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

[Lee Lansford]

For those who understand the problem and want to make effort to see it corrected, express your concerns to Lyle_E_Radke@fanniemae.com

 

[Carnivore]

Jgrant, I read your responses to my post. I thought I made it very clear in them Please stop trying to read into them so as to come up with something I did not say.

One way to explain this is with and Illustration/drawing showing three scenarios. So I wlll work on that and post it as soon as i get done correctly to make my point(s)

 

[Econobot]

JGrant, please consider a deep breath... You have an opinion which is opposed to the opinions of the vast majority of appraisers on this forum. Not only that, but our argument(s) of appraising in terms of HBU are never to be reconsidered by a borrower's or lender's desire to close a deal with an additional parcel. Operating in this manner is exactly what form filling is, valuing whatever they want the way they want it valued in complete disregard for your obligations as an appraiser. IMO, like others, this is not something to be compromised on. More importantly, and in terms of this forum, you should be suspended for a little while. You're so desperately and crudely beating a dead horse with your rationalized motives to appraise "value in use" with again, complete disregard for HBU analysis. You seem to think that your "experience" and time spent in the profession enable you to completely disregard the most fundamental basic concepts about how you begin to determine value (HBU analysis). This is further bolstered with your "top poster" status and frankly, as a newbie, I'd like to see this forum get rid of people who are blatantly incorrect and worse, have an attitude about it. Sadly the original post was thoughtful and useful, but since you started responding, the thread has been hijacked by your emotional entitlement to flawed thinking despite numerous appraisers telling you that you're wrong. You have done this to the other threads on the same topic...you are far from an expert and like I said, more of a form filler lacking basic knowledge, which is on display in this thread. Please consider taking a step back, for the benefit of us newbies. I really can't stand trying to read a thread for informative purposes just to see it hijacked by some entitled, "expert" who shouldn't be giving advice at all, to any appraiser. Beyond this, no amount of "case study" examples will change the fact that our job is to value in HBU. I partly hope you're just being devil's advocate but if not, please consider a new hobby. Filling this forum with your content only benefits you in whatever weird way you maximize your utility by typing on your soapbox. It's not helpful, it's plan wrong and bad practice and no matter how many times you say it or demand responses, 2 + 2 = 4 not 5.

 

[Lee Lansford]

Jgrant, I read your responses to my post. I thought I made it very clear in them Please stop trying to read into them so as to come up with something I did not say.

One way to explain this is with and Illustration/drawing showing three scenarios. So I wlll work on that and post it as soon as i get done correctly to make my point(s)

I admire your tenacity, but, to the the person who will not, or, cannot, understand this issue, your effort will not bear fruit. The rest of us? We "get it" .

 

[Carnivore]

Jgrant

Your making me pull from my Army Instructor Pilot days....

I used to do this for Students pilots AND even operational pilots when they struggled with a Particular Aerodynamic (which can be very complex).

Small visual error on example three, house is sitting equally on center line

 

[Econobot]

I have spoke with 3 chief appraisers regarding this and not a single one has indicated that, "sure you can do value in use, just throw it in the grid". It's misleading and moreover local lenders want 30% down on land, to think that Fannie is willing to write loans with 95% LTV on vacant land is absurd which is what happens when the appraiser lumps two parcels into (1) 1004. We need to remember that Fannie does not dictate appraiser theory or law, USPAP does and engaging in "value in use" is a direct departure from HBU analysis. Keep filling in those forms, the lenders love you.

 

[Carnivore]

This is the Canadian Version on HBU It is VERY GOOD asa reference

Don't ask me how I got it...I just did not pay attention

 

[glenn walker]

Lots of guidelines created by Fannie-Freddie-FHA for loan purposes meet USPAP guidelines. The requirement of certain forms that can only be used causes conflicts, issues like FHA physical inspection requirements in effect making us quasi unlicensed home inspectors in theory could even be a USPAP violation. how about prior to the 2008 mortgage meltdown how many lenders would instruct appraisers to not give value to non-permitted additions ? OR The home was located on 5 acres and the lender told the appraiser to do it as 2.5 acres because that was the typical size in that market. All were USPAP violations when it came to H & B use and or the appraiser developing the scope of work and not the lender. So now we get into Separate Parcel issues. When the appraiser receives the order and he/she finds out there are two separate tax cards then he/she has to determine if the lender wants to proceed as one parcel combined or do they only want the parcel that has the structure on it appraised ? NOW the appraiser has to determine his scope of work and set aside the lenders wants and needs. If he/she determines the H & B use is not to combine the parcels as one then he/she should inform the client that in order to do a credible report they will need to complete two separate appraisals. Now in reality WE all know that is not going to fly with a Fannie-Freddie-FHA assignment because once the Fannie-Freddie FHA DE Underwriter sees a Land Appraisal included with her UAD that deal is dead on arrival. The same can also be true even if the lender wants both parcels combined on one and the deed is being changed to reflect the merger that could also result in the lender ending up with a land loan and not what the Fannie-Freddie-FHA programs were crated for. A 15,00 Sq.Ft. single family home located on a 7,500 Sq.Ft. lot that also has another separate adjacent 7,500 Sq.Ft. lot may make perfect sense to combine both together ending up with one 15,000 Sq.Ft. lot , especially in a market where typical lot sizes range between 10,000 to 20,000 Sq.Ft.-- Where the dynamics change is when either the zoning and land use is different or when something makes no sense, like combining a 10 acre parcel of land with a home located on a 1 acre site. That would create a land loan and is not for a F & F type product. That person needs to get into a non-portfolio loan program where the appraiser was allowed to do two separate appraisals. Bottom line is the appraiser has to develop the scope of work before even proceeding and if he she feels uncomfortable that a credible scope of work cannot be developed within that lenders program guidelines then he/she should ask them to reassign it to someone else. The same holds true for a non-lender client-

I'd like people , esp those challenging ,to answer this question with A or B: I will use one acre lot size for simplicity/assume 1 acre min zoning. This question pertains to the Fannie example >

Subject of appraisal assignment is to value a property consisting of a house on one acre along with the adjacent vacant one acre lot, which is determined to be excess land.

Is the subject property described above ;n

A) A house on a 2 acre lot? or B) a house on an acre lot along with adjacent vacant lot. ?

There is no definite answer to A or B until the appraiser knows what he/she is appraising and what the scope of work is to deliver a credible report. Without knowing the particulars about Zoning, Land use, what size lots or parcels are common and typical for the area its all speculation. If the market area of example A & B is 1 acre minimal lot sizes then the highest and best use on "B" may be to combine both parcels into one deed and appraise it as a whole BUT if the properties were located in low cost area where sales prices of 1 and 2 acres were very similar then it may be advantages for the owner to keep them separate and use the adjacent 1 acre as a future negotiation tool in a sale or hold out until it makes sense to develop another home on the adjacent site and in that situation my H & B use analyses would be that "B" interim use is its H & B use. The truth is the entire thread is flawed because everyone got to focused on what Fannie Mae Guidelines will allow. Fannie-freddie-FHA-VA are not under USPAP and so its the appraisers business decision whether he/she wants to play in their Sand-Box. Scope of work and H & B use is solely the appraisers business decision. So lets see who do I want to face ? The USPAP police or the GSE'S the Federal Government or my State board when the GSE or FHA send there complaint in on me for violating there guidelines ?

Heads or Tails ---- thinking...thinking... I choose to be on the Fannie Mae & FHA team : )

 

[J Grant]

Econobot -your rationalized motives to appraise "value in use" with again, complete disregard for HBU analysis.

I made a HBU analysis, and how it pertains as well to value in use for the lot- either you disregarded that I made a HBU analysis, it or did not understand it. The rest of your post is too silly to deal with .

 

[J Grant]

I have spoke with 3 chief appraisers regarding this and not a single one has indicated that, "sure you can do value in use, just throw it in the grid". It's misleading and moreover local lenders want 30% down on land, to think that Fannie is willing to write loans with 95% LTV on vacant land is absurd which is what happens when the appraiser lumps two parcels into (1) 1004. We need to remember that Fannie does not dictate appraiser theory or law, USPAP does and engaging in "value in use" is a direct departure from HBU analysis. Keep filling in those forms, the lenders love you.

well DOH, I would not just do a value in use and throw it on the grid. I would make a HBU analysis and speak of value in use as well for the parcel only. See post 137 for dictionary of real estate which says value and use and Market value can be the same.

You have a reading comprehension problem, or an ego problem (or both) since you ignore the fact that I am not lumping the 2 parcels into 1 ( which my post 132 asked about lol because some of you do that)
Here you are again with silly filling in forms etc, today it is at me, a few weeks ago you were lobbing it at others along with telling some they should leave the profession.