Fannie Mae and "Multiple Parcels"

[Eli]

What if... since one component of the subject property has a separate HBU... you can provide the value for that component under a different definition of MV at the client's request? Does USPAP say that only one definition of value is allowed? Does it say you can't appraise two APNs on one form? Isn't the definition of value part of the scope of work?

You couldn't do two separate market values. The subject is "one". The client, intended use, user will never fall for two separate market values for the subject for the intended use and user. Never

An in-house bank would, a homeowner or investor would, so I eat my words. But, that is a different story. That's not FNMA. With an in-house bank, the subject would be two different subjects in your scenario. Each parcel would be a different subject. They could still make the loan and be fine with regulators and everybody. It would be two separate appraisals basically on in house lending. Perfectly fine to meet the regulators requirements on the loan in question.

The "use value" is the curve thrown, but very pertinent to the problem from a management standpoint, client standpoint, intended use/user standpoint., value definition standpoint.

 

[Terrel L. Shields]

With an in-house bank, the subject would be two different subjects.

Not with any bank I've ever worked for.

 

[Eli]

Not with any bank I've ever worked for.

See, if they had different H&B use was his hypothetical scenario. Like the adjoining parcel had a different H&B use from assemblage. I have seen banks do in house loans and take a lien on everything but the kitchen sink on both personal property and real property. It is done. The short term vs long term character of FNMA won't let them do that. In my hypothetical, they file both a mortgage, and a personal property lien, but not necessarily. They just secure all they can anyway they can. Two separate appraisals is fine in certain scenarios. Especially if one parcel is worth more separately than the house (assemblage).

Their "use value" is dodging somewhat. But they are the client, intended use, user. The definition of value is the most striking pose of all this. The definition of value is "HUGE"

 

[Eli]

It is surprising to me that so many people who defend "confidentiality" and "client", "intended use/user" seem like traders to me in this thread.

 

[Eli]

Spelled it wrong. "Traitors", not "Traders".

 

[George Hatch]

At one time the definition of market value was highest possible price or something similar? I'm sure the lifers here remember the exact wording. Sometimes things change, and the times they are a-changing.

That was a thing, but it was actually before my time.

 

[Terrel L. Shields]

The fact a bank takes a mortgage on more than they appraise can be a function of the LTV. It is cheaper to appraise a vacant 40 acres here than the adjacent 40 acres with a poultry farm. And if borrowing $40,000, well why do you need to value the entire farm? Just enough to cover the loan even if you do take both parcels.

 

[George Hatch]

What if... since one component of the subject property has a separate HBU... you can provide the value for that component under a different definition of MV at the client's request? Does USPAP say that only one definition of value is allowed? Does it say you can't appraise two APNs on one form? Isn't the definition of value part of the scope of work?

It's already common for appraisers to include more than one value opinion - using more than one valuation scenario - in appraisals.

Appraisers commonly provide opinions of insurable value (even though many of them omit including the definition they're using for that)
Appraisers sometimes get tasked to add an opinion of Liquidation Value and/or Disposition Value
Appraisers sometimes get tasked to add a value under bulk sale conditions - which is actually closer to what this situation is
"As Is" and "Subject to completion" is common

So in answer to your question, USPAP doesn't impede any of those situations. What it does impede is calling an apple an orange. What it does impede is *ignoring* the HBU of the additional parcel by use of the unconsidered assumption that the extra parcel is nothing more than a lawn to a buyer or seller.

As I keep saying, if Fannie has a problem with what an appraisal is that is their own problem, of their own making, and can only be solved at their own hand.

Appraisers are not dogs, and Fannie doesn't have a leash on us. They're just another user as far as our appraisal standards go. You can heel for them if you want, but if you wouldn't heel for Fly-By-Night Mortgage then it's not any more ethical to heel for Fannie.

 

[Mr Rex]

I reckon the USPAP police have us on a short leash.

 

[George Hatch]

I reckon the USPAP police have us on a short leash.

LOL - it's only been 30 years. I'm sure you'll get used to it someday.


If you think that "do what you say and say what you do" is too heavy a burden for you to bear then that's...unfortunate.

Fannie has a problem. They'll probably end up backing down in order to resolve the problem. Those of you who wish to continue ignoring HBU probably won't get caught at it by Fannie because they apparently don't understand the issue anyway, so you're good. As long as the form monkeys are in charge over there the banana will probably remain within reach.

Of course, my expectations for Freddie are a little different. They actually have an expert on staff now.