The Federal Housing Administration released guidance to issuers of FHA-insured reverse mortgages today stating that the agency may require a second appraisal when a risk assessment does not support the figure reached by the first appraisal. Under the new guidance, FHA will conduct a collateral risk assessment for every appraisal submitted by lenders in FHA’s home equity conversion mortgage program.
Lenders must not approve or close a reverse mortgage until the completion of the risk assessment; if a second appraisal is required, the lender is to use the lower of the two appraised values. FHA said the policy change is necessary to maintain the safety and soundness of its HECM program and that it would revisit the policy after six and nine months.
