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FHA, Legal Descriptions, Preliminary Title Reports

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CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
In FHA assignments the mortgagee MUST provide all documents relevant to the appraisal to the appraiser. I remember the push back on this when the handbook came out. I've always made the requirement that the client provide the prelim (for FHA and any other mortgage type assignments.)

Found this in the prelim and two thirds of the way through the process of writing the appraisal report (and two trips for comp and rental comp photos.)

PARCEL ONE:
PARCEL 1 AS SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID
LAKE COUNTY ON zzz x, 19xx, IN BOOK xx OF PARCEL MAPS AT PAGE xx.

PARCEL TWO:
AN EXCLUSIVE PARKING EASEMENT OVER PARCEL 2 A SHOWN ON A MAP FILED IN THE OFFICE
OF THE COUNTY RECORDER OF SAID LAKE COUNTY ON zzz x, 19xx, IN BOOK xx OF PARCEL
MAPS AT PAGE xx.

Pretty straight forward. I read the rest of the title report and found this:

The following matters shown or disclosed by the filed or recorded map referred to in the legal
description: EXISTING IMPROVEMENTS LOCATED ON PARCEL 1 ENCROACH INTO THE PUBLIC
RIGHT OF WAY FOR LAKESHORE DRIVE. UPON WRITTEN NOTIFICATION BY THE CITY
ENGINEER, THE OWNER OF THIS PARCEL SHALL BE REQUIRED TO REMOVE SAID
ENCROACHMENTS AT NO EXPENSE TO THE CITY.

About a third of the dwelling is in the ROW and there is no place else to relocate the improvements (building pad is cut out of solid rock in a nearly vertical slope.)
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Good job it's funny but 95% of the time the Title Insurance Company will just write around these issues so the buyer has a very limited policy. The hard part is the appraiser tries to determine the effect on future sale or marketability but until a buyer reads the title and understands the potential issues the title just goes from hand to hand. In your case I bet lender will get a policy and the agents and lender tell the buyer everything is fine because you and FHA have title insurance .
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
That section is an exclusion to the policy coverage.

The issue now is that the property is not eligible collateral for FHA. The protocol per the handbook is to do the appraisal "as is" and recommending rejection.

Does the "as is" include all the other MPR defects?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
AS IS is AS IS. Don't recommend any repairs to bring it up to MPRs.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Thank you. That's how I see it.

This is going to start a range war among the real estate agents and brokers. See the thread about agents appraiser shopping. I posted in that about my problem.

On this one it's the same brokerage and the HUSBAND of that agent. *sigh*
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
I have only recommended rejecting a property once in the last 17 years and that was after I spoke with my Santa-Ana HOC about the situation. They advised me to complete the report (As Is ) and had me recommend the lender reject the property due to not being good security for FHA/HUD . The contact also gave me their name and contact information and logged in the case number about our conversation. In this case the lender contacted my HOC and was told to reject the property.

Just make sure you have all your ducks lined up because the lender will try everything to get you to change the report especially if the title company will insure it.

Good luck and welcome to appraisal hell : ) LOL
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I've have recommended several be rejected due to extensive damage. I always do them AS IS and give lots of photos. I've never had a lender try to get me to change it. They seem to be thankful that I did them that way.
 
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