ADU income

[PushinValue]

FHA reverse ordered 1004.

There is nothing in 4000.1 I can locate indicating income approach must be developed. Lender request ADU market rent... Is it safe to say this is not included in the original scope of work (main home is 5000' custom with a 1000' ADU with no need to develop market rent for valuation purposes).

Nothing in the engagement letter stating income approach is required...


Let me know if I am missing something here... Do you get these requests on FHA reverse orders?

 

[Terrel L. Shields]

Did they indicate the ADU rent info in the engagement letter? Then tell them an extra charge is applicable. Was it even rented?

 

[TerryRohrer]

I would agree with your position. In such cases, if I think the work can be done without a dramatic disruption to my life and workflow, I offer to complete it for some significant fee. Otherwise, I decline.

 

[PushinValue]

IT was a month to month tenant.

I just wanted to make sure I was not missing something in 4000.1 that states you must develop or report income on ADUS

 

[alebrewer]

Of course we don't know your client's motivation - all speculation - but I'd guess the borrower is using the ADU rents as qualifying income. If such is the case, there is probably no requirement to develop the IA (that would be up to you to determine whether that is necessary or not), as all they need to know is the market rent for the ADU for qualifying income purposes.

 

[Terrel L. Shields]

It might be the lender wants that income from the rental to be put towards the note.

 

[alebrewer]

It might be the lender wants that income from the rental to be put towards the note.

yep - that's been my experience on the lender side. 1007 for any property the borrower is going to use rental income as qualifying income.

 

[sputnam]

Let me know if I am missing something here... Do you get these requests on FHA reverse orders?

USPAP requires that you consider all approaches and develop any that are applicable and necessary for credible assignment results. The fact that the Lender or Intended User doesn't require an approach is not permisison to not development.

Ale is correct...especially if it's a short term rental, the rental information is used to help qualify the borrower.