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FNMA's Final Word On Permits

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Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Tips for Appraisers
Permitted vs Allowable
We sometimes see the word "permitted" used to describe whether an existing use is allowable by the local zoning board. Yet, other times we see it used in reference to a building permit for an addition or modifications made to a home. This mixed usage of the same word can result in tremendous difficulty for your client who is trying to determine whether a subject property meets the property eligibility criteria set forth in the Fannie Mae Selling Guide.
Knowing the difference:
If the current use of a property is not allowable within the property’s specific zoning district, the use is considered illegal and ineligible for delivery to Fannie Mae. However, the mere absence of a building permit does not render the property ineligible for delivery and only requires the appraiser to comment on the quality and appearance of the work and its impact on the market value.


Kennedy, you get it now?
 
Last edited:

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Tips for Appraisers
Permitted vs Allowable
We sometimes see the word "permitted" used to describe whether an existing use is allowable by the local zoning board. Yet, other times we see it used in reference to a building permit for an addition or modifications made to a home. This mixed usage of the same word can result in tremendous difficulty for your client who is trying to determine whether a subject property meets the property eligibility criteria set forth in the Fannie Mae Selling Guide.
Knowing the difference:
If the current use of a property is not allowable within the property’s specific zoning district, the use is considered illegal and ineligible for delivery to Fannie Mae. However, the mere absence of a building permit does render the property ineligible for delivery and only requires the appraiser to comment on the quality and appearance of the work and its impact on the market value.


Kennedy, you get it now?


But, of course.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Part B, Origination Through Closing
Subpart 2, Eligibility
Chapter 3, Property Eligibility
April 25, 2017
Printed copies may not be the most current version. For the most current version, go to the online version at
https://www.fanniemae.com/singlefamily/originating-underwriting. 302

• adequately insured per Fannie Mae guidelines for property and flood insurance (see B7-3,
Property and Flood Insurance);
• the highest and best use of the property as improved (or as proposed per plans and
specifications), and the use of the property must be legal or legal non-conforming use (see
B4-1.3-04, Site Section of the Appraisal Report);

Highest and Best Use – Defined: The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value. (Source: The Appraisal of Real Estate, 14th Edition, Appraisal Institute).
 
Last edited:

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Part B, Origination Through Closing
Subpart 2, Eligibility
Chapter 3, Property Eligibility
April 25, 2017
Printed copies may not be the most current version. For the most current version, go to the online version at
https://www.fanniemae.com/singlefamily/originating-underwriting. 302

• adequately insured per Fannie Mae guidelines for property and flood insurance (see B7-3,
Property and Flood Insurance);
• the highest and best use of the property as improved (or as proposed per plans and
specifications), and the use of the property must be legal or legal non-conforming use (see
B4-1.3-04, Site Section of the Appraisal Report);

Highest and Best Use – Defined: The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value. (Source: The Appraisal of Real Estate, 14th Edition, Appraisal Institute).


The legal or legal non-conforming issue is basic to H&B Use analysis. There is nothing extraordinary--quite elementaryc, is it not?--in the words that you have quoted.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
USPAP SR 1-3(b) HABU

There is no acceptable Definition of Highest and Best Illegal Use ( i.e governing zoning ordinance, building ordinance, fire and safety ordinance, etc. )
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
https://appraisersforum.com/forums/threads/FNMA-day-1-stats.218922/

see the link at the bottom of the message
 
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