Any advice welcomed

[NC Appraising]

B2-3-04, Special Property Eligibility Considerations (06/04/2025)

This topic contains information on Fannie Mae’s unique property eligibility requirements, including:

selling-guide.fanniemae.com

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Accessory Dwelling Units​

An ADU is typically an additional living area independent of the primary dwelling that may have been added to, created within, or detached from a primary one-unit dwelling. The ADU must provide for living, sleeping, cooking, and bathroom facilities and be on the same parcel as the primary one-unit dwelling.
The following table describes the requirements for classifying an ADU.

	Only one ADU is permitted on the parcel of the primary one-unit dwelling. ADUs are not permitted with a two- to four-unit dwelling.
	The ADU must be subordinate in size to the primary dwelling. have the following separate features from the primary dwelling: means of ingress/egress, kitchen, sleeping area, bathing area, and bathroom facilities. The ADU may, but is not required to, include access to the primary dwelling. However, it is not considered an ADU if it can only be accessed through the primary dwelling or the area is open to the primary dwelling with no expectation of privacy.
	The kitchen must, at a minimum, contain the following: cabinets; a countertop; a sink with running water; and a stove or stove hookup (hotplates, microwaves, or toaster ovens are not acceptable stove substitutes). An independent second kitchen by itself does not constitute an ADU. The removal of a stove does not change the ADU classification.
	A borrower must qualify for the mortgage without considering any rental income from the ADU. (See B3-3.1-08, Rental Income for further information, and B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements for an exception for HomeReady mortgage loans.)

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Requirements​

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Construction of an ADU
The construction method of an ADU can be site- or factory-built, including modular, and single- or multi-width HUD Code manufactured homes that are legally classified as real property. If an ADU is present, the primary dwelling must be site-built or a modular home. If the ADU is a HUD Code manufactured home, the lender must verify the following:

• the property was built in compliance with the Federal Manufactured Home Construction and Safety Standards (established June 15, 1976, as amended and in force at the time the home was manufactured),
• it is attached to a permanent foundation system in accordance with the manufacturer’s requirements for anchoring, support, stability, and maintenance,
• the foundation system must be appropriate for the soil conditions for the site and meet local and state codes,
• it is encumbered by the mortgage with the primary dwelling, and
• additional requirements that appear in HUD regulations in 24 C.F.R. Part 3280.

Compliance with these standards must be evidenced by photos of the HUD Data Plate or HUD Certification Label(s) (for each section of the home) in the appraisal. If the original or alternative documentation cannot be obtained for the HUD Data Plate or the HUD Certification Label(s), the loan is not eligible for sale to Fannie Mae. See B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing, for more information.
Examples of ADUs
Examples of ADUs include, (but are not limited to):

• a living area over a garage,
• a living area in a basement,
• a small addition to the primary dwelling, or
• a manufactured home (legally classified as real property).

Whether a property is defined as a one-unit property with an ADU or a two- to four-unit property will be based on the characteristics of the property, which may include, but are not limited to, the existence of separate utility meter(s), a unique postal address, and whether the unit can be legally rented. The appraiser must determine compliance with this definition as part of the analysis in the Highest and Best Use section of the appraisal. See B4-1.3-05, Improvements Section of the Appraisal Report for additional ADU appraisal requirements.
Zoning for an ADU
Some ADUs may predate the adoption of the local zoning ordinance and therefore be classified as legal nonconforming. An ADU should always be considered legal if it is allowed under the current zoning code for the subject property.
If it is determined that the property contains an ADU that is not allowed under zoning (where an ADU is not allowed under any circumstance), the property is eligible under the following additional conditions:

• The lender confirms that the existence will not jeopardize any future property insurance claim that might need to be filed for the property.
• The appraisal requirements related to zoning for an ADU are met. See B4-1.3-05, Improvements Section of the Appraisal Report

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Multiple Parcels​

The table below provides the requirements when the security property consists of more than one parcel of real estate.

	Each parcel must be conveyed in its entirety.
	Parcels must be adjoined to the other, unless they comply with the following exception. Parcels that otherwise would be adjoined, but are divided by a road, are acceptable if the parcel without a residence is a non-buildable lot (for example, waterfront properties where the parcel without the residence provides access to the water). Evidence that the lot is non-buildable must be included in the loan file.
	Each parcel must have the same basic zoning (for example, residential, agricultural).
	The entire property may contain only one dwelling unit. Limited additional non-residential improvements, such as a garage, are acceptable. For example, the adjoining parcel may not have an additional dwelling unit. An improvement that has been built across lot lines is acceptable. For example, a home built across both parcels where the lot line runs under the home is acceptable.
	The mortgage must be a valid first lien that covers each parcel.

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Multiple Parcels Requirements​

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[sputnam]

I've got an appraisal assignment in which there are 2 dwellings on the property. They are both located on the same parcel, but have separate utilities. One is a brick ranch style home, and the other is a full manufactured home with HUD tags and compliance certificate. How would you best appraise this? would you call the manufactured home an ADU?

You are appraising the land.... and whatever is attached to it. It is a two family property. The report form you use will depend, in part, on the Client and Intended Users. Read the definition of an ADU carefully before you try to force the property into the '1 unit with an ADU' box.

 

[Terrel L. Shields]

First, who is the client. If secondary market client, above might work. If an in-house bank, then it is 2 houses. It is not a duplex. It is not an ADU. It is a dwelling with a second home that is a manf. home. Comps might be scarce but they probably exist if you search a wide area and back a full year.

I just analyzed a sale with a 1400 SF dwelling and a 500 SF 1 bed, 1 bath home on the side. It is what it is and no ADU or duplex designation is necessary. But then again I do these as narratives.