FNMA and Permits and Extraordinary Assumptions

[CGinMN]

The OP refers to an, "...appraisal based on the extraordinary assumption that all improvements are permitted" It says nothing about a report that is subject to some sort of inspection or repair or alteration to the property, as might be addressed by the checkboxes.

What about if phrased like this?

X subject to the following required inspection based on the extraordinary assumption that the condition or deficiency does not require alteration or repair:

Inspection by permitting authority with jurisdiction over the subject.

 

[Terrel L. Shields]

Perhaps you could supply a supporting citation ??

I am not sure that the word "extraordinary" can be found in the Selling Guide.

 

[andrew81]

I am not sure that the word "extraordinary" can be found in the Selling Guide.

It is, but, not appraisal related topics.

 

[Carnivore]

Maybe on your part. Extraordinary Assumptions are allowed in certain cases. Read your document before you sign it. Ever require inspection and check that box on the form above your MVE? If yes you have made an extraordinary assumption. It is imbedded in the form. What else are you unaware of?

Yes, I see that, I admit in part that I am wrong. I should have looked it back over Completely before I ran my mouth. I can see some real problems or should I say some extraordinary effort in the development of the report. In the OP's case. There has been some sort of apparent improvement(addition) and there is an absence of a permit. In my area the GIS may or may not have a historical list of permits. Mecklenburg County for example only list current permits that are OPEN. over time Once the permit is completed it goes away on-line. This leads me to ask a Question. Should we Old School the research and actually make a visit to the Permits Department? I say maybe maybe not. One Direct FNMA assignment I indeed had to make a Visit to the Permits Department. That visit revealed there were permits but not all of the permits needed. What happened is Electrical Power was permitted and singed off up to the Exterior Electrical Box. Problem was it did not go any further and the Interior wiring was buttoned up, but never signed off by the Municipality.

Specific to the FNMA Series formats; When does an Ordinary Assumption cross the threshold to an Extraordinary Assumption?
How Far do you go back?

FNMA gives an example of when you can not use an Extraordinary Assumption. During the Site/improvement Inspection you discover that a Room is locked and access is not allowed until some later prearranged date/time. In this case you can not make and Extraordinary Assumption about the Interior of that Room. You are required by FNMA to get the owner that day to allow you access or come back when access can me arranged.

Question from the OP; Does FNMA allow for use of an Extraordinary Assumption? Answer: Yes; No; Maybe.

 

[Russ Kitzberger]

Fee simple absolute interest is defined that the property transfers free and clear of any encumbrances, subject only to Police Power, Eminent Domain, Taxation, and Escheat.

If the lack of permit creates a lien or encumbrance on the property, and you include that; then are you valuing the fee simple absolute?
Is a (possible) lien or encumbrance from a lack of permit a title issue or a police/zoning issue?
If a permit requirement is never or rarely enforced, then is there a market participant expectation that they are receiving similar properties in fee simple without expectation of governmental enforcement pertaining to permits?

If you are valuing the property for FNMA mortgage, they ask you to value the property subject as though subject to the mortgage, could it be the case if they require warranty from the borrower that the property will be used compliant with laws and mortgage, then could you make the case that your appraisal assumes that the lender has ensured the properties use as a residence is compliant with the laws?

PrepAgent.com - Government Powers: Police Power, Eminent Domain, Taxation, & Escheat | Real Estate Exam

Pass your real estate exam with PrepAgent's online practice tests, animated videos, live online webinars, audio lessons, online flashcards, and more.

www.prepagent.com

 

[J Grant]

A) the UARAR forms do not permit any ADDITONAL extraordinary assumptions other than what is already pre printed on the forms.

B) If you do not know if a permit exists/can not find one then say it !! Don't try to imply one exists or make an EA or assumption about it. Just state the facts appraiser searched for a permit and none was found. Fannie ( and Freddie I assume ) will loan on properties that have not permitted additions / improvements -photo and describe what is built -find a similar comp - read their guidelines

If you think the electrical or construction of a non permitted area looks wonky you can make appraisal subject to inspection or recommend inspection

 

[BRCJR]

you answer that-google it.

You formed the opinion and/or conclusion...support it...

 

[ramrcdk]

Maybe on your part. Extraordinary Assumptions are allowed in certain cases. Read your document before you sign it. Ever require inspection and check that box on the form above your MVE? If yes you have made an extraordinary assumption. It is imbedded in the form. What else are you unaware of?

Hi Sadie, points you make ... BUT to chop their head off...WHY?
It's allllllllllll in the Presentation. Simply with a "tude like that
it's not really pro' or even smart. Unless you are a Smart-A_ _, right?

 

[BRCJR]

Maybe on your part. Extraordinary Assumptions are allowed in certain cases. Read your document before you sign it. Ever require inspection and check that box on the form above your MVE? If yes you have made an extraordinary assumption. It is imbedded in the form. What else are you unaware of?

This is different scenario than the OP presented. The embedded form is not being superseded when using the checkboxes. The OP was related to an additional or different condition than those allowed in the URAR.

I don't always see "eye to eye" with Danny Wiley (most times I do) but encourage you to become educated by him, particularly in this thread.

 

[Sadie]

I am not sure that the word "extraordinary" can be found in the Selling Guide.

Its right above the MVE on the 1004, the 1004 is a part of the selling guide in the forms section and if your scope of work requires an assumption that is extraordinary, then you CAN have an extraordinary assumption.

Direct from the horse's (FNMA) mouth.

An extraordinary assumption can be used to manage uncertain information that, if found to be false, could alter appraisal results. USPAP states that extraordinary assumptions are assignmentspecific. This might explain why appraisers don’t normally employ extraordinary assumptions when relying on uncertain information, such as MLS and public records. Those sources are so widespread that the assumption of accuracy, although not always valid, is at least common, not assignmentspecific. USPAP no longer defines the ordinary assumption, but for those of us who’ve been in this profession a while, you will recall that not all assumptions are extraordinary.