#### Chapter 2

####  Property Eligibility and Appraisal Requests

#### Overview

+------------+---------------------------------------------------------+
| ##### In   | > This chapter provides administrative details to       |
| troduction | > supplement the policies and procedures in Chapter 10  |
|            | > of the Lender\'s Handbook.                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > This chapter contains the following topics.           |
| #### In th |                                                         |
| is Chapter |                                                         |
+------------+---------------------------------------------------------+

+-------------------------------------------------------+--------------+
| ## Topic                                              | ### See Page |
+-------------------------------------------------------+--------------+
| 2.01 Assignment of Fee Appraisers and Compliance      | 2-2          |
| Inspectors                                            |              |
+-------------------------------------------------------+--------------+
| 2.02 Builder Files                                    | 2-3          |
+-------------------------------------------------------+--------------+
| 2.03 Other Reference and Data Files                   | 2-4          |
+-------------------------------------------------------+--------------+
| 2.04 Liquidation Appraisal Requests                   | 2-5          |
+-------------------------------------------------------+--------------+
| 2.05 Requests for "Exception" Processing of New       | 2-6          |
| Construction                                          |              |
+-------------------------------------------------------+--------------+
| 2.06 Veteran Built Homes (Exceptions)                 | 2-7          |
+-------------------------------------------------------+--------------+
| 2.07 Maximum Allowable Appraisal and Inspection Fees  | 2-7          |
+-------------------------------------------------------+--------------+

#### 

#### 2.01 Assignment of Fee Appraisers and Compliance Inspectors

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| ##### No   | > There will be no favoritism or discrimination in the  |
|  Favoritis | > making of assignments. The Appraisal System (TAS)     |
| m or Discr | > will be maintained to track the number of assignments |
| imination  | > given to each fee appraiser and compliance inspector. |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ro   | All fee appraisers and inspectors are to be assigned on |
| tational A | a rotational basis from a panel of the Department of    |
| ssignments | Veterans Affairs (VA) approved appraisers and           |
|            | compliance inspectors.                                  |
|            |                                                         |
|            | *Exception:* Fee compliance inspectors may be assigned  |
|            | out of rotation if there is sufficient cause documented |
|            | in TAS by Management.                                   |
|            |                                                         |
|            | System duplicate assignment reports must be reviewed on |
|            | a weekly basis, at a minimum, to avoid allowing         |
|            | circumvention of this requirement.                      |
|            |                                                         |
|            | Re-assignments between fee personnel must be performed  |
|            | in TAS.                                                 |
|            |                                                         |
|            | System reassignment reports must be reviewed on a       |
|            | monthly basis, at a minimum, to ensure the reason(s)    |
|            | for reassignment have been adequately                   |
|            | explained/documented.                                   |
|            |                                                         |
|            | *Reference:* 38 U.S.C. 3731(b)(1) for fee appraisers.   |
+------------+---------------------------------------------------------+

#### 

#### 2.02 Builder Files

+------------+---------------------------------------------------------+
| ##         | VA will establish and maintain a file for every builder |
| ### Establ | (in FileNet) who participates in the Loan Guaranty      |
| ish and Ma | program. This includes builders who only request "new   |
| intain Bui | construction" appraisals or construct foundations for   |
| lder Files | manufactured homes.                                     |
|            |                                                         |
|            | Each builder\'s file will contain documentation that is |
|            | required by Section 10.07 of the Lender's Handbook, and |
|            | concerns the builder's performance (including any       |
|            | evidence of past construction complaint activity.)      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### VA   | The Condominium/Planned Unit Development/Builder System |
|  Oversight | (CPB) will be maintained and used to cross-reference    |
|            | principals within a builder's organization.             |
|            |                                                         |
|            | Builder files for builders involved with recent         |
|            | construction complaints should be reviewed on a regular |
|            | basis to evaluate their construction complaint history, |
|            | and to determine if any actions are needed to help      |
|            | avoid future complaints.                                |
+------------+---------------------------------------------------------+

#### 

#### 2.03 Other Reference and Data Files

+------------+---------------------------------------------------------+
| ####       | Unless the information is readily accessible via the    |
| # File Req | Internet or elsewhere, each VA office will maintain     |
| uirements  | up-to-date:                                             |
|            |                                                         |
|            | -   Airport files for each major civilian and military  |
|            |     airport within its jurisdiction.                    |
|            |                                                         |
|            | -   List of sites rejected due to geological hazards.   |
|            |                                                         |
|            | -   Data on areas of geological instability within its  |
|            |     jurisdiction. For instance:                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   Maps and other information published by the U.S.    |
|            |     Geological Survey and U.S. Corps of Engineers, and  |
|            |                                                         |
|            | -   Soils maps and other information generally          |
|            |     published by the Department of Agriculture for the  |
|            |     State.                                              |
|            |                                                         |
|            | > ***Note:*** Unstable areas will be delineated on the  |
|            | > maps.                                                 |
+------------+---------------------------------------------------------+

#### 

#### 2.04 Liquidation Appraisal Requests

+------------+---------------------------------------------------------+
| #####      | > The provisions of 38 CFR 36.4319(f) or 36.4282(f)     |
|  Untimely  | > regarding legal proceedings, as they relate to        |
| Requests b | > foreclosure and repossession, may be applied if loan  |
| y Holders  | > holders continue to fail to request liquidation       |
|            | > appraisals in a timely fashion after being counseled  |
|            | > by VA. Loan Administration Officers will be consulted |
|            | > in such cases.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | Loan Management requests for an appraisal in            |
| # Requests | conjunction with liquidation action on a *vendee* loan  |
|  by Loan M | will be made via The Appraisal System (TAS).            |
| anagement  |                                                         |
+------------+---------------------------------------------------------+

#### 

#### 2.05 Requests for "Exception" Processing of New Construction

+------------+---------------------------------------------------------+
| ##### Bene | When used as intended, \"exception\" processing for new |
| fits of "E | construction cases has two benefits:                    |
| xception"  |                                                         |
| Processing | -   Helps recruit new builders into the Loan Guaranty   |
|            |     program, and                                        |
|            |                                                         |
|            | -   Allows veterans to purchase a new home of their     |
|            |     choice that would not otherwise be eligible for VA  |
|            |     financing.                                          |
|            |                                                         |
|            | ***Reference:*** For details, see "Exception" under     |
|            | "Construction Warranty" in Section 10.08 of the         |
|            | Lender's Handbook.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### VA   | VA offices will track the use of "exception" processing |
|  Oversight | to help ensure that it is used only for its intended    |
|            | purpose and not to avoid normal VA processing           |
|            | requirements. *Builders are still required to have a    |
|            | valid VA identification number when taking advantage of |
|            | exception processing and must comply with all           |
|            | applicable VA New Construction requirements other than  |
|            | VA 1-yr. builder/10-yr. Warranty requirements.*         |
+------------+---------------------------------------------------------+

#### 2.06 Veteran Built Homes (Exceptions)

  ------------ ----------------------------------------------------------
  **Veteran    A dwelling unit constructed by an individual veteran for
  Built        his or her own occupancy is eligible for VA loan guaranty
  Homes**      and exempt from proposed construction VA Minimum Property
               Requirements. Whether the veteran physically constructed
               the dwelling or acted as his/her own general contractor,
               the unit is eligible for VA loan guaranty and exempt from
               proposed construction VA Minimum Property Requirements.
               The veteran need not be a licensed building contractor to
               act as their own general contractor. Also ref. VA Lenders
               Handbook, Chapter 10, Section 10.05, New Construction.

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

#### 2.07 Maximum Allowable Appraisal and Inspection Fees

+------------+---------------------------------------------------------+
| #####      | VA is responsible for protecting veterans against       |
| VA Oversig | excessive charges for appraisals and inspections made   |
| ht of Fees | for VA Loan Guaranty program purposes.                  |
|            |                                                         |
|            | Each VA office, with concurrence by VA Central Office,  |
|            | will establish maximum allowable fees for VA appraisals |
|            | as well as repair inspections and compliance            |
|            | inspections made in its jurisdiction. Stations must     |
|            | ensure that the fees charged do not exceed that which   |
|            | is customary for other similar services in the area     |
|            | where the property is located.                          |
+------------+---------------------------------------------------------+

Continued on next page

+------------+---------------------------------------------------------+
| ##### Cha  | Any change in the Regional Loan Center's (RLC's)        |
| nges in Ma | current maximum allowable fees must be:                 |
| ximum Allo |                                                         |
| wable Fees | -   Adequately justified and documented in terms of the |
|            |     fees being charged for similar appraisals and       |
|            |     inspections made for conventional loan purposes,    |
|            |     and                                                 |
|            |                                                         |
|            | -   Approved by Central Office (26).                    |
|            |                                                         |
|            | Requests for Central Office approval must:              |
|            |                                                         |
|            | -   Be in writing from the VA office Director, and      |
|            |                                                         |
|            | -   Include detailed documentation regarding contact    |
|            |     with at least three of the largest lenders in the   |
|            |     VA office's jurisdiction, indicating what they pay  |
|            |     for similar conventional appraisals in major        |
|            |     markets across the jurisdiction.                    |
|            |                                                         |
|            | > ***Note:***                                           |
|            |                                                         |
|            | -   Any additional justification for the increase, such |
|            |     as timely articles, published studies, etc., should |
|            |     also be included.                                   |
|            |                                                         |
|            | -   For properties with two to four living units, do    |
|            |     [not]{.underline} consider conventional appraisals  |
|            |     that require the use of Fannie Mae Form 216,        |
|            |     Operating Income Statement, to be comparable to VA  |
|            |     appraisals. VA only requires the use of Fannie Mae  |
|            |     Form 1025, Small Residential Income Property        |
|            |     Appraisal Report.                                   |
+------------+---------------------------------------------------------+
| #####      |                                                         |
+------------+---------------------------------------------------------+

2.07 Maximum Allowable Appraisal and Inspection, Continued