Maryland Legal Alert for Financial Services
FHA Eliminates Mandatory Appraisal Field Reviews for Quality Control Reviews
On June 23, 2026, the Federal Housing Administration (FHA) issued Mortgagee Letter 2026-10, effective immediately, revising its appraisal quality control (QC) requirements for FHA-approved mortgagees. The Mortgagee Letter applies to all FHA-insured mortgage programs and eliminates the longstanding requirement that lenders obtain appraisal field reviews for at least 10% of loans selected for origination and underwriting quality control review. Previously, field reviews were also required for certain higher-risk loans, including those involving early payment defaults, borrower complaints, and unresolved appraisal issues. Under the revised guidance, appraisal field reviews are now optional, allowing mortgagees to tailor their appraisal review methods based on case-specific risk while maintaining FHA's core appraisal compliance framework.
Although field reviews are no longer mandatory, mortgagees must continue to evaluate all property documentation and appraisal reports for completeness, technical accuracy, overall quality, and compliance with FHA requirements. FHA encourages lenders to utilize risk-based review methods, including appraisal desk reviews, Automated Valuation Models (AVMs), multiple listing service data, public records, and other appropriate valuation tools to identify potential valuation errors or compliance concerns. Any appraisal field review that is conducted must still be completed by an appraiser listed on the FHA Appraiser Roster. Mortgagees also remain responsible for retaining documentation supporting their appraisal quality control reviews, including valuation tool reports, any appraisal field reviews performed, review findings, and corrective actions taken.
Practice Pointer: FHA-approved mortgagees should review and update their quality control policies and procedures to reflect the revised guidance, including removing references to mandatory appraisal field review sampling, incorporating risk-based criteria for determining when field reviews remain appropriate, and ensuring documentation and record retention practices continue to satisfy FHA requirements.
For more information concerning this topic, please contact Tamia J. Morris.
Contact Tamia J. Morris | 410-576-4021
Contact Christopher R. Rahl | 410-576-4222