FNMA and Permits and Extraordinary Assumptions

[Diego Lopez]

Having a discussion at the office with another appraiser and we are at a disagreement as to whether or not FNMA allows extraordinary assumptions regarding permits (ie appraisal based on the extraordinary assumption that all improvements are permitted) particularly when the house is larger than recorded and whether the market value opinion is still an "As Is" market value opinion if an EA is used. What say the forumites? Thanks!!!

 

[TerryRohrer]

To my knowledge, FNMA doesn't allow extraordinary assumptions. In my area, permitting is a non-issue. If caught building without, the "fine" is the cost of the permit you have to buy to continue. If you finish and don't get caught, there is no enforcement action taken, so there can be no impact on value. But, from what I read in other areas, enforcement can require removal of unpermitted improvements. If you are in the latter, I would opine it is your job to know. How can you conclude highest and best use if you don't know what is legal or permissible?

 

[DWiley]

"Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted."

From form 1004/70

 

[Diego Lopez]

To my knowledge, FNMA doesn't allow extraordinary assumptions. In my area, permitting is a non-issue. If caught building without, the "fine" is the cost of the permit you have to buy to continue. If you finish and don't get caught, there is no enforcement action taken, so there can be no impact on value. But, from what I read in other areas, enforcement can require removal of unpermitted improvements. If you are in the latter, I would opine it is your job to know. How can you conclude highest and best use if you don't know what is legal or permissible?

very interesting, if you get caught after the fact, is there any enforcement? In your area?

 

[TerryRohrer]

very interesting, if you get caught after the fact, is there any enforcement? In your area?

No, they don't come after you if the work is complete and you did not have a permit.

 

[Terrel L. Shields]

extraordinary assumptions regarding permits

I might assume that would be an ordinary assumption hence not necessarily an issue.

You might even argue that is a matter of legal nature.

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title​

to it, except for information that he or she became aware of during the research involved in performing this appraisal.​

 

[Diego Lopez]

I might assume that would be an ordinary assumption hence not necessarily an issue.

You might even argue that is a matter of legal nature.

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title​

to it, except for information that he or she became aware of during the research involved in performing this appraisal.​

Yes, it is a matter of legal nature.

 

[BRCJR]

I might assume that would be an ordinary assumption hence not necessarily an issue.

You might even argue that is a matter of legal nature.

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title​

to it, except for information that he or she became aware of during the research involved in performing this appraisal.​

With the volume of reports I see there is not a clear understanding, by many Appraisers, in the difference of an assumption and an extraordinary assumption.

 

[Sadie]

To my knowledge, FNMA doesn't allow extraordinary assumptions. In my area, permitting is a non-issue. If caught building without, the "fine" is the cost of the permit you have to buy to continue. If you finish and don't get caught, there is no enforcement action taken, so there can be no impact on value. But, from what I read in other areas, enforcement can require removal of unpermitted improvements. If you are in the latter, I would opine it is your job to know. How can you conclude highest and best use if you don't know what is legal or permissible?

Well, according to FNMA, extraordinary assumptions are allowed. Use google to look it up.

 

[BRCJR]

Well, according to FNMA, extraordinary assumptions are allowed. Use google to look it up.

Is that true within the 1004 or just the 2055 and desktops?