FHA Duplex

[SAB71]

Hello everyone, I have never posted, but I read posts frequently. I need some help with an FHA question, if you know the answer. I have already spoken with the Denver HOC, and after 15 minutes of explaining to her the issue and her doing nothing but telling me she doesn't understand the question, I gave up.

Here's the situation: I'm appraising a legal duplex for a reverse mortgage. The FHA issue is that the lower level (below grade) unit's windows are nearly 5 feet off the ground. The woman at the Denver HOC advised that I just call the bedrooms "dens", and finish the report. That just doesn't seem right to me. It is also going to be impossible to find any duplex sales with zero bedrooms in one of the units.

My question is: with the windows being too high for FHA guidelines, what are my options in appraising the lower level? Do I require them to cut into the foundation and install new windows which meet guidelines, or do I give no value to the lower unit at all? I am really stumped, and would love to hear some insight. Thanks a lot for your time.

 

[CANative]

Good question. I wish I knew the answer.

4150.2 clearly states that 44" is required window sill hight. It also states that if the standards are not substantially met the area cannot be counted as habitable. It doesn't tell the appraiser what to do about this.

On the one hand the market would probably still buy this property as a duplex or two unit and not pay too much attention to FHA's window height requirement. On the other hand FHA says to not include it as habitable area.

This may be an FHA reject. Let's see what the other FHA pro's on the forum have to say.

 

[Mr Rex]

FHA is big into the 3 S's one of which is safety. A short kid can't ride Space Mountain or get out of a window too high off the ground. It is what it is, better they crush their bones diving from a 2 story window than scratch and claw to their death trying to get out of a dungeon window.

 

[Kevin A. Spellman]

The purpose of the 44 inches from floor level to the window is for fire-rescue. The safety of the occupants is more important than the value for either the FHA or the conventional loans. Was your subject a conversion? I would seek the authority (building department) to state whether or not a second living unit exists within your subject’s home. I think it is great you have recognized this deficiency and I would not ask for lowering of the windows. I believe your subject has failed the test of a living unit with absence of fire-rescue windows or means of egress.

 

[SAB71]

The purpose of the 44 inches from floor level to the window is for fire-rescue. The safety of the occupants is more important than the value for either the FHA or the conventional loans. Was your subject a conversion? I would seek the authority (building department) to state whether or not a second living unit exists within your subject’s home. I think it is great you have recognized this deficiency and I would not ask for lowering of the windows. I believe your subject has failed the test of a living unit with absence of fire-rescue windows or means of egress.

No, it's not a conversion, just an old home. It was built in 1940, and according to the owner, was built as a duplex.

My biggest concern is that whether I call the rooms something besides bedrooms, or whether I give the lower unit no value at all, there are still going to be little kids sleeping in rooms with no egress. I have no clue what to do. Maybe I'll call the HOC again and see if I can speak with someone that isn't a moron.

Thanks for your comments.

 

[Chris Colston]

It may be an FHA reject anyway...I thought on a reverse the property had to be owner occupied. Does the owner occupy both units? I was not aware that a duplex would qualify for a reverse.

 

[Kevin A. Spellman]

Pre-existing use from the 1940s is no excuse for the absence of fire-rescue windows. There is a deficiency and you cannot demonstrate or assign value to a living unit that cannot meet the minimum standards to be considered a living unit. I will state this again seek the authority for the determination as a two family, not an owner’s statement. If the authority agrees with you call the client and state you can only value it as a single family with a finish basement, but state the use of the basement within the body of the report. Do not label the rooms as sleeping quarters; call it a finished room only. You are not obligated to label rooms in a finished basement other than a kitchen or a bath.

 

[Jerry Bone Jr]

You could describe the issue in the report. Make a requirement that the windows height is changed to meet the FHA guidelines. List the rooms as bedrooms, based on the requirement. Let the DE UW make the call.

 

[Mike Boyd]

Maybe you could require that steps up to the windows be built. The owner occupancy rule for a reverse mortgage might kill the deal anyway. Although if one of the units is owner occupied(the upstairs unit) the situation may be moot. No value given to the downstairs unit.

 

[CANative]

you cannot demonstrate or assign value to a living unit that cannot meet the minimum standards to be considered a living unit.

Help me out here. I just can't seem to understand this concept.