What if you change your mind about the provider of your FHA loan before the deal is closed? Will you have to go through the whole grueling appraisal process again? Is there enough time to get the lower interest rate plus meet the closing deadline?
New rules for FHA appraisal portability and transfers went into effect January 1, 2010. They protect a borrower who decides to go with another lender before their FHA loan is closed. The rule change only applies to loans that were assigned a FHA case number after January 1, 2010.
The rule that applies to the appraisal portability doesn't mean that the new lender is absolutely prohibited from ordering another appraisal. There are some circumstances that allow for the second lender to order a second appraisal. If the borrower can be harmed because the first lender didn't provide a requested copy of the original appraisal, they can order another. This option could be used if it looked like the best way to avoid a delay in the closing that could in some form hurt the borrower. If the second lender has an exclusionary list of appraisers, and the original appraiser is included, a second appraisal can be ordered. If the Direct Endorsement underwriter of the second lender determines that the appraisal ordered by the first lender has material deficiencies, it can also be used as a good reason for an order for a second appraisal.
Allowing for the second appraisal is beneficial to the person whose mortgage is being held up because of the information of the original appraisal being inaccurate or not communicated to the second lender. It could mean the difference of loosing out on an interest rate lock, late fees, missed purchase contract deadlines, or even foreclosure proceedings. The lender who orders a second appraisal must provide documentation on the reasons a second appraisal was done.