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

[J Grant]

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.

I just re pasted the fannie statement, read it again please...everyone...per what it says, the parcels are not assembled into a single parcel. They remain contiguous parcels, covered by one lien

Fannie did not address the deed issue, I assume the parcels could be on separate deeds or one deed, but they must be conveyed under one lien.

 

[J Grant]

So...when appraising--for, say, a refinance and conforming to Fannie--2 as though 1 (one SFR improved, the other vacant) when each has its own H&BU separate the one from the other, do tell us what the appraiser's explanation of H&BU would look like. Please, where the market does not combine the two as though one, only you the appraiser doing that. Take your time.

And...not to forget: How might you get away with not X'ing the NO box to the question (paraphrasing) "Is the H&BU as improved the current use?"

Doesn't matter if it is a refinance, since the SCA is a hypothetical sale. We can not say the market is not combining the two just because it is a refinance ! the SCA is a presumed/hypothetical sale, even when there is in actuality no "sale " in a refinance or divorce appraisal.

Getting past that, the valuaiotn and HBU issues - assume res zoning, and a nice house contributing to value.

HBU of the whole property- existing residential, the house contributes to its site and also contributes to the whole. There is no reason to demolish the house to make its site vacant.

Explain that the house conveys with the adjacent vacant lot. The vacant lot has a potential HBU as a salable and build able lot. However, on the of effective date, the lot was not listed for sale and had no listing activity the prior year. The owner is holding it for future appreciation as an investment, which is noted that a pool of typically motivated buyers would do, thus the lot value at present effective date is value in use the use is hold until the future time when owner might want to sell the lot or build on it. The adjacent lot and house ares conveyed under a single lien and mortgage encumbrance.

The total value - ?? That would need to be developed in the appraisal. It would not be easy...but doable.

 

[J Grant]

So which box did you check?

Explained several times, the box HBU of the property would be existing residential, since the house continues to contribute to its site, and there is no reason to demolish house to make its site vacant.

 

[alebrewer]

J, i think what folks are trying to get you to understand is that there are (potentially) at least two different H&B uses when trying to assemble an improved lot with a lot that can (and possibly should) be separated and sold off separately. It is just not as simple as checking a box - it is a much more involved H&B use analysis - one that, to George`s point, is probably not an agency assignment - one that might be better suited to a different reporting format...

 

[J Grant]

J, i think what folks are trying to get you to understand is that there are (potentially) at least two different H&B uses when trying to assemble an improved lot with a lot that can (and possibly should) be separated and sold off separately. It is just not as simple as checking a box - it is a much more involved H&B use analysis - one that, to George`s point, is probably not an agency assignment - one that might be better suited to a different reporting format...

I do understand that !! ( the potential different HBU when assemble an improved lot with adjacent lot.) ...where did I say it was as simple as checking a box ? Read my post 242, I explained how I could handle the potential and existing as of eff date HBU of the vacant lot, and how by doing so the total property HBU could be existing residential - what reason is there to demolish the house or change its present use, just because it is conveying along with a vacant lot?

I agree it could be involved - but lets be honest it is not THAT involved, it is one lot and one house on a lot, not a subdivision analysis . I don't get how a reporting format changes things...plenty of room for narrative comments on a form... I appreciate your post though!

 

[George Hatch]

In my view the form works for the appraiser; the appraiser does not work for the form. We do work-arounds on that form on a regular basis - it's mostly filling in the blanks but there's also some clarification involved. I think this is an example of that. I think you can do almost whatever you need to do with that form so long as you explain what you're doing.

With that said, the time to start drawing attention to the fact that this subject has two parcels with different attributes is early and often. An appraiser who waits to start talking about these issues until the comments section in the Sales Comparison is just shooting themself in the foot.

"See highest/best use analysis in addenda". Once in the site section, once at the bottom of the improvements section where they ask how well the subject fits into its environment, once in the Sales Comparison and once in the Final Reconciliation. Make your reader sick of seeing the reference.

Then nobody can complain that you failed to address the situation or were in any way attempting to obscure it.

 

[J Grant]

I dont' know why people get so hung up on forms - a form is just a way to organize information, and exists mostly to make it easy for the reader, ( and these days, for computers/UAD syncing )

We can add pages of narrative to a form, exhibits, charts, as many photos as we want, why does it limit anybody?

The form is a format for information conveyance, - boring to fill out, granted...but it's the contents that count...

 

[alebrewer]

I dont' know why people get so hung up on forms - a form is just a way to organize information, and exists mostly to make it easy for the reader, ( and these days, for computers/UAD syncing )

We can add pages of narrative to a form, exhibits, charts, as many photos as we want, why does it limit anybody?

The form is a format for information conveyance, - boring to fill out, granted...but it's the contents that count...

Yes, but (at least the agency forms) some forms are promulgated for a specific intended user, which may or may not conform to USPAP guidelines. You, and George, are correct that the form should not restrict USPAP compliance, but that takes diligence on the part of the appraiser - sometimes with respect to the H&BU reporting/analysis.

 

[George Hatch]

I lay the reporting controversy at the feet of the form designers. If the GSE forms - and virtually all of their derivatives - had a HBU section that was similar to the one the AI forms used we wouldn't be having this discussion and appraisers wouldn't be getting that nagging suspicion that no matter what they did they were still subject to someone telling them they did it wrong.

I've never associated with the AI in any way, but I don't mind saying that the GSE forms are what you get when the bankers design a form and the AI form is what you get when a really competent appraiser designs a form.

Get off my lawn.

 

[alebrewer]

I lay the reporting controversy at the feet of the form designers. If the GSE forms - and virtually all of their derivatives - had a HBU section that was similar to the one the AI forms used we wouldn't be having this discussion and appraisers wouldn't be getting that nagging suspicion that no matter what they did they were still subject to someone telling them they did it wrong.

I've never associated with the AI in any way, but I don't mind saying that the GSE forms are what you get when the bankers design a form and the AI form is what you get when a really competent appraiser designs a form.

Get off my lawn.

Agreed. The agencies have never admitted to compliance with USPAP as their primary agenda. Their intended use has nothing to do with USPAP...