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

[Carnivore]

FAQ 176 Page 262

What if the Above FAQ did not Exist? Reason I ask is because there was a prior USPAP Issue that did not have this FAQ

How would you know that a Federally Related Transaction must have a Market Value appraisal as defined by Federally Insured Financial Institutions regulations?

What other Federal Banking Regulations do we have to Know?

How would we know what questions to ask?

Is it the responsibility of the Lender/Client to inform us of what banking regulations we need to be aware of when we are ask to perform a Valuation Service for said Federally Regulated Lender?

I am just kind of deep diving into this whole discussion to try and understand the dilemma we seem to be in. We did not create this dilemma!

In the Response to FAQ 176

The very last sentence of that FAQ 176 is very revealing. "....depending on the Intended Use?

Below is not the same type of Valuation Problem, but it is somewhat similar in how you might create a report that is the topic of this thread.

The FNMA Form 1004 does not serve itself very well in this particular assignment and other types of Fed Reg lender assignments. To WIT REO assignments. The REO assignment is at a minimum two opinions of market value; AS-IS and AS-REPAIRED. It can be up to Four Opinions of Value. We use the REO Addendum to facilitate that report.

In a REO assignment we typically opine the AS-IS MV on page 2 of the URAR. Page one is typically used for the AS-IS. The REO addendum shows the Repair/Renovation list an market cost of those repairs..

The above gives you an Idea of how you might structure the Report for the Assignment that is the topic of this thread. In other words you have to think outside the Box!
Hopefully the reader will understand what you did and how you got there.

The Fannie Mae Newsletter about this topic and the solution was amateurish at best. "Don't worry Be Happy! Just my humble opinion.

 

[J Grant]

Think, McFly

The assumption is part of the definition of MV. The content of the assumption is that the parties know what they're doing in this transaction - they know what the property is worth.

If we are to proceed under the assumption that most buyers and sellers of these properties are not well informed or well advised then how can we possibly get to "most probable price"? By assuming nobody knows what they're doing so therefore the market data is unreliable?

They know what they are doing in comparison to other well informed buyers..but the vast majority do not know what HBU is...you referenced HBU to the MV definition earlier.
The well informed well advised buyer is the appraisal model buyer and seller actions for appraiser opinion of most probable price. "Real" buyers and sellers arrive at real prices (whatever they may be) Real world buyers vary in the range of how well informed they are or how prudently they act etc - we can compare and analyze their actions and prices with model in the MV definition

 

[J Grant]

Wow. Once again--wow. Incredible.
To be a licensed appraiser as you are and not understand that H&BU is fundamental to market value is shocking. But, that's why this string goes on as it does.
Do a search of the internet with key words MARKET VALUE HIGHEST & BEST USE. Seriously.
This is not a debatable issue.
It is unbelievable--well, at this point I have to say that it is no surprise--that you continue to assert what you do on this issue.
You can certainly appraise without incorporating H&BU, but, don't even think of labeling the value opinion as Market Value.

? I never said to ignore HBU analysis, nor did I say not to incorporate it. Where did I say that in any of my posts? Please find it and paste it. .

Lol it is not a debatable issue, look at the pages of this thread - seems it is a debatable issue, as appraisal methodology should be, aka how to apply it to real world appraisal problems.

 

[J Grant]

"Got H&BU analysis?"
Understand that incorporating H&BU is fundamental to MV?
Familiar with Standards Rule 1-3 (b)? It's not there as a nicety and then to be ignored.
Now...read carefully here: Of course 2 parcels--one improved, the second vacant and adjoining--may have a single market value because the H&BU (got that?) of the vacant parcel is as "green" space for the improved parcel. And, of course, the vacant parcel may be necessary to support the improved parcel (that is, the improved parcel alone might not satisfy zoning requirements or other requirements). But, this is not why we're here.

You are slowly coming around to understanding the Fannie position regarding how these properties can be appraised...by admitting (finally) that the HBU ( I got it long ago) of the vacant parcel is green space which is actually its value in use - I am accommodating you here because green space is your own invented description of the use, in reality it is a vacant lot which owner can do with as they like. They can build on it, keep it vacant to sell at a futre time, or make it green and use it for enjoyment/privacy. .

As far as all the edict from you/others the vacant parcel must be appraised at its HBU ( the appraisal opinion of HBU is for the entire property, not the vacant lot alone) but to address it, reconcile the value in use with a market value - see dictionary of RE that value in use MAY (or may not )be equal to market value. I posted it numerous times yet you never address it.

 

[Lee Lansford]

Again, wow.

I don't know whether to laugh or cry when you share your understanding of this issue.

 

[Carnivore]

? I never said to ignore HBU analysis, nor did I say not to incorporate it. Where did I say that in any of my posts? Please find it and paste it. .

Lol it is not a debatable issue, look at the pages of this thread - seems it is a debatable issue, as appraisal methodology should be, aka how to apply it to real world appraisal problems.

Jgrant.... Although it is an issue, it is not so much a development issue. USPAP is pretty clear about that This is more of a a Std 2 reporting Issue. The hick-up is in the Standardized 1004 Form and What FNMA solution was to that issue. It was amateurish and meant to be a expediency. Don't worry be happy kind of thing. They will not put you on their exclusionary list, nor will they file a complaint with your State Appraisal Board. OTOH....overly zealous AMC's may do this, a Borrower may do this based on a disappointing outcome, or probably not if they get what they want!

If your concerned that it's not going to fly through the UAD stuff, well that is a problem and your right. AMC_Phone Monkey Checker dude will be Apoplectic. Lender may also be in that state of mind. I don't care about that. But that's just me.

 

[J Grant]

Again, wow.

I don't know whether to laugh or cry why you share your understanding of this issue.

You rarely answer a question or deal with the topic. Instead you post personal nonsense such as the above. I can say the same about your posts on this topic and more than a few have ...

 

[J Grant]

Jgrant.... Although it is an issue, it is not so much a development issue. USPAP is pretty clear about that This is more of a a Std 2 reporting Issue. The hick-up is in the Standardized 1004 Form and What FNMA solution was to that issue. It was amateurish and meant to be a expediency. Don't worry be happy kind of thing. They will not put you on their exclusionary list, nor will they file a complaint with your State Appraisal Board. OTOH....overly zealous AMC's may do this, a Borrower may do this based on a disappointing outcome, or probably not if they get what they want!

If your concerned that it's not going to fly through the UAD stuff, well that is a problem and your right. AMC_Phone Monkey Checker dude will be Apoplectic. Lender may also be in that state of mind. I don't care about that. But that's just me.

I do little AMC work and could care less about UAD. I happen to agree with fannie's take on this as a way to appraise these properties ( at least in some cases, not all, each assignment is different)

 

[glenn walker]

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.

 

[J Grant]

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. (Applies only to DIVIDED lots - do you get that? It does not apply to adjoining lots.)