Single Family Appraisal and Disposal Practices of the Department of Housing and Urban Development

CED-77-90: Published: Jun 23, 1977. Publicly Released: Oct 27, 1983.

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The purchasers of a home that had been foreclosed and put up for bid at $37,500 by the Federal Housing Administration (FHA) alleged that they were not told of the agency's appraisal price of the property.

A review of the case showed that the appropriate requirements were met and that the FHA had acted reasonably in the disposal of the property. The purchasers were, in fact, told the property valuation by virtue of the clause (d) of the Conditions of Sale in the Standard Retail Sales Contract. Moreover, even if clause (d) failed to inform them, a relevant Supreme Court decision concerning appraisal notification held that notification was primarily to protect the Government and its insurance funds, and only incidentally to benefit purchasers; the United States was not liable for misrepresentation to purchasers who relied on an FHA appraisal and paid above market value. FHA failure to furnish the parties with a written appraisal thus appeared legally inconsequential and successful court action by them appeared doubtful.

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