encroachment protocol?

[CANative]

FHA appraisal (reverse mortgage)

This property has improvements which enroach onto two different lots. The house encroaches onto the lot to the south and the old storage shed encroaches onto the lot to the west. See aerial photo (from city planning department)

The homeowner was born in this house back in the 1930's. The house is 130 years old. The same family has owned this lot and the contiguous lots forever. I believe the encroached on lots are owned by members of the same family.

What is the protocol for FHA on this situation?

 

[john eickhoff]

Greg, the lender has a derective number 203.389, Waived title objections, that gives them direction on what they can and cannot waive. Those they cannot waive must be submitted to HUD for determination. However, from what you have posted it doesn't sound like it would be acceptable unless the lots being encroached on were being conveyed with the subject lot. It wouldn't matter how long they have lived in the house or that the adjoining lots were owned by family members--that could all change quickly and the new owners may not appreciate part of their lots being taken up by the neighbor. Sounds like they need to have the part of the lot being encroached on cut out and replatted with their lot but that is up to HUD or the lender to decide.

 

[CANative]

Thanks John for taking the time to post.

The LO doesn't get it. It went in one ear and out the other. She listened for a while and then just wanted to know how much longer for the report and was asking about value. :icon_frown:

Even if I were to proceed with the appraisal, I'm not sure how. Hypothetical condition? But what is the HC? I'm not sure the city could permit a lot line adjustment because both parcels are non-conforming. Perhaps an an easement? I don't know. Got's to think about it some more.

On top of all this the house has lots of problems outside. I'd just as soon back away from this one.

 

[Pamela Crowley (Florida)]

I think, under this circumstance, FHA wants you to write up why this property does not qualify. I believe that is what I would do and deliver that, with your invoice for your time, to your client and to FHA. Do you have Brad Pack's email?

 

[CANative]

I lost Brad's email. I could call him though. I hate to bother him with stuff like this.

This is a new client that I don't really want. They recruited me and wanted a bunch of application stuff (sample reports, E&O, license, resume, blah, blah, balh) but I never had the time to send them anything. Now they are bombarding me with reverse mortgage assignments.

The thing is, it's all for Lake County. The problem with that is that in Lake County all of the old people live in old houses with old house problems. Lots and lots of problems.

They want me to proceed, against my advice with a 1977 manufactured with half-*** sturctural modifications, settlement of one side of the unit but not the other and lots and lots of repairs that would take me 2 hours at the site and 6 hours to write before I could even do the market analysis. And still this MH is at or beyond it's useful economic life.

They just don't get it.

 

[Pamela Crowley (Florida)]

I'll send you his email, but as long as you already have his phone number, I suggest calling him and telling him ALL about this particular one and others that are originating from this client.

 

[MS Rebel]

Sounds like it is a lender call - the underwriter will handle the issue. Please let us know what happens and how you proceed. Sounds like a fun job. :Eyecrazy:

Why would they say 'perform LIMITED due diligence'? Strange wording.

4150.2 pages 3-2 and 3-3.

D. EASEMENTS, RESTRICTIONS OR ENCROACHMENTS
Consider all easements, restrictions or encroachments and their impact on the market value of the subject property and list them on the appraisal. These factors are often discovered during the survey and title report once the appraisal has begun. Perform limited due diligence to verify the existence of these types of significant limiting factors. Also record these items in the URAR which were considered in the value estimate.

E. ENCROACHMENTS
As a general rule, an encroachment will cause a property to be ineligible for FHA mortgage insurance. However, there are exceptions to this rule and further information can be found by calling the lender. The appraiser should identify any of these conditions:

o encroachment of a dwelling, garage, another physical structure or other improvement onto an adjacent property, right-of-way or utility easement

o encroachment of a dwelling, garage, another physical structure or improvements on the subject property

o encroachment of a dwelling, garage or another physical structure into the setback requirement

An encroachment may be acceptable if the adjoining landowner or the local governing authority provides a perpetual encroachment easement that is filed in the County Clerk and Recorder's Office. The Direct Endorsement under-writer will handle this issue under the General Waiver guidelines.

 

[CANative]

Thanks Rhonda.

I appraised a house last year with such an agreement. It's not comparable to the subject because it was lakefront, but it's worth mentioning in the report.

 

[CANative]

Please clarify on the encroachment due to improvements - per clients, they own all the land next to their property w/ a sibling. If it is an encroachment, please advised as how the client should resolve this - get land surveyed and redrawn?

Well first of all, if the lender had to foreclose, the neighbor would no longer be a sibling.

I'm not comfortable giving this sort of advice. And why aren't they talking to the DEU?

How should I respond?