FHA Revises Appraisal Validity Period Guidance

Recently, FHA published a Mortgagee Letter (ML), ML 2022-11, which extends the initial appraisal validity period to 180 days from the effective date of the appraisal and increases the appraisal update validity period to 1 year from the effective date of the initial appraisal report that is being updated.  The new guidance applies to FHA Single Family Title II forward and HECM programs.

Specifically, for FHA case numbers assigned on or after June 1, 2022, the ML revises the guidance provided in the Origination through Post-Closing and Endorsement section of the Single Family Housing Policy Handbook (SF Handbook) and in the HECM Financial Assessment and Property Charge Guide by:

• Increasing the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report;
• Extending the appraisal validity period from 240 days to 1 year; and
• Removing the optional 30-day extension of the appraisal validity period.

Further, for appraisals with effective dates on or after July 12, 2022, the ML updates the guidance provided in the Servicing and Loss Mitigation section of the SF Handbook by extending the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report.