Fannie Mae and "Multiple Parcels"

[CANative]

Obviously there have never ever been sales of properties with 2 contiguous lots with different H&BU in the strictest of USPAP edicts, so it is impossible to opine a value of such an alien transaction. Fannie Mae, as the largest source of mortgage funds in our galaxy has obviously lost their freaking minds. WTF were they thinking? I'm nose deep and bloody n the latest USPAP and I don't think an Appraiser has a chance to dodge the USPAP police on this one. Check the f'ing no H&BU checkbox on the form, reiterate the latest update on the issue from Fannie, and explain why the H&BU is checked no. Rocket surgery.

Are you applying a discount to the excess land when sold in the same transaction?

 

[Mr Rex]

Are you applying a discount to the excess land when sold in the same transaction?

If the market says so.

 

[Andrei Fin]

Excess and Surplus Land

At times, an appraiser is often called on to appraise improved properties that have an above-average amount of land. These assignments may either be for single-family resdidential or commercial or industrial parcels. Two questions arise in such assignments. What is excess land and how should it be appraised? Excess land is land that is not needed to support the use of existing or probable future improvements. There are two variations of excess land. Some housing agencies and residential mortgage lenders will not lend on an additional lot or acreage that is judged to be beyond the needs of a typical homeowner (or common and customary for a particular area.) That is, if a half-acre lot is typical for homes of a particular price and in a suburban neighborhood, then an extra lot would be excluded from the transaction and the borrower would have to acquire it with cash. The appraiser would only appraise the underlying home-site and building. However, if it were necessary to appraise the additional lot or land, it could be done readily and without any discount in unit value because it has value as a separate economic unit.

James S. Boykin, PhD, MAI, SREA, CRE - Land Valuation - AI

Excess land is not a single economic unit. By definition.

Yes it does have value as a separate unit. It also has a second value as part of the whole. Fannie is asking for the latter.

 

[Andrei Fin]

Fannie's difficulty is that (last time i looked) they can't base loan decisions on Value-in Use. But that's their problem, not ours'.

That's funny because the newsletter literally says the opposite. I wonder who is correct, George or the most recent newsletter?

 

[George Hatch]

Yes it does have value as a separate unit. It also has a second value as part of the whole. Fannie is asking for the latter.

We've been over this: It's a fair question for them to ask and a fair question for us to answer. What's (sometimes) not fair is calling the answer to that question MV.

 

[George Hatch]

That's funny because the newsletter literally says the opposite. I wonder who is correct, George or the most recent newsletter?

Ahh, the appeal to authority again. You think Fannie must be right because they're Fannie.

As far as USPAP issues go it will almost always be me. And all the other people who are competent with USPAP. Fannie has repeatedly demonstrated their incompetency with the material.

 

[Andrei Fin]

As far as USPAP issues go it will almost always be me.

You guys keep saying this is not a USPAP issue?

 

[Mr Rex]

There is an optimum MV under the strictest current interpretations of USPAP and there is an "As Is" market value. I suspect that the next USPAP update will address this. At least this go round they have something of substance to address in the biennial changes. The current "strict" interpretation" does not account for potential future increases in value that may exceed the current $1 more standard.

Appraiser's and appraisals are expected to reflect market participants reactions to market data and conditions. Fannie Mae is more correct in this scenario than USPAP in this case. IMHO. So USPAP needs to change. WTF about that is new?

 

[George Hatch]

Fannie's internal issues are Fannie's deal. Appraisal issues are appraisal issues.

 

[J Grant]

You can, so long as you call a value in use by than nomenclature.

One of the requirements in USPAP is to cite both the definition of value being used and its source:

View attachment 43078

Fannie's difficulty is that (last time i looked) they can't base loan decisions on Value-in Use. But that's their problem, not ours'.

The value in use is only for the component of the vacant lot, the appraisal opinion of market value is for the entire property ( the improvement and lot )