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Does FHA Still Require The 1004mc?

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
All right charts and seasonality are good- but no more because some dunderhead bureaucrats may see your stuff and decide to add it to their scope creep agenda : )
Oddly enough, I've seen this happen. Probably because I was doing what other appraisers started doing at about the same time, and posting about it on the forum and other blogs.

But still, kind of coincidental.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Why are appraisers so worried about the 1004MC? It is a decent tool. Actually, it is pretty informative right now. Many of my markets had a dip in values January-March. Some markets are 5% below what they were last year at this time. Isn't it good to know this kind of data?
 

CA2365

Freshman Member
Joined
Apr 15, 2010
Professional Status
Appraiser Trainee
State
Florida
Per FHA HUD Handbook 4000.1 page 526,
"11.Market Conditions Addendum, Fannie Mae Form 1004MC/Freddie Mac Form 71, Instructions Applicable to FHA Appraisals
a. Standard
The Appraiser must complete the Fannie Mae Form 1004MC/Freddie Mac Form 71, Market Conditions Addendum to the Appraisal Report, for all appraisal assignments. The analysis and valuation of FHA-insured Properties must properly analyze and address market trends in the subject’s market. Whether these trends are positive, neutral or negative, proper data collection and reporting are imperative components of a complete market conditions analysis; this is most important where markets are demonstrating negative trends."

So yes, it is still required for FHA reports while 4000.1 is the ruling FHA HUD Handbook.
 

Kenny H.

Freshman Member
Joined
Aug 11, 2019
Professional Status
Certified Residential Appraiser
State
California
Mike Garrett, I believe that government agencies and lenders dropped the 1004MC because it is largely ineffective at defining the market. Unless you're in, say, Santa Clara County, where one realtor zone can easily produce 100 sales and listings per year, the sample size is usually wanting. Not statistically viable. I find myself picking "stable" as a conclusion most of the time where I'm at regardless of checked boxes -- that is, unless I have viable and multiple proof otherwise. If the 1004MC is required by a lender, so be it. It has to be there. But one can always ask the AMC or bank engaging. Lender above FHA.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
Mike Garrett, I believe that government agencies and lenders dropped the 1004MC because it is largely ineffective at defining the market. Unless you're in, say, Santa Clara County, where one realtor zone can easily produce 100 sales and listings per year, the sample size is usually wanting. Not statistically viable. I find myself picking "stable" as a conclusion most of the time where I'm at regardless of checked boxes -- that is, unless I have viable and multiple proof otherwise. If the 1004MC is required by a lender, so be it. It has to be there. But one can always ask the AMC or bank engaging. Lender above FHA.
Now that Fannie no longer requires the MC, we are probably free to use it in ways not previously allowed. Use and entire city and all types of property, for example.
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
Now that Fannie no longer requires the MC, we are probably free to use it in ways not previously allowed. Use and entire city and all types of property, for example.
i wouldn't believe that to be true. it still has the pre-printed directions on the form itself, and those would not allow what you are suggesting. all my lending clients still require the 1004MC and it must be completed appropriately.

i could see doing what you suggested but then transferring it to an addenda page in narrative format to explain what is happening in said city. then again there are many different markets within a single city so sales of 4,000sf housing wouldn't be indicative of the 1,200sf places necessarily.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
i wouldn't believe that to be true. it still has the pre-printed directions on the form itself, and those would not allow what you are suggesting. all my lending clients still require the 1004MC and it must be completed appropriately.

i could see doing what you suggested but then transferring it to an addenda page in narrative format to explain what is happening in said city. then again there are many different markets within a single city so sales of 4,000sf housing wouldn't be indicative of the 1,200sf places necessarily.
I write the more inclusive version and print it it to pdf and include as a static exhibit page. In addition to the lesser, live version.

Still, see if you can convince me the pre-printed language on the now-defunct (for FNMA) MC form cannot be "modified" in the sense that this applies to the pre-printed statement of assumptions, sow, certs, etc.
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
I write the more inclusive version and print it it to pdf and include as a static exhibit page. In addition to the lesser, live version.

Still, see if you can convince me the pre-printed language on the now-defunct (for FNMA) MC form cannot be "modified" in the sense that this applies to the pre-printed statement of assumptions, sow, certs, etc.
not even going to try. you have already formed your opinions about the form and how you can complete it. the directions are on the form and dictate how it should be completed. you can choose to follow them or not. i would hardly call the form defunct as most lenders (based upon posts on this site) still require it to be included for residential appraisals. if no one required it's use then defunct would be an applicable description.

that being said your use of the phrase "we are probably free to use it in ways not previously allowed" should tell you all you need to know. it would seem that filling out a pre-printed form that specifically asks about comparable/competing sales in the neighborhood could lead to misleading results for the end user if you enlarge that to encompass every sale in a city as you suggested. unless of course your defined neighborhood is the entire city...
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
I said "defunct (for FNMA)." they are the entity that designed and implemented this form and dictated how it was to be used. Since they not longer require its use they cannot expect adherence to the pre-printed instructions.

Even FNMA allowed some latitude.

With property explanatory notes, I don't see why using the form in the manner I suggested would have to be "misleading."

mc instructions.JPG
 
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