Requirements before ordering an appraisal

When a lender orders an appraisal for “proposed construction” (a home not yet built), the appraiser cannot physically inspect a finished house. Therefore, the valuation relies entirely on the plans and specifications. The lender is required to upload a full set of construction exhibits into WebLGY on the day the appraisal is requested. These exhibits typically include the plot plan, foundation or basement plan, exterior elevations, wall sections, and a description of materials. If these files are too large to upload, the lender must arrange for them to be sent directly to the assigned appraiser by overnight delivery to avoid delays.

Yes, prior to ordering an appraisal and incurring costs, lenders should initiate a check of the Credit Alert Verification Report System (CAIVRS). This system alerts lenders if a borrower has a delinquent federal debt, such as a default on a student loan or a previous government-backed mortgage. While a CAIVRS “hit” does not automatically disqualify a borrower, it must be resolved or explained satisfactorily before the loan can proceed. Checking this early prevents the Veteran from paying for an appraisal on a loan that might eventually be denied due to unresolved federal indebtedness or ineligibility.

When ordering an appraisal in the WebLGY system, there is a specific block designated for the property’s legal description. However, legal descriptions can sometimes be lengthy and complex, exceeding the character limit of the input field. If the legal description does not fit in the designated block, the lender must not truncate it or leave it incomplete. Instead, the lender should upload a complete copy of the legal description as a separate document into WebLGY on the same day the assignment is made. This ensures the appraiser and the VA have the accurate legal definition of the property being secured.

Generally, an appraisal is not required for an Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL is a “streamline” refinance product designed to lower the Veteran’s interest rate on an existing VA loan without requiring extensive re-underwriting. Because the VA already guarantees the loan on the property, a new valuation is typically unnecessary. However, if the borrower is pursuing a “Cash-Out” refinance, a full appraisal is strictly required to establish the current market value and determining the maximum loan amount. Lenders should always verify specific investor overlays, but VA policy usually exempts standard IRRRLs from the appraisal requirement.

Yes, lenders must determine if a property is eligible for an appraisal before placing the order to avoid unnecessary costs for the Veteran. Certain geographic locations render a property ineligible for a VA-guaranteed loan. For example, properties located in Coastal Barrier Resources System (CBRS) areas or Lava Flow Hazard Zones 1 and 2 are generally not eligible for appraisal. Lenders are expected to exercise due diligence to identify these location-based restrictions at the earliest possible opportunity. Failing to identify these ineligible zones early can result in the denial of the guaranty or a reduction in a future claim payment.

For properties that are defined as new or proposed construction, the lender has specific due diligence requirements regarding the builder. Before an appraisal can be ordered or a Notice of Value issued, the lender must verify that the builder possesses a valid VA-issued Builder Identification Number. This requirement ensures that the builder is registered and not currently sanctioned or excluded from participation in the VA Home Loan program. Additionally, for proposed construction, the lender must upload specific construction exhibits, such as plot plans, foundation plans, and exterior elevations, into the system on the same day the case number is assigned.

Before an appraisal request can be processed and assigned to a fee appraiser, the lender must address the payment of the appraisal fee. The system requires the requester to certify that the appraisal fee has been collected from the borrower or other interested party and is being held for payment. The lender must explicitly agree that upon receipt of the Notice of Value (or advice that one will not be issued), they will forward the approved fee to the appraiser. This protocol prevents fee appraisers from having to collect fees directly from Veterans at the door, which is unauthorized.

No, lenders are generally not permitted to select a specific appraiser for a VA-guaranteed loan. The Department of Veterans Affairs utilizes a rotational assignment system to ensure independence and prevent bias in the valuation process. When a lender requests an appraisal through the WebLGY system, the system automatically assigns the next available appraiser from the VA’s rotational fee panel for that specific geographic area. This process is designed to protect the Veteran and the government by ensuring the appraisal is conducted by a neutral third party who is not influenced by the lender’s desire to close the loan at a specific value.

If the appraisal is for a purchase transaction, the lender is required to provide the fee appraiser with a copy of the fully executed sales contract. This document must be uploaded into the WebLGY system on the same day the appraisal request is made. The appraiser needs access to the sales contract to analyze the terms, including the sales price, any seller concessions, and personal property included in the deal. Providing this document immediately ensures the appraiser can consider all relevant financial data and concessions when establishing the reasonable value of the property, preventing delays in the valuation process.

Yes, obtaining the Certificate of Eligibility (COE) is a strict prerequisite. Lenders are explicitly instructed to verify a borrower’s eligibility for the home loan benefit before an appraisal assignment is requested. The COE serves as the official proof that the applicant is a qualifying Veteran with available entitlement. Lenders typically obtain this document through the WebLGY system found in the Veterans Information Portal. Ordering an appraisal without first establishing eligibility creates a risk that the Veteran may incur costs for a property they cannot finance using the VA program. Therefore, the COE must be requested and on file prior to the appraisal order.