O.k., great comments. Please allow me to clarify a few points.
Many lenders don't sell direct, or have saleability issue with condition.
I've gotten A LOT of feedback from underwriters that when C5, loan is no go, no exceptions.
______________________
Joan: Your job isn't to make or break deals. Your job is to provide an independent analysis. To do anything else would be misleading .
Me: That is correct. But there is a practical working aspect of that as well. Because C ratings affect lendability, my described c rating is what states for the lender, if the home is worthy and well conditioned. If I refused to adapt to the lenders issues with c5 not being saleable, I'd be doing a poor job because my independent analysis would be to advising the lender that a property which could have been lendable, is not lendable, simply due to my choice of C rating. So if a home does not have major repairs, I must provide that appraisal analysis and state such. With UAD C ratings, the C rating is an integral part of stating weather or not the subject has need for repairs. In other words, C5 or lower is the exact same thing as stating 'subject to'. Well almost. If an appraiser constantly forced non saleable position on the lender, they would not be doing their job very well, if those properties otherwise would have been saleable, without UAD C ratings being applied. It seems Fannie is confusing the issue by saying c5 is go, when it's not? I've got more to learn about this issue, but it's an interesting dialogue.
____________________________________________________
Canative: Characterizing a new house with a small hole in the roof C6 is counter intuitive. It doesn't match the UAD definition.
Me: Agree, this is the problem. NC pointed out the specifics of UAD FAQ on the matter. But this is misleading unless you also state that 'if repaired' would be Cx. So this is a very perplexing scenario in the 'on the ground' relationships between reporting, underwriters, and appraisers.
____________________________________________________________
T: Your job isn't to jawbone with a bunch of stupid UWs and AMC monkeys either...If you don't trust me, then fire me. Don't try to browbeat me or second-guess the condition of a house from some mud hut in India.
Me: I love you man.
______________________________________________________________
NC: On their engagement letter, it even said to make the report "subject to" to bring the subject property to Q4 quality? What, by adding eaves, gutters, more corners to the foot prints, raise the ceilings, add superior cabinets, more glazed areas?
Me: Really? I think they're confusing the Q rating with the C rating. If they don't lend on Q5's. What was a Q5 vs Q4 again? Geesh, I don't have that page open now. I include the C & Q descriptors page at the end of every report, and end up referring to it all the dang time. I think you've got an engagement letter writer who did not understand the descriptives. I'd write management and ask them to edit the engagement letter.
The idea that a property which is financeable is given a c5 instead of a c4, could meet the standard of faulty appraisal.
ML 10-08 validity period
ML - 95-56 Repair escrow
_____________________________________________________________
Rich: Fannie is not OK with C6 or Q6. Freddie is not OK with C5, C6 or Q6.
Me: Yes, that's my point also. Fannie guidance I thought said c5 is go. So that was my 'practical low or floor' for noting acceptable. However, the lenders err on the side of caution, and when you break down the UAD C rating text (below), this helps clear up why most lenders won't touch the C5.
____________________________________________________________
JRS: Hey NOw! Actually, it's a really tough issue that is fully confusing. Benefit of the doubt must be given.
_____________________________________________________________
And this is the text I was dealing with.
Apparently, a c4 rating is the base low rating for many lenders practical considerations on lending.
Below are the copied Condition ratings, and my new approach notes italicized, following the copied UAD condition rating text.
C4
The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate. (highlighted notes: That's non essential repairs. Not MPR minimum property requirement repairs. Homes can have deferred maintenance and still be c4. Anything noted as significant, is what causes a c5 or lower rating, and those items noted as significant are otherwise called MPR items or mandatory fix items. If all mandatory fix items are answered, it's sort of a defacto thing within the uad language, that the property would go c4.)
C5
The improvements feature obvious deferred maintenance and are in need of some significant repairs. Some building components need repairs, rehabilitation, or updating. The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence. / (So if "Significant repairs" are known, those are what are entered into the cost to cure addenda, or otherwise called MPR items. When all items from cost to cure are answered, and there were no "significant repairs" left, then the subject should presumably go c4 in most cases.)
