Fannie Condition ratings C1, C2, C3, C4, C5 and C6 on Page 1 URAR?

[YankeeFan]

let me clarify this, as its not as clear as I had indicated it appears and I will amend the commentary. Im not using the UAD C Codes in the individual components section let me make that clear, I agree now I don't thinks its appropriate given FAQ 34 now. Im doing as I always have done prior to UAD implementation, Im still using Excellent or E, Good or G, Average or A, Fair of F et cetera, I think this commentary in this analysis just ties everything together for the reader and helps with reasoning.

≅ is approximately equal to or what I call...comparable to, a term used by appraisers every day I believe.
Here is what I've decided to start implementing, and Im pretty sure it satisfies FAQ 34 and wont get me in trouble with Fannie Mae or reviewers...its solves the problem and is the solution I believe. I acknowledge VolcanoLvr for showing the light at the end of the tunnel!

SUBJECT INDIVIDUAL COMPONENT CONDITION RATINGS (Improvements section, Form Page 1):
This report is written to the 'new' UAD reporting conventions mandated by FannieMae/FreddieMac. Those entities have required appraisers to adopt new proprietary numerical reporting 'rating numbers' for the Overall Condition of the property. The GSE's have abandoned the former reporting conventions of 'average, good' etc. as an "overall" or holistic view of a property because there are no defined definitions for those words, except in the copyrighted manual produced by a cost rating agency, which the UAD process does not use.

Definitions for the new numerical ratings are included with the report. Any reader or reviewer must consult those pages to determine what the numerical ratings mean for the overall rating. This inclusion is consistent with the appraiser's obligation under USPAP to produce a report that is not misleading.

The problem with this numerical rating system is the UAD condition rating is primarily applicable to the overall condition rating shown in various places on the form pages and FannieMae in FAQ #34 indicates not to use these proprietary codes in the individual property component sections of the URAR, but the overall Subject rating is determined from the individual component ratings. It makes perfect sense to use the 'abandoned' words shown above for the individual components by translateing or relating them into the overall UAD condition rating.

In order for the appraiser to report the overall Condition of the Subject property, individual rating letters have been applied to the individual components on Form page 1, Improvements section. Those are then analyzed and amalgamated into the overall Condition rating applied to Form page 1, and in the Comps grid. This is a process based on logic and the ratings defined and mandated by Fannie/Freddie.

The appraiser has related/interpreted the individual component descriptions to the UAD Appendix D condition ratings and has applied those observed condition conclusions to individual components in this way:
(New or N) ≅ C1 - Individual components new; no physical depreciation
(Excellent or E) ≅ C2 - Individual components nearly new or recently repaired, refinished or rehabilitated to meet current standards
(Good or G) ≅ C3 - Individual components are well maintained and have limited physical depreciation; some but not all Individual components may be updated or recently rehabilitated
(Average or A) ≅ C4 - Individual components have minor deferred maintenance and physical depreciation, but have been adequately maintained and are functionally adequate
(Fair or F) ≅ C5 - Individual components need repairs, rehabilitation or updating but are useable and functional
(Poor or P) ≅ C6 - Individual components need substantial repair and rehabilitation due to damage or deferred maintenance; immediate corrections needed to maintain livability of the dwelling


Example: Flooring: Crpt,Vinyl,G....not only does this solution solve the problem for appraisers it also adds another character of space for utilization in the report...ie G is better then C3!
This solution can also be adopted or amended to include the quality component codes of UAD. Just add that to the commentary. Also note, if you use a P code on an individual component item...its not exactly a C6 or required repair tied to a "subject to" condition of the report...it could be but it doesn't have to . Now if I have 4 G's, 2 A's...ie 4C3's and 2 C4's,,Im gonna rate the property a UAD C3 overall. Feel free to copy this as part of your comments, if your wish and feel as I do that this is a logical and practical solutions to these issues.

 

[J Grant]

Very happy to hear you are not writing in C ratings on page one!

If developing a detailed system of matching components to ratings helps an appraiser conclude opinions about a property, go for it. We all work a bit differently .

However, Developing it for personal use is different than including it in narrative in a report. This is my opinion, but there is no problem begging for a solution.) I have not heard of Fannie, a lender, an AMC, an UW, (or anybody) ask for a correlation between C ratings and page one components, It is overkill, too much information making it overly complex.

Common sense indicates page one component descriptions correspond, (allowing for variances) with the C ratings. It would draw attention, for example, if an appraiser called a property C2 with page one components described as "average".

 

[Pam Wyant]

Each appraiser is typing their own thing for the condition of the individual items. Some type Average or Avg or A or other variations of Average, so that is not consistent nationwide. Then the blanks on the form are so small that after the type of material is typed there is limited space for the condition, which is another reason when I heard about using the codes, it made sense to use C4 for average, it only takes up two spaces. Because of the small space on the forms very contorted abbreviations are used to describe the type of material which causes even more confusion. To me typing Carpet/Tile/C4 is easier to understand and read then CpTlAverage for example. In my area there is such a wide variety of properties with a mishmash of materials, workmanship quality and condition in one structure that individual describing and rating of each component provides more information about the property, how and why I arrived at the overall rating.

The UAD definitions addenda has space for an appraiser to add their own abbreviations, so we can utilize A, av, avg or G, F, P and simply add those to the UAD definitions addenda, which is what I do.

 

[Jo Ann Meyer Stratton]

In addition to the long explanation I have had in my reports since starting to do this, I have added the abbreviations (C4 for average for example), the full name and where they are located in the report to the Property Description Abbreviations used in this report page.

 

[J Grant]

The condition and quality ratings were developed by Fannie for a specific use for a specific area of report., the grid, and meant ONLY to represent a holistic view of the property They were not intended for appraisers to synch with components, nor for appraisers to come up with their own explanations and link them to "average" or "good" to be used anywhere else in report.

 

[residentialguy]

In addition to the long explanation I have had in my reports since starting to do this, I have added the abbreviations (C4 for average for example), the full name and where they are located in the report to the Property Description Abbreviations used in this report page.

Fannie DOES NOT WANT the C ratings on page one for components , they stated it, how many ways can that be said? It makes appraisers look ridiculous to be doing it, no matter how elaborate the explanation.

There Is no problem to be solved, appraisers are inventing one out of nothing. It is embarrassing

Exactly JG! The condition ratings are ambiguous as is, now appraisers want to use TWO versions on the same report? Wow.

"Make sure your worst enemy is not living between your own two ears"

 

[J Grant]

It's beyond absurd that appraisers are doing this, and worse, advising others to do it. What part of the FAnnie FAQ answer do they not understand? The Q and C explanations on UAD definitions page DO NOT use the language of good, or average. They Q and C are meant for intended Fannie use and meant to apply ONLY to one specific aspect of grid.

Appraisers are adding an extra layer of needless liability by linking the C and Q ratings to good ,or average/ other verbiage, and using them outside the context they are intended for . Good quote re between our ears...guilty as charged at times!