Good Evening Everyone,
I have an AMC that insists to their clients that an AS IS value must be produced in a single family residential appraisal report, for a home under construction or being renovated, per the Dec 2010 Interagency Guidelines from the FDIC.
I have read them, it is difficult to say the least, especially Appendix C.
What say you? What I find strange is that Chase, Flagstar and Wells Fargo do not require this, but, a regional AMC does.
Thanks so much....Mike P.
IAG Page 9
"Be based upon the definition of market value set forth in the appraisal regulation. Each appraisal must contain an estimate of market value, as defined by the Agencies’ appraisal regulations. The definition of market value assumes that the price is not affected by undue stimulus, which would allow the value of the real property to be increased by favorable financing or seller concessions. Value opinions such as “going concern value,” “value in use,” or a special value to a specific property user may not be used as market value for federally related transactions. An appraisal may contain separate opinions of such values so long as they are clearly identified and disclosed.
The estimate of market value should consider the real property’s actual physical condition, use, and zoning as of the effective date of the appraiser’s opinion of value.
For a transaction financing construction or renovation of a building, an institution would generally request an appraiser to provide the property’s current market value in its “as is” condition, and, as applicable, its prospective market value upon completion and/or prospective market value upon stabilization.25
FOOTNOTE 25
25 Under NCUA regulations, “market value” of a construction and development project is the value at the time
a commercial real estate loan is made, which includes “the appraised value of land owned by the borrower on which the project is to be built, less any liens, plus the cost to build the project.” 68 FR 56537, 56540 (October 1, 2003) (referring to Office of General Counsel Opinion 01-0422 (June 7, 2001)); 12 CFR 723.3(b).
FANNIE MAE October 22, 2013
Part B, Origination Through Closing
Subpart 4, Underwriting Property
Chapter 1, Appraisal Guidelines, Appraisal Report Assessment
"Appraisals Completed “As Is” Fannie Mae permits appraisals to be based on the “as is” condition of the property
provided existing conditions are minor and do not affect the safety, soundness, or structural integrity of the
property, and the appraiser’s opinion of value reflects the existence of these conditions."
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. 601
"Physical Deficiencies That Affect Safety, Soundness, or Structural Integrity
The appraisal report must identify and describe physical deficiencies that could affect a property’s safety, soundness, or structural integrity.
If the appraiser has identified any of these deficiencies,
the property must be appraised subject to completion of the specific repairs or alterations.
In these instances, the property condition and quality ratings must reflect the condition and quality of the property based on the hypothetical condition that the repairs or alterations have been completed.
If the appraiser is not qualified to evaluate the alterations or repairs needed, the appraisal must identify and describe the deficiencies and the property must be appraised subject to a satisfactory inspection by a qualified professional. The appraisal may have to be revised based upon the
results of the inspection. If so, the report must indicate the impact, if any, on the final opinion of value. The lender must review the revised appraisal report to ensure that no physical deficiencies or conditions that would affect the safety, soundness, or structural integrity of the property are
indicated.
A certification of completion is required to ensure the necessary alterations or repairs have been completed prior to delivery of the loan."
