An Open Letter to Fannie Mae RE: multiple parcels

[George Hatch]

To me, that is the issue. Is it a whole separate lot that might as well be a mile away? Or, more likely, it is managed identically with the lot that contains the house.

Either way, that's an opinion to be developed. Not a default to assume. Fannie does a lot of business in the rural areas but they also do a lot of business in the urban/suburban areas. This one of those types of situations where one size cannot be assumed to fit all.

 

[George Hatch]

Agree 100% with everything here. That doesn't make the instructions for these fluke assignments somehow a USPAP violation etc.

They sure can be.

 

[George Hatch]

The crux of the issue here is Scope of Work. There is no reason to argue about your job because it is laid out therein.

INTENDED USE: The intended use of this appraisal report is for the lender/client to evaluate the property that is the
subject of this appraisal for a mortgage finance transaction.

On the one hand you're right - this does come down to a SOW issue. OTOH I think you have conflated the user's policies as comprising the entirety of the SOW decision and that's factually incorrect. You are in error when you conflate the two.

AFAICT Fannie's policy here has an internal inconsistency. Self-inflicted. They are required to use MV appraisals, but now they're trying to get value-in-use appraisals without acknowledgement that they're doing that. The fix for that internal inconsistency is....internal. Not external. We cannot cure that inconsistency for them without also lying about what we're doing.

I ain't lying for any client or user. Including Fannie.

 

[djd09]

lying to whom? themselves? comical

 

[djd09]

fannie and TAF are located within a minute of each other on 15th st. maybe the two of them should meet and hash it out. on the bright side another FAQ could emerge. what a joke.

 

[Econobot]

Have a

Appraisers don't dictate to the market, they reflect the market. Your job in a lending appraisal is to reflect the market to help your client manage risk. The result is credible if the data supports it.

The lack of understanding is not HBU, everyone agrees that the second parcel has its separate HBU, the lack of understanding is Scope of Work. Most probable value of (A+B).

Your HC scenario is an absolutely correct way to handle the problem. However there is no HC needed because the lots are already owned and transferred (and appraised) as one economic unit. The reason for this is because of the real world difficulty involved for the owner to sell a decent house plus marginal lot at the same time for max profit.

Agreed but the reasoning for the HC is that the two parcels currently have individual parcel IDs, tax accounts, etc.

 

[Econobot]

When we opine to a value that is dependent upon special requirements or interests of the client (any and all Intended Users) as to what constitutes the subject property and contrary to H&BU, we can be certain of one thing: The value being opined to is not MV.

Right off the bat I'm saying this is not the HBU... I then explain why I'm approaching this (2) parcel property the way I am. Evidence of owner's encumbering an additional lot for privacy despite HBU saying develop/sell/rent/what have you. Then providing market evidence of buyers who have made offers and want to keep the additional parcel undeveloped for privacy. Hence the rationale for using the HC that they are merged as one. If the properties were merged, the appraisal would be AS IS and disclosing the same issue, NOT HBU, and informing about excess land. Lastly, giving value to the additional lot in terms of additional site size only, might as well not even include as it's impact on value is minimal in that regard, especially at $.050 per SF which can be typical in my area for "in town" land.

 

[Lee Lansford]

The "word on the street" is that Fannie is working on a "clarification" of their recent statement on "multiple parcels".

Wait. Watch.

 

[Andrei Fin]

The "word on the street" is that Fannie is working on a "clarification" of their recent statement on "multiple parcels".

Wait. Watch.

That should be good for another 1,000 posts haha.

 

[J Grant]

Right off the bat I'm saying this is not the HBU... I then explain why I'm approaching this (2) parcel property the way I am. Evidence of owner's encumbering an additional lot for privacy despite HBU saying develop/sell/rent/what have you. Then providing market evidence of buyers who have made offers and want to keep the additional parcel undeveloped for privacy. Hence the rationale for using the HC that they are merged as one. If the properties were merged, the appraisal would be AS IS and disclosing the same issue, NOT HBU, and informing about excess land. Lastly, giving value to the additional lot in terms of additional site size only, might as well not even include as it's impact on value is minimal in that regard, especially at $.050 per SF which can be typical in my area for "in town" land.

This is illogical and would be rejected by any lending client. Appraisers can not just add an HC to a URAR form and let it float, an HC must be made checkbox subject to. So are you going to impose your will on the owners and make it subject to them "merging" the 2 lots as one (whatever that would legally entail ).

Then you assume the buyers in market want to encumber an additional lot for privacy, what if that is not the case and they want the additional lot to hold for future appreciation?

In any event, the HC can not be done unless it is subject to "being merged" and what that legally means who knows, how does an appraiser force a legal "merging" of two separate platted lots? A HC that they are "merged" without making it subject to that happening would be rejected and is not possible on a URAR form, which is the only form fannie and UW and client needs.