Bad advice from Fannie--"Multiple Parcels" from Dec. 2019 'Appraiser Update'

[Lee Lansford]

Each assemblage example has to be analyzed on a case by case basis, and wrt to one of the parcels in an assemblage is that parcel able to remain subdivideable and be sold off ?

The day an individual parcel is put on the market for sale, why would a buyer care if it needs to be released from a blanket mortgage? As long as that can be done and buyer gets clear title imo it would not affect buyer and therefore the MV of that parcel.

Lol, you dont' understand this. How can you fail to understand that two one acre parcels are not being combined into one 2 acre parcel? They remain two 1 acre parcels encumbered under a single mortgage. Apparently, fannie understands it enough to UW loans on it.

OMG.

 

[J Grant]

OMG.

what is OMG about it? It is what it is, two parcels , one with a house on it, one vacant, encumbered under one mortgage. The OMV from appraiser for contributory value of the adj vacant lot since hey are sold as a hole is the issue for the appraisal, and imo that should be how the market views and values that parcel. The vacant parcel did not become surplus land or merged into one large site with the house , it remains on eff date a separate and divisible parcel, and if its market value as such is same as its contributory value ( it may or may not be) we opine what market tell us.

 

[Lee Lansford]

Each assemblage example has to be analyzed on a case by case basis, and wrt to one of the parcels in an assemblage is that parcel able to remain subdivideable and be sold off ?

The day an individual parcel is put on the market for sale, why would a buyer care if it needs to be released from a blanket mortgage? As long as that can be done and buyer gets clear title imo it would not affect buyer and therefore the MV of that parcel.

That you're all over the place with the central issue that began this thread is interesting but not particularly relevant. But, I will be certain to alert the 3 (that I am aware of) former members of the ASB who share my concern regarding this issue that they should instead turn to you to "learn" of the errors in their thinking this matter .

 

[Lee Lansford]

what is OMG about it? It is what it is, two parcels , one with a house on it, one vacant, encumbered under one mortgage. The OMV from appraiser for contributory value of the adj vacant lot since hey are sold as a hole is the issue for the appraisal, and imo that should be how the market views and values that parcel. The vacant parcel did not become surplus land or merged into one large site with the house , it remains on eff date a separate and divisible parcel, and if its market value as such is same as its contributory value ( it may or may not be) we opine what market tell us.

Various appraisers here have offered you good advice which you do not want to put into use. You don't need my permission to continue on as you elect.

 

[Carnivore]

No small part of the problem with Fannie's words in the recent newsletter is the erroneous applying of the terms excess & surplus to a situation where there are 2 parcels (one improved, other vacant) and where the vacant parcel is not necessary to support the improved parcel (and, of course, having its own H&BU).

The offering from Fannie needs further attention from Fannie. The man at Fannie to share your thoughts: Lyle_E_Radke@fanniemae.com

Let me throw a real curve ball into what they are saying. Let me create an example where this really begins to exasperate and show its ugly face in the context of Lending.

This below is an extreme. Often times to best way to illustrate an issue is to use an extreme.

The FNMA position in the news letter does not take into consideration or should I say ignores the potential of Very High Land Values. For guidance to be sensible and logical it has to work in all cases.

Imagine a small aged bungalow type SFR on Beachfront property. The owner of the SFR also owns the adjacent site. He wants a mtg loan to refinance and he wants to include the adjacent site. The bungalow is still contributing to the MV but it only represents only 30% of the the site MV. Now add the adjacent lot(which is identical in MV to the Subject site. Now the Improvement only represents 15% of the total Mtg Loan.

One element of HBU that has not really been spoken to is Maximum productivity.

I am soliciting criticism for my above example. I am a big boy! Sling your arrows and tomahawks, I can take it. This is all academic discussion.

 

[J Grant]

Let me throw a real curve ball into what they are saying. Let me create an example where this really begins to exasperate and show its ugly face in the context of Lending.

This below is an extreme. Often times to best way to illustrate an issue is to use an extreme.

The FNMA position in the news letter does not take into consideration or should I say ignores the potential of Very High Land Values. For guidance to be sensible and logical it has to work in all cases.

Imagine a small aged bungalow type SFR on Beachfront property. The owner of the SFR also owns the adjacent site. He wants a mtg loan to refinance and he wants to include the adjacent site. The bungalow is still contributing to the MV but it only represents only 30% of the the site MV. Now add the adjacent lot(which is identical in MV to the Subject site. Now the Improvement only represents 15% of the total Mtg Loan.

One element of HBU that has not really been spoken to is Maximum productivity.

I am soliciting criticism for my above example. I am a big boy! Sling your arrows and tomahawks, I can take it. This is all academic discussion.

Every situation is different in a very high land value situation with a small/depreciated house, HBU may be demolish the house, when house does not contribute more than cost to remove. There is no one size fits all rule about how to value, just because fannie explains how it views a vacant adjacent lot for its loan program.,

 

[Lee Lansford]

Let me throw a real curve ball into what they are saying. Let me create an example where this really begins to exasperate and show its ugly face in the context of Lending.

This below is an extreme. Often times to best way to illustrate an issue is to use an extreme.

The FNMA position in the news letter does not take into consideration or should I say ignores the potential of Very High Land Values. For guidance to be sensible and logical it has to work in all cases.

Imagine a small aged bungalow type SFR on Beachfront property. The owner of the SFR also owns the adjacent site. He wants a mtg loan to refinance and he wants to include the adjacent site. The bungalow is still contributing to the MV but it only represents only 30% of the the site MV. Now add the adjacent lot(which is identical in MV to the Subject site. Now the Improvement only represents 15% of the total Mtg Loan.

One element of HBU that has not really been spoken to is Maximum productivity.

I am soliciting criticism for my above example. I am a big boy! Sling your arrows and tomahawks, I can take it. This is all academic discussion.

Your example is really not an extreme as it illustrates the meaning of the vacant parcel having its own H&BU separate from the improved parcel.

Your analysis provides the stark evidence of why it is that "lumping" the 2 together as though 1 is contrary to H&BU (e.g., NOT maximally productive in your illustration)..

But, I predict that one person following this string will disagree and go off on some sort of a tangent.

 

[Lee Lansford]

Every situation is different in a very high land value situation with a small/depreciated house, HBU may be demolish the house, when house does not contribute more than cost to remove. There is no one size fits all rule about how to value, just because fannie explains how it views a vacant adjacent lot for its loan program.,

Au contraire!

I see that you avoid the key point of Carnivore's illustration above.

A correct--which you avoid--analysis of Carnivore's illustration would result in X'ing NO to the question (page 1, fannie form) "Is the H&BU...as improved the present use?" where you chose to combine the two as though one. Why you continue to choose to miss this, I know not.

 

[George Hatch]

Analysis of H&BU as vacant is as 2 properties. Thus, what you propose is dead at inception.

Mic drop

 

[Carnivore]

Au contraire!

I see that you avoid the key point of Carnivore's illustration above.

A correct--which you avoid--analysis of Carnivore's illustration would result in X'ing NO to the question (page 1, fannie form) "Is the H&BU...as improved the present use?" where you chose to combine the two as though one. Why you continue to choose to miss this, I know not.

I think the reluctance to check "No" is that the loan goes into the round file. Reason is Joe Snuffy as a result of a Solicitation Call from High Pressure Loan Dude at Rocket Mtg says no problem, and Joe snuffy as usual thinks his extra lot is worth $X(more than it actually does.

Here's the problem with the reluctance to check NO because it will kill the loan, Its not our job to worry about such BS. Our Job is similar to a coroner that is to deliver the Certificate of Death and the reasons why it died.

So the ethical and professional way to deal with this scenario is to deliver Two(2) appraisals. One 1004 SFR and One Land/Site Appraisal. They are bot stand alone Products because they are Appraisal Reports. Yes, they are going to scream, Howl, cry, drop to the floor and kick their feet like a spoiled kid at Walmart.

Do you all recall in the past Assignments that wanted House and five acres.

Hear it is: https://www.fanniemae.com/content/guide/selling/b4/1.3/04.html

What is important about the info in that link: It is contradicts the news letter we are discussing. In other words it is the exact reverse(well not exact). I hope you see my point! The solution to that problem of large acreage was all the owner had to do was survey out the parcel/new legal description. Bada Bing Bada Boom.