FHA - multiple parcels, multiple deeds, multiple PINs. What have you seen FHA want in

[Alan H]

I am doing an SFR appraisal on a sale which is to be FHA. It has 2 parcels, each has its own deed and PIN/Tax ID. In all prior experiences FHA has required that the parcels be joined, prior to sale, either as a single parcel (when the additional lots are individually, buildable, vacant land); or under 1 deed with both parcels described in a single legal description (when the additional parcel contains improvement which affects the marketability of the primary residence - such as a garage or swimming pool, etc.).

Has anyone had any experience where HUD/FHA approved 2 parcels on 2 seperate deeds with 2 PINs, prior to them being joined at least via deed? In other words approved it just based upon the Agreement Of Sale?

The 'lender' is stating that all that is needed is for the AOS to include the 2 parcels and this is the exact opposite from everything I've ever been told by HUD/FHA. I have a call into HUD/FHA Philadelphia HOC, but thought I'd send this out and see what ideas you had....

 

[CANative]

What a strange thread...

Unless there is something on the lot without the residence that the house lot can't live without then it's just another lot.

Don't value both as one.

 

[Alan H]

Maybe I need to clarify.

There is a SFR on 1 parcel with its own deed and an an adjacent parcel there is a garage, which belongs to the SFR, but is on its own deed and Tax ID/Pin.

Every FHA appraisal I have ever done which had multiple parcels had to be conditioned to be joined, either as a single PIN on a single deed (in the case of the extra parcel being vacant, seperately buildable, land), or as 2 parcels described in a single deed (in the case of the 'additional' lot being 'improved' in a way that made it to be 'contributing' to the marketability of the property - such as a detached garage or a swimming pool on the additional parcel).

In my prior experiences, either of the above have always called for at least a single deed containing a legal description of the property, in its entirety.

My question is has anyone had any experiences where HUD/FHA accepted a SFR on 1 deed and PIN and the GARAGE on a 2nd Deed and PIN. And if so what was the instrument used to provide the legal description per HUD/FHA guidelines.

 

[Jo Ann Meyer Stratton]

Asessor's parcel numbers are not a legal entity, they are only a bookkeeping function for assessment and taxation processes.

What is the intent of the mortgage? Is it to cover all the legal descriptions? Would that combination be in compliance with local zoning? Would the site area be similar to other residential properties in the area? Would the combined area be accepted (and expected) in the subject's market? You need to know the answers to those questions (and others) before you can proceed.

If the answer to the above questions is yes, you include all the legal descriptions and assessor's parcel numbers in your report. Add up all the tax bills and report the total amount. When the mortgage documents are recorded at close of escrow everything will be on one recorded document.

Separate legal descriptions and assessor's parcel number exist for many reasons. Maybe one lot has a joint tenancy deed for John and Mary Smith and the other lot has a warranty deed for John William and Mary Louise Smith. Maybe both lots were purchased at two different times and nobody every got around to requesting the assessor to combine them for tax purposes. Maybe one lot is inside the city limits and one lot is outside so there has to be two different tax bills so the tax money goes to the right governing entities. There are all sorts of legitimate reasons for the current separation.

First thing call your client, find out what is going on, then forge onward from there.

 

[Alan H]

Maybe I need to clarify some more.

There is a SFR on 1 parcel with its own deed and on an adjacent parcel there is a garage, which belongs to the same owner and is being sold with the SFR, but is on its own deed and Tax ID/Pin.

Every FHA appraisal I have ever done which had multiple parcels was required by HUD/FHA guidelines to be 'conditioned' pending joining of the parcels.

When the additional parcels were vacant land that qualified as buildable under current zoning, HUD/FHA has always required that the parcels be joined as a single PIN on a single deed.

When the additional parcel contained improvements which affect the marketability of the overall Subject (such as a detached garage or a swimming pool on the additional parcel), I have seen HUD/FHA make an exception and not require the parcels to be joined as the same PIN, however when this has been allowed, I have seen HUD/FHA still require a new deed containing both parcels in its legal description.

In my prior experiences, I have never seen HUD/FHA accept a Subject which has multiple parcels on seperate deeds. HUD/FHA has always required, in my personal experiences, that some deed condition to be met, prior to accepting the appraisal/mortgage.

My question is, has anyone had any experiences where HUD/FHA accepted a SFR on 1 deed and PIN and the GARAGE on a 2nd Deed and PIN (that's 2 parcels, 2 deeds, 1 sale)? And if so what was the instrument used to provide the acceptable legal description per HUD/FHA guidelines?

 

[Jo Ann Meyer Stratton]

Many times over the past 32 years since the examples I posted are not unusual in this area. The legal description that provides the collateral for the mortgage is described on the Deed of Trust (mortgage document in Arizona). That legal description on that single document may have one or multiple parcels, again depending on the circumstances. Another example is a subdivision developed in 1889, the lots are only 25' wide so to have a site large enough for a house people may own two to maybe ten lots. Some times they were purchased at different times so for assessment records there are separate parcels. But when they go to finance their home all the lots are described on one deed. Whether they are assessed as one parcel number or multiple parcel numbers is up to the owner and assessor's office. The owner can go into the assessor's office and request them be combined as one parcel number so they receive only one tax bill or they stay home and don't do anything, which means they receive multiple tax bills. Assessor's parcel numbers are for bookkeeping purposes only and not a legal item. One deed can cover multiple parcels, they don't have to be in one subdivision or county or state even. Same way with mortgages, there can be one legal description (lot or site) or multiple descriptions that are collateral for that specific loan.

As I mentioned before, talk to your client and research the legality of the area they want listed as collateral on the mortgage (zoning, building permits, physical & legal access, set backs, location on the site, etc, etc, etc).

 

[CANative]

May a property have multiple property tax account numbers and be eligible for FHA insured financing?

FHA requires that the lender is responsible for conveying good and
marketable title to FHA when a claim is filed. If a property is comprised by
multiple lots and/or parcels, buildable or otherwise, each with a separate
property tax
account number, the multiple lots/parcels must be in the same
ownership. The legal description of the property (often referred to as a metes
and bounds description or a rectangular survey system) contained within the
deed must specifically reference and
describe each lot or parcel in its entirety
and each must be encumbered under the same deed. The property must be
one contiguous assemblage of land and improvements and all parcels must be
encumbered under the same mortgage instrument.

http://portal.HUD.gov/hudportal/documents/huddoc?id=aprval.pdf

 

[Alan H]

Thanks CANative,

I have the same info you gave me, as well as the 3-7 Subject comments from 4150.2 and both of these seem to state that all parcels must be delivered to HUD/FHA on ONE DEED.

The 'lender' is maintaining that the parcels may be delivered to HUD/FHA under seperate deeds, so long as the legal description in the appraisal correctly identifies each of the parcels. I have heard of lenders allowing this under conventional financing but NEVER heard of this being allowed under HUD/FHA.

I'm just trying to see if anyone has any actual experiences where HUD/FHA did NOT require a sale of property that consists of multiple parcels to have them all put on the same deed, prior to filing the completion report.

 

[sputnam]

Whether FHA or FNMA approves a particular loan should never be the appraiser's concern. It sounds like a client assignment condition. If you are unwilling to do it, decline the work. If you accept, make sure that somewhere on the order or an email or something, you have the client's instruction in writing. Then when they later contact you because FHA tells them they can't do it that way, you get to say, "Well, I did it the way you requested. Yes, I can change it now. It will be $$$".

 

[Alan H]

Ok, at about 8 AM this morning, I spoke with the Philadelphia HUD HOC office, about clarification of the HUD/FHA guidelines for the 2 parcels on 2 deeds contained in this assignment, so here is the verdict, right from HUD/FHA HOC Phila:

Because the additional parcel is an appurtennant garage, they do not need to be combined into a single parcel, however, to be acceptable to HUD/FHA, the 2 parcels must, at least be included in the same legal description on the same deed. The HOC referenced Handbook 4150.2 Chapter 3-7, A. GENERAL ACCEPTABILITY CRITERIA, per below:

1. Subject Property
The subject property must be adequately identified as a single, marketable real estate entity. However, a primary plot with a secondary plot for an appurtenant garage or for another use contributing to the marketability of the property will be acceptable if the two plots are contiguous and comprise a readily marketable real estate entity.



Per Phila HOC, HUD/FHA accepts a single parcel on a single deed as best satisfying the requirement to be "adequately identified as a single, marketable real estate entity", however makes an exception, in cases like this Subject's, where "a secondary plot for an appurtenant garage or for another use contributing to the marketability of the property will be acceptable if the two plots are contiguous and comprise a readily marketable real estate entity". In this case, the two parcels do not need to be combined into one single parcel, however in order to provide HUD/FHA with an acceptable single, marketable real estate entity, the two parcels must be contained in the legal description of a single deed.