1 mile rule

[paragonrea]

Just got off the phone with an underwriter about the "1 mile rule". They insisted that it was a Fannie guideline, I know that it is not. I read and explained the exact language from the Fannie book in regards to comparable selection and NO where did it say 1 mile. They still insist that comparables MUST be within 1 mile per Fannie guidelines. Does anybody know how this myth was started? The origin would be very helpful in the future when Mr. Mortgage Broker insists that I use a comparable from a superior community because it is within 1 mile, god I hate that one. m2:

 

[Carnivore]

Your answer to this issue can be found in:

Scope of Work Rule

http://commerce.appraisalfoundation...cceptability_.htm#Scope_of_Work_Acceptability

An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.

Comment: If relevant information is not available because of assignment conditions that limit research opportunities (such as conditions that place limitations on inspection or information gathering), an appraiser must withdraw from the assignment unless the appraiser can:

modify the assignment conditions to expand the scope of work to include gathering the information; or
use an extraordinary assumption about such information, if credible assignment results can still be developed.

An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.

Standard 1 of USPAP:

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/standards/std_01_.htm

Specifically:

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/standards/Standards_Rule_1_2.htm

Standards Rule 1-2

In developing a real property appraisal, an appraiser must:

(a) identify the client and other intended users; (note5)

(b)identify the intended use of the appraiser’s opinions and conclusions;(note6)

Comment: An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.

 

[Michael Tipton]

I'd suggest referring the UW to the following sections of the current FNMA sellers guide. The one mile rule is a lender condition, not a FNMA requirement.

http://www.allregs.com/efnma/index.asp?dv=0&id=a&ii=0&im=0&io=FNMA&ip=/&iq=0&iv=0&iw=0&iy=0&iz=0&fc=0&fk=_&fm=0&fs=0&fv=0&sd=/&sm=1&sp=FNMA&sq=_&st=_&sv=0&sx=/&sy=0&sz=0&t=0&tc=FNMA/selling/part-xi/xi-ch-4/xi-406&td=0&ti=0&tm=0&to=FNMA&tw=0&tv=0&tq=0&tx=/&tp=FNMA/selling/part-xi/xi-ch-4/xi-406/xi-406.05


http://www.allregs.com/efnma/index....FNMA/selling/part-xi/xi-ch-4/xi-406/xi-406.02


http://www.allregs.com/efnma/index....FNMA/selling/part-xi/xi-ch-4/xi-403/xi-403.01

 

[Greg Bell]

There are many FNMA myths.The in one mile rule has always been silly.In Kansas the driveways are longer than a mile.

 

[DJBanas]

I solved this problem with my biggest client by requesting that they send me the FNMAE reference so that I can add it to my folder for future reference. About 2 days later received an email with the info from the seller's guide and a statement saying that they didn't realize the "rule" had changed. LOL

 

[Mike Garrett RAA]

Another fine reason to have underwriters licensed!

 

[Greg Bell]

I solved this problem with my biggest client by requesting that they send me the FNMA reference so that I can add it to my folder for future reference. About 2 days later received an email with the info from the seller's guide and a statement saying that they didn't realize the "rule" had changed. LOL

Maybe you should have asked just when the FNMA rule was changed

 

[Chris Colston]

The one mile myth and the 30% land to value ratio myth are carry overs from lender/underwriter requirement in the 1980's. It was thought that "suburban" comps should not exceed a 1 mile radius from the subject. In active, good markets that might be so. However, as we all know, as the market changes so does where the comps come from.

Just put in an adequate explanation that buyers looking at the subject would also consider the comps and the distance required to find those comps as a good substitute for the subject and you shouldn't be questioned anymore.

 

[Brad Ellis]

All,

Yes it changed but it used to be in there.

Brad

 

[Elliott]

It comes from France, where they have the 1 KM rule.