What appraisal updates are required on a USDA Loan after a hurricane?
What appraisal updates are required on a USDA Loan after a hurricane?
First off, I hope everyone is prepared and has made the necessary safety precautions for Hurricane Irma and the potential damage that may occur.
On a secondary note, I also wanted to outline what homebuyers and Realtors should expect for transactions that are currently in progress or may have had a closing re-scheduled.
As in previous years where hurricane activity affects related mortgage transactions, there are specific appraisal requirements that need to be taken once the storm ends and after disaster areas have been confirmed.
What are the steps when a post hurricane re-inspection is required for a USDA loan?
Generally speaking, here is an outline of the steps we will be following:
- #1 Determine if the property is located in a declared disaster area
- #2 If so, prepare for a re-inspection of the property to be scheduled with the appraiser
- #3 USDA requirements state that the appraiser may utilize Fannie Mae Form 1004D
- #4 However, depending on the loan program, lenders may dictate different forms
- #5 Photos of the interior, exterior, or both may be required
- #6 The purpose of the report is to:
* Confirm if the disaster has affected the property; and
* Has the value of the property been negatively affected
- #7 Once the re-inspection report has been received and reviewed, that will determine:
* If the closing may continue as is, or
* If any required repairs, what needs to be completed prior to closing
What are we doing to prepare?
As a precautionary step, my office has already begun to pre-schedule appraisal re-inspections for many transactions, because once the storm is over, and with the wide range of counties that could be affected, it is reasonable to expect that appraisers will be backed up with re-inspection orders.
Remember, if there is damage to a property, the level of severity can also be a factor in determining what additional steps may be needed to meet minimum property requirements for USDA guidelines.
Also, please note that this is meant to be a general overview of what could be expected because different loan programs and lenders may have separate requirements.
Above all, I sincerely hope that everyone takes safety first and properly prepares so that we all can get back up and running just as soon as possible.
May God bless all of us!
Sean Stephens | NMLS# 185288
Metroplex Mortgage Services, Inc.
