C5 Condition Rating

[timd354]

"TMD- I suggest that you also read sec. B4-1.2-03 of the Fannie Mae Selling Guide, which states, among other things, that if the home has an active roof leak (and please don't try to argue that a hole in the roof is not an active roof leak), then the appraisal must be completed "subject to" repairs - "

Noting the active roof leak as a C 5 satisfies the Fannie Mae selling guide as completed subject to repairs. Again, that would be for the leak at an early stage where it is affecting only a limited area, often showing as dampness or a water stain. Once it gets beyond that, it would be C 6.

Really? C5 properties do not require repair in order to be eligible for Fannie Mae financing (although they do require repair for Freddie and some lenders have overlays). You need to go back an re-read the Fannie Mae Selling Guide and learn what their appraisal requirements actually are as many of your comments in this thread evidence that you have some gaps and/or misunderstandings in your knowledge of Fannie Mae's appraisal requirements.

Suggest you look at sec. B4-1.3-06 of the Fannie Mae Selling Guide, in which you will find the following:

Appraisals Completed “As Is”

Fannie Mae permits appraisals to be based on the “as is” condition of the property provided existing conditions are minor and do not affect the safety, soundness, or structural integrity of the property, and the appraiser’s opinion of value reflects the existence of these conditions.

Minor conditions and deferred maintenance are typically due to normal wear and tear from the aging process and the occupancy of the property. While such conditions generally do not rise to the level of a required repair, they must be reported. Examples of minor conditions and deferred maintenance include worn floor finishes or carpet, minor plumbing leaks, holes in window screens, or cracked window glass.

Condition Ratings C1, C2, C3, C4, and C5 as previously defined are eligible for delivery in “as is” condition. Properties with the initial Condition Rating C6 indicate one or more deficiencies that impact the safety, soundness, or structural integrity of the property. Therefore, the appraisal must be completed subject to completion of the deficient item(s).

See Physical Deficiencies That Affect Safety, Soundness, or Structural Integrity of the Subject Property in this topic for additional details when completing appraisals on properties with safety, soundness, or structural integrity deficiencies.


Here's a question for you...if a small roof leak does not affect the safety, soundness, or structural integrity of the property (which is what you are arguing), then (based on the above language highlighted in green) why are you making your appraisal report subject to repair of the roof?

 

[Mr Rex]

Minor plumbing leaks do not require repair. Doesn't a plumbing leak and a roof leak have alot in common.

 

[timd354]

Minor plumbing leaks do not require repair. Doesn't a plumbing leak and a roof leak have alot in common.

IMO, it is very odd that Fannie does not require the repair of some (minor) plumbing leaks (or define what exactly constitutes a minor plumbing leak), but I did not write the Selling Guide. However, Fannie specifically calls out active roof leaks as something that negatively affects safety, soundness, and structural integrity and which requires repair. Its right there in the Fannie Mae Guide for those of you who actually bother to read the Selling Guide and it is not open to argument as the language in the Fannie Mae Selling Guide is unambiguous when it comes to roof leaks (and please do not try to argue that a hole in the roof is not an active roof leak because that is just absurd).

If you guys don't like the language in the Fannie Mae Selling Guide, you have a choice to make when it comes to doing appraisals for Fannie related loans - either follow the requirements of the Selling Guide (as much as you don't like those requirements) or decline the assignment.

 

[Carnivore]

C6 The improvements have substantial damage OR deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements.

OR is the operative word(s). The statement does not use the word 'AND' anywhere.

C6 ...OR deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements.

So in my view is the 'hole in roof' is severe enough to affect the safety, soundness or integrity of the improvements. The severity in this case is not determined by size or cost of repair, No, the severity is ANY Hole. IMO

Minor plumbing leaks do not require repair. Doesn't a plumbing leak and a roof leak have alot in common.

Well at first I thought you made a good catch. Then again it depends I suppose on what is a minor. So keeping with the intent of C Ratings. then I assume minor plumbing leak is from the faucet into the sink/bathtub as opposed to under the sink/bathtub where water is leaking into the flooring/subflooring, etc

 

[djd09]

The whole rating system is garbage.

 

[timd354]

The whole rating system is garbage.

I doubt that anyone at the GSE's cares about your opinion on the matter as the ratings were devised to meet certain needs of the GSE's and the ratings have been quite successful in meeting those needs.

 

[residentialguy]

I doubt that anyone at the GSE's cares about your opinion on the matter as the ratings were devised to meet certain needs of the GSE's and the ratings have been quite successful in meeting those needs.

I don't think that the comps should be an absolute rating, rather should be relative to the subject...superior, inferior, similar. Maybe I should re-write the UAD. After all, the GSEs do care about my opinion.

 

[timd354]

The Fannie Mae appraisal FAQ's are a good resource for appraisers: https://www.fanniemae.com/search?ac...www.fanniemae.com&gsaFrontEnd=fm_cportal_prod


Q33. In what situations should a property be appraised “as-is” versus “as-repaired”?

Fannie Mae permits an appraisal to be based on the “as-is” condition of the property as long as any minor
conditions, such as deferred maintenance, do not affect the safety, soundness, or structural integrity of
the property, and the appraiser’s opinion of value reflects the existence of these conditions. Minor
conditions and deferred maintenance items include worn floor finishes or carpet, minor plumbing leaks,
holes in window screens, or cracked window glass. Minor conditions and deferred maintenance typically
are due to normal wear and tear from the aging process and the occupancy of the property. Such
conditions generally do not rise to the level of a “required repair.” Nevertheless, they must be reported.

The appraiser must identify physical deficiencies that could affect the safety, soundness, or structural
integrity of the property as part of his or her description of the physical condition of the property. These
may include cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped
roof shingles, inadequate electrical service or plumbing fixtures, etc. If the appraiser has identified any of
these deficiencies, the property must be appraised subject to completion of the specific repairs or
alterations. In these instances, the property condition and quality ratings must reflect the condition and
quality of the property based on the hypothetical condition that the repairs or alterations have been
completed.

 

[timd354]

I don't think that the comps should be an absolute rating, rather should be relative to the subject...superior, inferior, similar. Maybe I should re-write the UAD. After all, the GSEs do care about my opinion.

LOL, call them up and tell them to change it then.

 

[residentialguy]

The appraiser must identify physical deficiencies that could affect the safety, soundness, or structural
integrity of the property as part of his or her description of the physical condition of the property. These
may include cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped
roof shingles, inadequate electrical service or plumbing fixtures, etc. If the appraiser has identified any of
these deficiencies, the property must be appraised subject to completion of the specific repairs or
alterations. In these instances, the property condition and quality ratings must reflect the condition and
quality of the property based on the hypothetical condition that the repairs or alterations have been
completed.

I think JG is talking about a very small hole...like someone shot a .22 at the roof. The above does give the option to not include it with their use of "may"