Hybrid Appraisal Extraordinary Assumptions

[BRCJR]

I suggest you be your own man and stop following titles. FMNA is crystal clear that you are to report to the appraiser things that may affect value. Maybe after a HO sues you for killing the deal, you might have a bit more clarity.

If the specific interest rate on a specific loan is not made available to you what do you do?

 

[J Grant]

Peer practice I have never heard of an appraiser calling about a borrower's interest rate on conventional financing. Unless it is creative or non typical financing, for conventional it says in the contract financing at prevailing rates or a rate below a top end cap. WTF difference does it make on "value" if the borrower's interest rate is 4.8 or 5%? The interest rate is predicated in part on borrower credit / UW criteria and can change which is why the says at prevailing rates rather than stating a specific number . The SC price is written at prevailing rates so whatever specific rate borrower ends up with did not affect the price.

Read the Fannie instructions carefully, they say what is on the contract is what the lender needs to send first paragraph

 

[TRESinc]

FMNA is crystal clear that you are to report to the appraiser things that may affect value.

i'm curious about this. if the interest rate is not known at the time that an offer is made, and accepted (and the appraisal ordered though that really isn't a factor in my question) how would that affect the value of the property? my experience has been that a buyer and seller come to a meeting of the minds at the conclusion of the contract negotiations, which happens long before the loan is approved, and i have never seen a contract go back and have the price changed because the borrower got a higher (or lower) interest rate than they thought they would. i am sure it could happen but i have personally never seen that as the reasoning behind a contract price change.

 

[residentialguy]

If the specific interest rate on a specific loan is not made available to you what do you do?

i'm curious about this. if the interest rate is not known at the time that an offer is made, and accepted (and the appraisal ordered though that really isn't a factor in my question) how would that affect the value of the property? my experience has been that a buyer and seller come to a meeting of the minds at the conclusion of the contract negotiations, which happens long before the loan is approved, and i have never seen a contract go back and have the price changed because the borrower got a higher (or lower) interest rate than they thought they would. i am sure it could happen but i have personally never seen that as the reasoning behind a contract price change.

I quoted both of you, because these kind of go hand in hand. A typical varying of interest rate isn't going to make a difference, but special financing can, esp if the financing tied to the seller; that's why it is even stated in the definition of Market Value. If they don't disclose, I will mention it in my report that FNMA requires this and they did not comply. Then I create an loophole for myself that if I did rely on the subject, it is based upon the assumption that the finance was typical for the market and did not affect the price; however, should this be found to be atypical and affected the price, my opinion of value may have been different had that information been disclosed to me.

 

[BRCJR]

I quoted both of you, because these kind of go hand in hand. A typical varying of interest rate isn't going to make a difference, but special financing can, esp if the financing tied to the seller; that's why it is even stated in the definition of Market Value. If they don't disclose, I will mention it in my report that FNMA requires this and they did not comply. Then I create an loophole for myself that if I did rely on the subject, it is based upon the assumption that the finance was typical for the market and did not affect the price; however, should this be found to be atypical and affected the price, my opinion of value may have been different had that information been disclosed to me.

So let me get this straight, if you cannot do what you have defended in this thread you now create a loophole for yourself? Why not have stated that from the beginning of the "debate"?

 

[residentialguy]

So let me get this straight, if you cannot do what you have defended in this thread you now create a loophole for yourself? Why not have stated that from the beginning of the "debate"?

It depends on the circumstance. In some cases I wouldn't use the subject and the deal would be dead in the water. Most would not be like me and put in an assumption claiming the Certs say no, they would be forced by your hand to ignore the subject. Either way, that doesn't get around the fact that you and your brass are wrong. If it affects value, per FNMA requirements, you should get it over to the appraiser...at least when asked. The reason I say "when asked" is because most appraisers don't realize that the subject can be a good indicator of value, so they ignore it right off the bat. But for those that do, those are the ones that you need to get the information to because it may very well affect value. Why you entrust the appraiser in confidential information except for something that may help the deal go thru is beyond me. Classic cut of nose to spite face policy.

 

[TRESinc]

It depends on the circumstance. In some cases I wouldn't use the subject and the deal would be dead in the water. Most would not be like me and put in an assumption claiming the Certs say no, they would be forced by your hand to ignore the subject. Either way, that doesn't get around the fact that you and your brass are wrong. If it affects value, per FNMA requirements, you should get it over to the appraiser...at least when asked. The reason I say "when asked" is because most appraisers don't realize that the subject can be a good indicator of value, so they ignore it right off the bat. But for those that do, those are the ones that you need to get the information to because it may very well affect value. Why you entrust the appraiser in confidential information except for something that may help the deal go thru is beyond me. Classic cut of nose to spite face policy.

i still don't see how an unknown interest rate, at the time the buyer and seller agree to a price and sign a contract at said price, affects the sale price. the price has already been established long before the interest rate is known. following your logic if i was to buy a house from you and we signed a contract and i went to my lender and wanted a 30 year note, then a week later changed my mind and wanted a 15 year note, that would affect the established, signed contract price?