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

[Econobot]

I have had a couple of these and I've told the AMC to find another appraiser to give you the 2 parcels in one appraisal as I wont be doing it. Both assignments happened to be adjacent and vacant. When I called the listing agents they both said, "well technically yes they probably should be separately developed". To which I said that an appraiser is required to identify this aspect of land, everytime. Moreover saying a legitimate appraiser wouldn't knowingly value them together. The one called me back later and with a snarky tone, said "they were valued together before". I simply said that I'm aware they both previously sold together....14 years ago and that the lender is free to choose another appraiser. I'm always careful to discuss "appraisal theory" and am hesitant to discuss specifics. Whoever wrote this guidance from Fannie is trying to get loans through the system with complete disregard for the role of an appraiser. With that being said an appraiser can complete surplus land scenarios under the hypothetical condition that the parcels are merged (replatted) as one but not when it's excess land. I think we need to remember our job and it's not about getting borrowers secondary market loans....

 

[Michigan CG]

Yep. That's one problem.

The main problem is that FNMA issued this. For many this is already a confusing issue and there are many very clueless AMC people who will not convince the appraiser this is proper appraisal practice. Will FNMA show up when a person is from of their state board for violating USPAP?

 

[Michigan CG]

With that being said an appraiser can complete surplus land scenarios under the hypothetical condition that the parcels are merged (replatted) as one........

There is absolutely no reason to use an HC of being one parcel as the SURPLUS does not have a separate highest and best use.

 

[Michigan CG]

I have had a couple of these and I've told the AMC to find another appraiser .............

The vast majority of the AMC employees who ask for this are severely unqualified to do their jobs and most AMC chief appraisers are not qualified to do their jobs.

 

[Meandering]

HC that the parcels are assembled into a single parcel. If the borrowers are dumb enough to want the loan, they'll do it before the loan closes.

It's odd that Fannie did not address if each parcel is on it's own, separate deed or if, both parcels were purchased together and are on one deed. Splitting lots from an encumbered deed can be an issue, but with separate deeds, there should not be any, just pretend it's all one and we're going to encumber that other parcel.

Oh but I guess it makes HAL stall out if you have two H&B uses, because they can't be separated by a semi-colon.

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[djd09]

check the box. summarize.

 

[J Grant]

Fannie does lend on a house with an adjacent vacant lot , when adj lot is excess land . Fannie is allowed to lend on them, owners are allowed to borrow on them, and buyers allowed to purchase them. There is nothing in the fannie announcement that appraiser is supposed to ignore the HBU if second lot were severed and sold vacant. Nothing in the announcement says to pretend it is surplus land. The adj lot and house are under one lien. That also is allowed. Don't know why that freaks appraisers out.

Fannie states purpose of the excess lot for the appraisal is value in use. Which still means the adj lot would have its own HBU separately. As long as appraiser discloses the fact of the adj lot having its own HBU if sold off, I don't see what the conflict is.

Imo if the vacant lot retains the possibility of being sold, I don't see why it's value is diminished because it is encumbered under one mortgage.

 

[Mr Rex]

I have an issue with some of the attitudes that miss a key point. Property rights include the ability to mortgage the property. The whole property. So I own 2 adjacent lots with potential H&BU of the second lot being build-able yada, yada. It's my property and it is worth $X. Why should I not be able to get a mortgage on the whole thing? What is the downside? Should I be forced to sell the 2nd lot because it has H&BU as a separate lot? Should I be forced to get a separate mortgage on the lot or should I be forced to build a garage or similar on the second lot? Should I engage an appraiser to see how big of a garage I need to build so the H&BU tests fail as a separate lot due to the garages contributory value and/or cost to remove? Silly rule with little relation to common sense IMHO.

 

[J Grant]

I've appraised a few like this in the past years, the sky did not fall, the lending universe did not implode. I disclosed adjacent lot was excess land, could have its own HBU if sold separate how hard is that to do?? Not exactly genius level challenge. For those apparisals I said the vacant lot had an interm use for owner to hold for investment purpose. Value in use is similar - the reality is the owner has determined they would rather keep the lot then sell it to a spec builder.

Which brings up the question, (was in a prior thread ), why is this lot still vacant if there is such amazing demand for it? Maybe there is low demand for vacant lots, or it is a negative to have a noisy house being built next door. So perhaps HBU is NOT to sell it at this time..holding a lot vacant for future appreciation and as an investment shows informed buyer and in fact a lot of lots sit vacant for years for this reason.

 

[djd09]

I disclosed adjacent lot was excess land, could have its own HBU

So which box did you check?