Changes In Adu Reporting For Fannie/freddie Work?

[bnmappraisal]

Assume that a house is 2,000sf. Within that 2,000, there is an area that (let's say 350sf) that could be used as an ADU unit. This 350sf is directly accessible via the interior of the house and doesn't necessarily have its own exterior access. This area would need to have a bathroom; it may include a bedroom and a small living room area or it may be a single room with a bath. But, it has a kitchen counter with sink (it may or may not have a stove/range appliance). In many cases, it could function as a wet bar.

Question: Has anyone been asked to identify this area as an ADU for a GSE-type appraisal?

I have a decent number of ADU/In-Law properties in my market, so I do a decent number per year. For these properties (and as Jay points out) I check zoning and proceed accordingly.

I have NOT been asked to check the ADU box for anything such as you describe.

I don't see how/why your example would be considered an ADU

 

[hastalavista]

Sounds like a lender change to me. I have not heard anything from Fannie or Freddie regarding this.

More than the lender, although its testing may be limited at this stage. And, it may end up not going

I don't see how/why your example would be considered an ADU

I don't either.
But, apparently, that is how the space is being asked to be identified (again: I want to stress this is a report & identify thing; not a valuation thing. Although those things are usually related!).

 

[timd354]

More than the lender, although its testing may be limited at this stage. And, it may end up not going


I don't either.
But, apparently, that is how the space is being asked to be identified (again: I want to stress this is a report & identify thing; not a valuation thing. Although those things are usually related!).

It will be interesting to see how it plays out....thanks for the info Denis!

 

[jay trotta]

More than the lender, although its testing may be limited at this stage. And, it may end up not going


I don't either.
But, apparently, that is how the space is being asked to be identified (again: I want to stress this is a report & identify thing; not a valuation thing. Although those things are usually related!).

Bingo !

 

[Michigander]

Hi Denis, yes, if there is a space that could function as an ADU it needs to be analyzed/discussed. For example, the basement does not have an exterior separate entry, but it has a kitchenette (as long as you can cook a meal, meaning hot plate even), a full bathroom, bedroom/living space, then it gets discussed as such. This is becoming more and more of an issue with Fannie Mae from what I understand.

If housing continues to increase in price, and young folks are saddled with a lot of student loan debt, then the likelihood of bunking up in shared living spaces with their own interior unit, is probably going to be an issue. Wish we could get some more housing built that was less expensive and friendly to the starter market. Another issue, but related.

 

[hastalavista]

Hi Denis, yes, if there is a space that could function as an ADU it needs to be analyzed/discussed. For example, the basement does not have an exterior separate entry, but it has a kitchenette (as long as you can cook a meal, meaning hot plate even), a full bathroom, bedroom/living space, then it gets discussed as such. This is becoming more and more of an issue with Fannie Mae from what I understand.

(my bold)

Thanks, Michigander!!!

What you describe (even a "hot plate") is what I have heard,

 

[Vermonter]

I had a recent question about this from a client. Subject had a bed/bath above the garage, but no kitchen and only accessible by breezeway from the interior of the 2nd floor. I did not report it an accessory unit and they asked for additional comments on why not. Thought it was an odd request at the time (maybe a month ago), but could have something to do with what you were told.

 

[hastalavista]

I had a recent question about this from a client. Subject had a bed/bath above the garage, but no kitchen and only accessible by breezeway from the interior of the 2nd floor. I did not report it an accessory unit and they asked for additional comments on why not. Thought it was an odd request at the time (maybe a month ago), but could have something to do with what you were told.

Thanks, Vermonter

 

[Riick]

None yet. My guess as to the intent is that they want to notify
to the lender of the potential of an ADU unit. It is more risky to underwrite a SFR loan
on a home with an illegal rental unit or potential rental unit. They want to be notified of
the added risk potential

More risky? Interesting.
When I worked for a large mortgage lender, the Chief Appraiser believed that the (potential?)
increased income to the borrower, made the borrower, and thus the loan, *less* risky.
Frankly, made sense to me.

Oh, and NO have not seen this as a requirement in appraisal request.
OTOH, have not run into an ADU for 20+ years.

 

[The Warrior Monk]

Hi Denis, yes, if there is a space that could function as an ADU it needs to be analyzed/discussed. For example, the basement does not have an exterior separate entry, but it has a kitchenette (as long as you can cook a meal, meaning hot plate even), a full bathroom, bedroom/living space, then it gets discussed as such. This is becoming more and more of an issue with Fannie Mae from what I understand.

If housing continues to increase in price, and young folks are saddled with a lot of student loan debt, then the likelihood of bunking up in shared living spaces with their own interior unit, is probably going to be an issue. Wish we could get some more housing built that was less expensive and friendly to the starter market. Another issue, but related.

This sounds problematic, and likely an issue that will have to deal with in the future. If the property is compliance with zoning, yet FNMA says that the property has a ADU and either doesn't buy the loan or changes the terms, I smell lawsuits coming.