1004MC & Neighborhood Section page 1

[residentialguy]

I don't know what you mean by "the three combined." You check all three boxes?

The neighborhood data is comprised of all the submarkets together in the neighborhood. You don't break them down into 3 sub-markets like you did. That's what the MC is for. If you feel that other sub-markets are pertenant infomation, then tell and explain.

 

[Mike Kennedy]

B4-1.4-04, Appraisal Report Review: Trend of Neighborhood Property Values, Demand/Supply, and
Marketing Time (04/01/2009)
Introduction
This topic contains information on trend of neighborhood property values, demand/supply, and marketing time.
• Overview
• Assessment of Market Conditions
Overview
The appraiser must report the primary indicators of market condition for properties in the subject neighborhood as of the effective date of the appraisal by noting:​

Trend of Property Values Supply of Properties in the Subject Neighborhood
Marketing Time for Properties
• increasing,
• stable, or
• declining.
• shortage,
• in-balance, or
• over-supply.
• under three months,
• three to six months, or
• over six months.​

Note:

The appraisal must describe the reasons when the trend of property values is declining, supply is an over-supply, or marketing time is over six months. The appraiser’s analysis of a property must take into consideration all factors that affect value. Because Fannie Mae purchases mortgages in all markets, this is particularly important for market areas that are experiencing significant fluctuations inproperty values including sub-markets for particular types of housing within the market area.​

OPINION: ABOVE SECTION REFERENCES "ALL" PROPERTY VALUES ......"INCLUDING" SUB-MARKETS (comparables)​

_______________________________________________________________________________________________

"Therefore, it is important for lenders to remind the appraisers they use to analyze the following as part of the sales comparison approach:
• listings and contract sales,​

• closed or settled sales, AND
• the most recent and similar sales available. (1004mc - "comparables")

OPINION(Sales Comparison Approach supported by 1004MC specific "comparable" data)
___________________________________________________________________________________________________

OPINION: section below refers back to Page 1 URAR​

"Particular attention must be paid to sales or financing concessions in markets that are experiencing declining property values, an over-supply of properties, or marketing times over six months (see B4-1.4-16, Appraisal Report Review: Sales Comparison Approach).

Assessment of Market Conditions
If the lender determines the property is located within a declining market, the lender must ensure that current market conditions are identified and analyzed in the valuation process and described in the appraisal report.
____________________________________________________________________________________________________

OPINION: Page One 1004.........."all" (including comparable sub-market)​

Page Two 1004 (top) & 1004MC ....."COMPARABLE properties"

This conclusion re SCA and 1004MC DATA is supported by the many Posts on AF citing demands by Underwriters that the top of page 2 of the URAR MUST match the 1004MC Actives/Comp Sales Grid

 

[residentialguy]

And what use would THAT information be?

They way it was put to me was basically - "The lender isn't lending on all homes in the neighbrohood. They are lending on a specific property, and the one-unit housing trends should address the subject property and the properties is most directly competes with."

You don't think that the whole neighborhood of 250 sales were going down the crapper would be useful? You're just going to show the handfull of comparables you found showed stable.

 

[residentialguy]

Mike,

any chance you could put a legend in your post for your color meaning?

 

[The Argus]

Makes sense Mike, and that is how I see it.

If it is the other way, as Mr Wiley has explained, why is that information not shared in CE classes. Honestly, the first time I have ever heard (and have often heard to the contrary from instructions, CGs and appraisers all over the place) that the neighborhood section of the URAR is specific to Comparables only, was in this thread.

Furthermore, if an appraiser needs to have a contact on the "inside" at Fannie to get such info, we're all up the creek.

 

[DWiley]

This conclusion re SCA and 1004MC DATA is supported by the many Posts on AF citing demands by Underwriters that the top of page 2 of the URAR MUST match the 1004MC Actives/Comp Sales Grid

Of course the MC form and the top of page 2 must match - they are asking the same question. This is specifically addressed in the 1004MC Q&A.

 

[residentialguy]

Your top of page two I have a problem with.

yeah Greg, how did you get those numbers as comps? Your mc shows something like 145k-172k

 

[CANative]

Greg and ResGuy,
Your neighborhood consists of three distinct submarkets. Submarket A is increasing, B is stable and C is declining. Which box in the "one-unit housing trends" on page one of the URAR gets checked?

What makes the submarket? Improvement characteristic, location in reference to some benchmark geographical point or school district (or whatever), Sale conditions (REO versus owner/occupant seller)?

It depends.

Look, in my noob opinion, it's impossible for a national power user like Fannie to get consistent analysis and data in a one-size-fits-all check box. It's up to the appraiser to check the box that is "most right" and explain variances.

 

[woodsytf]

almost every MC form we do that has only comparable homes included in the data shows mixed results and lots of banks/underwriters want the numbers to match when that may not be the case. if the sale data says it, show it. we have reviewed some reports where the appraiser has stated that they are using the form in a way that differs from the directions/instructions... i suppose you can as long as you explain it.

around here we have some stable, some up, some down, almost always an oversupply, and generally when we use only homes that will pass the law/rule of substitution we have a situation where one or two sales shows a completely different result, so we have to mark them as the data reads and add narrative to illustrate our conclusion/contention that the market is ________ (up, down, stable, etc...)

we have to make a choice of one box or the other, but that doesn't mean those three boxes are the only three answers. it isn't exciting, fun, or sexy, but these appraisals often need more than a box checked!

some of my neighborhood have 3bed 2bath modest homes increasing over the past 2~3 years (not much, maybe 1~3%) but it is defendable, yet they are surrounded by overbuilt/overpriced 3bed/2baths large GLA homes that have taken a dive and lost 10~25% in the same period. if the data is there, show it to these folks and let them choke on it.

 

[DWiley]

If it is the other way, as Mr Wiley has explained, why is that information not shared in CE classes.

It is - at least in the CE classes taught by instructors who have taken the time to study all the stuff that Fannie has put out and to actually talk with Fannie.

Instructors are just a subset of the general appraiser population. Some instructors/schools had 1004MC seminars rolled out before Fannie had even published their guidance. Asinine is the word that comes to my mind.