HUD and FHA Guidelines for Valuation Analysis for Single Family and One to Four Unit Dwellings - Part 7

Purpose of this Section: The following section contains appraisal guidelines for HUD and FHA appraisals. I've included this section to be used as a reference for you. These guidelines can help further clarify the appraisal topics discussed in this book. The text is written in a very formal and technical style of writing since it is used by HUD and FHA for their appraisal procedures. You don't need to try and memorize everything right away since it will seem overwhelming if you try to do that. Just take your time so you can learn at your own pace and refer back to this book as needed, like a reference manual.



The review process is a critical quality control and performance monitoring mechanism for HUD. FHA will monitor appraisals and appraisers using statistical analysis and field reviews. Through analysis of performance measures, FHA will identify candidates for field reviews. By performing statistical analysis as well as field reviews, HUD maintains the capability to broadly track its portfolio and investigate it in greater depth.


The Real Estate Assessment Center (REAC) will conduct statistical analysis to track the performance of appraisers and properties and to identify problematic appraisals for review. If the review and subsequent analysis indicate behavior that is out of compliance with FHA guidelines, FHA may take enforcement action. The performance categories below will guide the monitoring and enforcement efforts.


The following performance categories allow FHA to monitor each aspect of the appraiser's performance. The table below lists examples of performance measures for each category.

Performance Category

Performance Measure

Appraisal Process

Transaction quality


Proof of analysis


Relevance of data



Appraisal Reporting



Mathematical Accuracy



Valuation Conditions

Identified repairs



Maintenance of Professional

Maintenance of state licensure




Disciplinary actions



Field reviews

Supported findings


Required record keeping


Responsiveness to field review

HUD expects a high level of professionalism, customer service, technical expertise and record keeping from appraisers. The above measures demonstrate HUD's focus on:

  • Complete, justifiable and accurate appraisals
  • Qualified and competent appraisers
  • Professionalism
  • Accuracy


The oversight process includes statistical analysis of appraisals and field reviews. The reviews will be used to determine the reliability of the appraisal supporting FHA financing as well as the performance of the appraiser. To gauge an appraiser's performance, REAC will review a sample of appraisals performed for FHA over a specified time period and/or a specified number of appraisals performed.

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