FNMA and Permits and Extraordinary Assumptions

[Sadie]

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!!!

Figure out if it is just an assumption or an extraordinary one. Then perhaps check the box that says the appraisal is made subject to (the last box) inspections, etc. If it is just a regular assumption the appraisal can be made as is. AI has a nice little description of what is an ordinary assumption vs extraordinary.

 

[Carnivore]

Oh Carnivore, read your 1004 a little more carefully.

I know we assume. #5 Statement of assumptions and limiting conditions.

We don't make any Extraordinary Assumptions.(USPAP)

Is this the confusion?

 

[Sadie]

I know we assume. #5 Statement of assumptions and limiting conditions.

We don't make any Extraordinary Assumptions.(USPAP)

Is this the confusion?

Maybe on your part. Extraordinary Assumptions are allowed in certain cases. Read your document before you sign it. Ever require inspection and check that box on the form above your MVE? If yes you have made an extraordinary assumption. It is imbedded in the form. What else are you unaware of?

 

[Mike Kennedy]

Assumptions and Hypothetical Conditions

https://www.appraisalinstitute.org/assets/1/29/Guide_Note_15.pdf

 

[Mike Kennedy]

"For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of those criteria must be met if the improvements are to be considered as the highest and best use of a site."

B4-1.3-04, Site Section of the Appraisal Report (06/05/2018)

selling-guide.fanniemae.com

 

[DWiley]

Maybe on your part. Extraordinary Assumptions are allowed in certain cases...

Yes, quite correct. They can be used if, and only if, one uses the checkboxes in the Reconciliation section. Simply adding an EA into commentary, as the OP seems to imply, is not allowed, as the form instructions indicate.

The OP refers to an, "...appraisal based on the extraordinary assumption that all improvements are permitted" It says nothing about a report that is subject to some sort of inspection or repair or alteration to the property, as might be addressed by the checkboxes.

 

[J Grant]

Fannie will accept non permitted areas as part of sf ( and contributing to value ) if appraiser states it was finished in a workmanlike manner and provides 2 comps with similar not permitted areas comps.

 

[glenn walker]

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

Wrong you did not read memo last week : )

 

[glenn walker]

Re

Wrong you did not read memo last week : )

Read Danny's Posts the only ones that are correct on this forum as he keeps up on it--

 

[James Micozzi]

"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

So with that thought in mind, adding FHA as an intended user on an FHA assignment on an FNMA 1004 is a no-no.