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Fannie Mae Question - Over 6% Concessions

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Mark Deason, Feb 24, 2009.

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  1. Mark Deason

    Mark Deason New Member

    Dec 17, 2004
    Professional Status:
    Certified Residential Appraiser
    I did an report for a sale on a property listed for $89,900. Contract price is $92,000 with $5,940 in concessions, over 6% (the maximum I have seen), supposedly to cover CC, Escrows, Prepaids and Owners Title insurrance (all in the PA).

    My comments: $5,940.00 to be paid for by the seller towards buyers closing costs, prepaids and escrows, and to cover the owners title poilcy. This is slightly more than 6% concessions, the maximum typical for the area. The appraiser does not believe this to be detrimental to the overall market, but is not a financial expert and
    can't be held responsible.

    The processor wants me to state that : (shortened), however what the underwriter is looking for is that the amount over the 6% to cover FannieMa's title policy is what the additional amount of seller concessions is for and is typical for FannieMae.

    My reply: I am not a loan officer, and have no idea what is typical for Fannie Mae and what isn't. I am not comfortable stating what I don't know. They obviously have a problem with going over 6% for reasons known better to you than me, and as far as I'm concerned, this is NOT typical, and I'm not putting my license on the line to state that it is. I have never seen concessions over 6% on a FHA report. I stated I don't think it is detrimental to the market, but that is all I am willing to state. Sorry.

    Her reply: I respect what you are trying to say, however if you need to confirm the FannieMae guidelines, you can look them up on there website, call XXXX the real estate agent who works with them, or get the number from XXXX for FannieMa and her contact there to confirm. Please call me in the morning.
    Thank you;

    Is this typical for Fanny Mae and/or would the concessions be against Fannie Mae guidelines? Is this my responsibility to state in the report? I cold not find a definate answer online and don't want to get jammed up. Thanks for any help
  2. leelansford

    leelansford Elite Member

    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser

    If you have correctly understood and analyzed the sold comparisons in light of Fannie's instruction (the asterisk section of their definition of Market Value) to appraisers specific to concessions to buyers, I don't know what else you might do.
  3. Riick

    Riick Elite Member

    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    Neither F&F, nor FHA have a hard "6%" rule, it depends upon you local market.
    Now the figure you have is 6.45% -v- 6.0% (exactly, never more or less?)

    FWIW, a varience of less than 1/2 % is closer than I can get the value estimate;
    I always feel that if I'm within 5% of the "real number" I'm doing well.

  4. Elliott

    Elliott Elite Member

    Apr 23, 2002
    Professional Status:
    Certified General Appraiser
    Welcome to the forum!! Just curious, so in a month or two, when your
    subject property has closed and you use it as a comparable for another
    property, do you adjust the sales price for the 6% concession or just
    the amount over 6%, or some other amount, or make no adjustment for
    the concession?
  5. Restrain

    Restrain Elite Member

    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    The adjustment is not a $ amount but the effect on the market by the concessions, and the 6% rule is a guideline in the UWs mind.

    For example, you have a home that is selling for $100,000, with $6000 in concessions, and sales with no concessions shown are selling for $96,000, then your adjustment would be $4000, not $6000.
  6. hglenbetts

    hglenbetts Senior Member

    Dec 3, 2007
    Professional Status:
    Certified Residential Appraiser
    Back to the OP...

    Just state what you know, as presented to you in the PA. It's not your job to quote FNMA loan guidelines..
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