by VA to process loans on the automatic basis may participate
in the LAPP program.

**Nomination of Staff Appraisal Reviewer By Senior Officer**

The senior officer of the lending firm must nominate and recommend those
qualified full-time salaried personnel who will act in the firm\'s
behalf as their staff appraisal reviewer(s) to personally review
appraisal reports received from VA assigned fee appraisers and to make
reasonable value determinations associated with the submission of loans
to VA which will be closed on the automatic basis. Lender staff review
personnel may not be employed by or perform appraisal review services
for any other lender and may not be on the VA fee panel.

**Qualifications of Staff Appraisal Reviewer**

The staff appraisal reviewer must be a full-time salaried employee of
the lender and have at least 3 years of work experience of a type which
qualifies him or her to perform administrative appraisal reviews for VA
loan guaranty purposes.

**Location of Staff Appraisal Reviewer/Geographic Familiarity.**

The lender\'s staff appraisal reviewer may be located in a branch
office. There is no restriction on the location of a supervised
lender\'s staff appraisal reviewer.

**Application, information, procedures, etc.**

Chapter 15 of the VA Lender's Handbook contains all LAPP approval
processing information to include the one page application form and
required certifications.

K. QUESTIONS AND ANSWERS CONCERNING APPRAISAL PROCEDURES

Q. What is a VA escape or VA option clause?

A. The clause you refer to is based on a VA regulatory requirement that
the Sales Contact include language that will allow the veteran to get a
refund of his or her sales contract deposit if the VA value is less than
the sales price. The clause should be in the Sales Contract and should
state: "It is expressly agreed that , not withstanding any other
provisions of this contract, the purchaser shall not incur any penalty
by forfeiture of earnest money or otherwise be obligated to complete the
purchases of the property described herein, if the contact purchase
price or cost exceeds the reasonable value of the property established
by the Department of Veterans Affairs. The purchaser shall, however,
have the privilege and option of proceeding with the consummation of
this contract without regard to the amount of reasonable value
established by VA."

**Q. Does a property with multiple living units located in separate
buildings on the same lot qualify under VA?**

A. Multi-family dwellings up to a maximum of four living units do
qualify under the VA program whether attached or singularly detached
from one another, as long as they conform to local zoning and meet VA\'s
minimum property requirements (MPRs).

**Q. Do mobile homes quality under the VA Home Loan Program?**

A. Transactions involving manufactured (mobile) homes situated on fee
simple ownership lots are eligible under the VA Home Loan Program
provided the home is affixed to a permanent foundation and is accepted
by the town as real estate.

**Q. Does a property qualify under VA if located in a FEMA designated
Special Flood Hazard Area?\
** A. Properties that fall within a flood zone \"A\" area may qualify
under the VA Home Loan Program. Note, that if the improvements are
located in zone \"A\", flood insurance is required. Should a portion of
the lot fall within zone \"A\" but the improvements in zone \"B\" or
\"C\", flood insurance is not required. When flood insurance is
required, it is mandatory that the community participate in the National
Flood Insurance Program. Should a community not be a participant and the
improvements are in a special flood hazard area, the property would not
qualify under the VA Loan Guaranty Program.

**Q. Does VA require a septic certification for existing construction?**

A. No, unless the condition of the system is suspect and a concern is
specifically addressed in the fee appraiser\'s report. **Exception**:
Individual sewage disposal system inspections are required for
properties in Massachusetts.

**Q. Are cesspools or holding tanks acceptable to VA?**

A. Yes, as long as the fee appraiser does not see evidence of
malfunction and the system is not in violation of local health codes.
Again, individual sewage disposal system inspections are required for
properties in Massachusetts.

**Q. What are VA\'s Requirements regarding underground fuel oil storage
tanks?**

A. Underground storage tanks that satisfy local building codes and are
not known to be in disrepair are acceptable to VA.

**Q. What exactly is VA looking for in a water quality analysis?**

A. There must be a recent water analysis by the local health authority
or testing laboratory that indicates the water is safe for drinking.
Should the analysis indicate that the water is potable but that some of
the elements tested exceed EPA or local health authority standards, VA
requires the veteran to acknowledge this by signing a copy of the
report.

**Q. Is a standard water quality analysis required for community well
situations?**

A. No. For properties whose primary water source is a community water
system, VA requires evidence which indicates that the system meets with
the approval of the local health authorities and that it is currently in
good standing. A community system is privately owned and usually serves
five or more properties.

**Q. Please define an acceptable wood destroying insect inspection
report.**

A. An acceptable wood destroying insect report should indicate no active
infestation and no visual damage that can have an impact on structural
soundness. If there is infestation or structural damage, the lender must
provide evidence of corrective measures.

**Q. What is VA looking for with a legal description?**

A. VA is looking for a legal description, tax map, plot or site plan,
survey map, or mortgage inspection plan that specifically identifies all
lot dimensions. Please note that submitting any of the above, which only
identifies the total square footage of the lot is not acceptable.

**Q. Is a non-mechanical heating system (e.g. wood, coal, pellet)
acceptable to VA as a primary heat source?**

A. No. In our region a fully functional, mechanical heating system must
be installed.

**Q. What is VA looking for in a private road maintenance agreement?**\
A. First, the private road must be protected by permanent easements.
Second, evidence must be submitted which indicates that the road will be
maintained in all seasons. This may come in the form of a private road
maintenance agreement or Home Owners Association membership. Without
either of these alternatives, the veteran and lender must request a
waiver and VA will consider on a case by case basis.

**Q. Does VA have any specific guidelines regarding lead paint or
radon?**

A. For lead paint, VA\'s guidelines require that defective paint
conditions (loose, chipped, flaking, or peeling) must be corrected. VA
currently has no guidelines regarding radon.

**Q. What are the mechanics of an appeal of value?\
** A. An appeal of value can be initiated by any party involved in the
transaction. It should be submitted to the appraiser in writing. It
would be helpful if the reason(s) for the appeal were made known, and if
the requester could include any information or comparable sales not used
by the fee appraiser that would support an increase in value.

**Q. What is required in order to waive a repair listed on the CRV?**

A. To waive a repair, the veteran and lender must submit a request in
writing. VA will consider how the waiver will affect safety, sanitation
and structural soundness, as well as the impact on value. If approved,
VA will issue an endorsement to the CRV.

**Q. What are VA\'s guidelines for approving a request to escrow funds
for repairs?**

A. VA prefers that all NOV repairs be completed before closing. For
those special circumstances where this is not feasible, the lender has
responsibility (reference Chapter 9 of VA Lenders Handbook) for having
the appropriate VA forms completed and approving the escrow.

**Q. Are slab and stone foundations acceptable to VA?**

A. Yes, as long as the foundation is structurally sound.

**Q. Is there a minimum square foot requirement for a living area or lot
size?**

A.  No.

**Q. Will VA except an existing house with a dirt floor basement?**

A. Yes, provided there is no evidence of excessive dampness that would
adversely affect livability.