C4 is the new C5.

[Mile High Trout]

C4 is the new C5.

C5 is a bust for most deals. Just FYI. Good luck finding anyone to loan on a c5, even with repair escrow.

Anything you might make subject to, stalls the way loans close, forcing repairs. And with subject to, you also need to tackle as repaired. So that's a can of worms. What about an alternative approach?

Where as noting C5 due to a faulty condition which could be corrected and the subject would be noted as C4 is a potentially clever way to handle repair issues, as opposed to subject to.

Fannie FAQ on UAD says if anything is a c6, whole home must go c6. But.....

That is sort of misleading. You could also comply with fannie FAQ on uad and note c6, but would have been c4 if not for this one issue. Would go c4, if issue is repaired.

You might lose out on some final requests, but no biggie.

What you think?

 

[Adios]

C4 is the new C5.

C5 is a bust for most deals. Just FYI. Good luck finding anyone to loan on a c5, even with repair escrow.

Anything you might make subject to, stalls the way loans close, forcing repairs. And with subject to, you also need to tackle as repaired. So that's a can of worms. What about an alternative approach?

Where as noting C5 due to a faulty condition which could be corrected and the subject would be noted as C4 is a potentially clever way to handle repair issues, as opposed to subject to.

Fannie FAQ on UAD says if anything is a c6, whole home must go c6. But.....

That is sort of misleading. You could also comply with fannie FAQ on uad and note c6, but would have been c4 if not for this one issue. Would go c4, if issue is repaired.

You might lose out on some final requests, but no biggie.

What you think?

Your job isn't to make or break deals. Your job is to provide an independent analysis. To do anything else would be misleading .

 

[Smokey Bear]

There's a newer, better version of Plastic out there?

 

[CANative]

Your job isn't to make or break deals. Your job is to provide an independent analysis. To do anything else would be misleading .

Characterizing a new house with a small hole in the roof C6 is counter intuitive. It doesn't match the UAD definition.

It would make more sense to call it C1 but check yes to the Page 1 question "are there any conditions.... blah, blah" and making a repair condition for that item.

Agree with the trout.

 

[NC Appraising]

Characterizing a new house with a small hole in the roof C6 is counter intuitive. It doesn't match the UAD definition.

It would make more sense to call it C1 but check yes to the Page 1 question "are there any conditions.... blah, blah" and making a repair condition for that item.

Agree with the trout.

Characterizing a new house with a small hole in the roof C1 is counter intuitive. It doesn't match the UAD definition.

It would make more sense to call it C6. But you would not. See below. Subject to does not get the C6 rating.



C1[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]: The improvements have been recently constructed and have not been previously occupied. The entire structure and all components are new and the dwelling features no physical depreciation. [/FONT]
[/FONT]

C6[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]: The improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements. The improvements are in need of substantial repairs and rehabilitation, including many or most major components. [/FONT][/FONT]Note: [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Substantial repairs are needed to the improvements due to the lack of adequate maintenance or property damage. It reflects a property with conditions severe enough to affect the safety, soundness, or structural integrity of the improvements. [/FONT][/FONT]



Q17. If a property’s overall rating could be C2, C3, C4, or C5 for Condition, but there is one item alone that could be rated a C6, how should the property be rated?
[FONT=Arial,Arial][FONT=Arial,Arial]The condition of the property should be determined holistically and the best definition should be applied as the overall rating. However, the C6 rating is an exception because it indicates that the property suffers from trait(s) that negatively affect the safety, soundness, or structural integrity of the improvements. As a result, if any portion of the dwelling is rated a C6, the whole dwelling must be rated a C6. [/FONT]


[FONT=Arial,Arial]Q33. If the condition of the property requires the appraisal be made "subject to" repairs, alterations, or inspections, what rating should the appraiser put in the condition field on page one in the improvements, or unit description section of the appraisal report? [FONT=Arial,Arial][FONT=Arial,Arial]The appraiser must provide the rating based on the condition of the property as it will be after the completion of the "subject to" items in the improvements or unit description section. The same rating must used in the sales comparison approach grid. The appraiser must also describe the current condition of the subject property including the "as-is" condition rating in the condition comment field and/or in an addendum if necessary. Lastly, the comments must also include a breakdown of the necessary repairs and/or alterations which will be required to be repaired. [/FONT]
[/FONT]



The appraiser must select the overall condition rating for the subject property and each comparable property from the below list. The overall condition rating for the subject property must match the overall condition rating that was reported in the Improvements section so that it is consistent throughout the appraisal report. Only one selection is permitted. The condition rating for the subject property must describe the physical condition of the property as-of the effective date of the appraisal and the physical condition of each comparable property as-of the date of sale for the comparable properties on an absolute basis, not on a relative basis or how the properties relate to other properties in the neighborhood.


[/FONT][/FONT]

 

[Terrel L. Shields]

Your job isn't to make or break deals.

Your job isn't to jawbone with a bunch of stupid UWs and AMC monkeys either...If you don't trust me, then fire me. Don't try to browbeat me or second-guess the condition of a house from some mud hut in India.

 

[NC Appraising]

Mile High,


I kinda disagree. C5 homes have to be pretty worn out. Most of them that I run into are located in low income neighborhoods and are rentals.


To the best of my knowledge, Fannie Mae loans on a C5 home? No. Same with FHA. FHA will insure on a C5 condition home.

To the best of my knowledge, Freddie Mac will not loan on a C5 or a Q5 rated home.


Now I see that the Q5 rated homes have become the Q4 homes. Freddie Mac screwed that one up. There is nothing wrong with a Q5 rated home. The below is a starter home in a cookie cutter subdivision: no gutters, no side eaves or overhangs, stock cabinets with no knobs mostly particle board, no mouldings, etc.!!!!


Q5 [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades. [/FONT][/FONT]



What is wrong with the above? Why not lend on it? This is why the cost approach is always high on these types of properties.


I will agree with you that if you use a C5 or a Q5 rated home all hell will break out and expect to get placed at the end of the line.

Again, Fannie will lend on a C5 rated home and FHA will lend on a C5 rated home. So why does lenders and AMCs give us such a hard time if we rate it as the UAD calls for it? It's funny. The lender makes that requirement (even thou fannie will lend on it) and then their employees and AMCs give us hell for it.


Then you have Freddie Mac and their Q5 deal.

 

[Rich Heyn]

Then you have Freddie Mac and their Q5 deal.

I think you may have received some bad information, or Freddie's policy on Q5 has changed from when I last researched this issue. My understanding is that Freddie won't purchase loans involving C5, C6 or Q6 properties but Q5 is acceptable.

 

[J Grant]

I don't understand the point of this post. We evaluate the condition of the property and quality based on our best observation of it, as UAD said, a holistic approach (except for C6 issues)

Whether a lender or not will loan on it is not our concern.

A client pressuring to change a condition or quality rating in order to get a loan through is the same as value pressure. Ask for everything in writing, keep it in a file, report it to the consumer protection bureau and if FHA to them .

 

[NC Appraising]

I think you may have received some bad information, or Freddie's policy on Q5 has changed from when I last researched this issue. My understanding is that Freddie won't purchase loans involving C5, C6 or Q6 properties but Q5 is acceptable.

Thanks for keeping me in-line.


Yeah, that is why I said to the best of my knowledge. I have several AMCs and lenders that have a requirement that a house must be in Q4 or better quality. When I asked why, that is what they said.

On their engagement letter, it even said to make the report "subject to" to bring the subject property to Q4 quality? What, by adding eaves, gutters, more corners to the foot prints, raise the ceilings, add superior cabinets, more glazed areas?



I also faintly remember something from Freddie when it first came out. I could be completely wrong on this.

Do you know if they revised this? The AMCs and lenders had to get it from somewhere.

Thanks.