1004MC & Neighborhood Section page 1

[residentialguy]

The intent of the 1004MC is to provide support for the appraiser's conclusions regarding market trends and conditions. Consequently, the checkboxes under "One-Unit Housing Trends" on the URAR are submarket specific, as is the 1004MC. Additionally, the "Market Conditions" comment section of the URAR should contain comments specific to the subject submarket. With one possible exception, the remainder of the Neighborhood Section of the URAR pertains to the entire neighborhood, not just the subject submarket.

NC, to put it simiply, Page 1 is the 1 unit in the neighborhood. MC are comps within that neighborhood. 2 completely different studies. The first is a sub-market of the area in that it filters everything but SF... the MC is a sub-market of that submarket in that it focuses on homes that are comparable to the subject, hence the term "comparable".

FNMA is talking out of both sides of their mouth saying in the instructions that the MC is to provide support for page 1 and then calling them "COMPARABLES" If all SF sales are "comparables", fine...then on the top of page 2 will list all sales active and sold. And then eliminate the "adjustment guidelines" if all sales are "comparable"...they already set the guideline of comparables: they mean all sales.

 

[NC Appraising]

What I posted was from other posters from another thread.



Thier not talking out of thier mouths. Do you realize if they changed the page 1 of the URAR how many software people, data miners, etc. would have to go through....Your just reading it as you want to. The other two posters that have been in constant communication with Fannie has come on hear and said how Fannie wants it done. It may not be perfect, but it's how they want it.....





I do it their way, since it's their form.


This is not pointed at you, but I have a problem with appraisers who want to do it their way, when their way is the wrong way, and then try to come on here and preach it. Yes, it can be confusing, but appraisers are just hard headed. I realize that some areas of appraising is gray, and that is just fine to come on here and debate appraisal theories.


But like I said, these two guys have been in constant communication with Fannie mae and this is how they want it. I guess if one disagrees, they should not use it. If you do use it, and do it your way, your reports could be seen as not being USPAP compliant.

 

[NC Appraising]

From Fannies FAQs:

Note the last sentence in the following paragraph.

The Form 1004MC is intended to provide the lender with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood. The form provides the appraiser with a structured format to report the data and to more easily identify current market trends and conditions. The appraiser’s conclusions are to be reported in the “Neighborhood” section of the appraisal report.


The following sentence references “housing trends” as in “One-Unit Housing Trends” on the URAR form.

The “Inventory Analysis” section assists the appraiser in analyzing important supply and demand factors in order to reach a conclusion regarding housing trends and market conditions.

 

[residentialguy]

I give them both. I do a 1004 MC on the 1-units in the neighborhood...that goes on pg 1 that the FNMA form labels 1 unit housing in NEIGHBORHOOD. I do a 1004MC on the submarket of the comparables. That goes on the MC that the FNMA form labels "Comparables". This provides the overall housing trends and shows the trend of homes like the subject are in comparison. Now, when you can show me that eliminating one of these analysis will provides a superior and more credible report, I'm all ears. It is my appraisal and don't expect me to put all neighborhood data in something called "COMPARABLE, or to only put only COMPARABLE information that asks for all SF. That is misleading. They can instruct us all they want...but it better be in-line with what the form says. These "instructions" and "contstant communications" of theirs is worse then part 1 of the 1040D they so nicely endorsed.

 

[The Argus]

I see USPAP as more important than Fannie.

I write a narrative, in that narrative, I explain the forms I use, define my neighbohrood, define the subject's segment within the market and explain the market trends and conditions.

The report is the report. The FORMS are not the REPORT. The REPORT is the REPORT.

 

[DWiley]

I see USPAP as more important than Fannie.

That line could make for an interesting philisophical thread.

USPAP contains a SCOIPE OF WORK RULE, and that Rule includes a Problem Identification section. One of the things one must identify in defining the appraisal problem are any assignment conditions applicable to the appraisal. When one takes on an assignment subject to the guidelines of Fannie Mae, one of the things inherent in that is following the directions of Fannie Mae when it comes to completing and reporting the anlaysis.

We can quibble about the words on the form, but the printed directions of Fannie Mae are pretty clear - the 1004MC form is to be used to support the trend analysis reported on page 1 of the URAR.

 

[residentialguy]

We can quibble about the words on the form, but the printed directions of Fannie Mae are pretty clear - the 1004MC form is to be used to support the trend analysis reported on page 1 of the URAR.

If the instructions say to do a hypothetical or as completed but to mark the box that says "as-is" since it would cost to much money to get new forms with the right box....would you do it?

Words on the form mean something. When you sign that form, you are certifying that you agree to the words, not the communication to Joe Schmo at HUD. Would you sign any other legal document that says something different then what you intend? If so, I know some lawyers that would love to sign some papers for them...just follow their instruction, never mind what the document says.

Do it how you want, just make sure your report is very clear as to what you are doing. If you are doing it the way FNMA instructs, make darn sure that you clearly indicate that it's is different than what the form says.

 

[The Argus]

the printed directions of Fannie Mae are pretty clear.

I guess that's why there have been so many threads debating this topic.

 

[DWiley]

If the instructions say to do a hypothetical or as completed but to mark the box that says "as-is" since it would cost to much money to get new forms with the right box....would you do it?...When you sign that form, you are certifying that you agree to the words, not the communication to Joe Schmo at HUD.

No one has to take anyone's word for how the 1004MC relates to page 1 of the URAR, all they have to do is read what Fannie has put out on. Examples have already been posted in this thread. When you sign the certification you are basically saying that you have read and followed the directions for completing the form, including the 1004MC.

The stuff about HC is a nice red herring, but has nothing to do with the 1004MC.

I guess that's why there have been so many threads debating this topic.

The main reason there are so many threads on this topic is that a large number of appraisers just started filling in blanks without first reading the directions. Had I not read the directions, watched the video, etc. I probably wouldn't be filling it out properly either.

I am always amazed at how some communications from Fannie are treated as if they are Gospel and some are basically ignored.

 

[Mike Kennedy]

Learn How to Use the New Market Conditions Addendum


Gain an understanding of and recognize the sources of market information necessary to analyze market conditions. Our new recorded training is organized to address the Market Conditions Addendum (Form 1004MC), effective April 1, 2009, section by section. Also review the FAQs for additional information about the form and other appraisal topics.

• View Recorded Training
• FAQs (.pdf)