Neighborhood Description Do Not Reference Income

[George Hatch]

Middle income may not be a problem in and of itself, but certain stats can be construed as a reflection of the residents of a neighborhood as opposed to the properties in the neighborhood.


If you were a minority and you saw a report that referred to a statistic about 25% of your neighborhood's residents earning less than $25k/year and your loan application got denied, you might be forgiven for giving serious consideration to the possibility that the rejection might have been influenced by a judgement that was passed on the personal characteristics of your neighborhood instead of the the property's value or your own qualifications.

I know some $500k neighborhoods where everyone's annual income exceeds $80k. and I know of other neighborhoods with comparable values where the median incomes are below $30k, so I really don't buy the idea that household incomes can be considered a direct indication of property values.

 

[residentialguy]

Redlining...yeah... it's the appraiser's fault for what the loan officer did. It's not like they can't pull up census data on their own. What's this world coming to

 

[J Grant]

Let the loan officer pull up the census data if it interests them. We should not do it for them because our appraisal is about properties, not people.

 

[Riick]

Redlining...yeah... it's the appraiser's fault for what the loan officer did. It's not like they can't pull up census data on their own. What's this world coming to

Answer: Nanny State.
However, if our next nanny is like the last two Chief Executives, I'm calling the Cops about Child Abuse

 

[CANative]

 

[glenn walker]

Reviewer is correct ** For at least 35 years Fannie, Freddie, FHA, VA , and the major money center banks DO not want information about neighborhood income. We appraise real estate and the comparables support or don't support the value. Race, creed, Income , none of it matters AND they are doing us a favor because If I was an economist I would expect to paid a lot more money. Everyone knows folks in Beverly Hills earn $1,000,000 to $25,000,000 a year and that's why the comparable sales are $5,000,000 to $35,000,000 : LOL

 

[jay trotta]

OK, here's an alternate look or view; the Deed specifies a fact in which the transfer of property meet the requirements of; Sec.8 per income etc.

The UW (idiot or not) will have a different perspective based on Deed restrictions; You need to develop a Value / High/Low or Indifferent, and of the Sale data you have (within the 12 month cycle) Not one property reflects the Deed Restriction Fact; can You support an "impact" ?? In this example we are using a Municipal Wide Search, can you provide a value range ?

Your Thoughts.......

 

[andrew81]

i do not reference income in my reports but i dont have a problem with it as it is an economic factor.

Utility, scarcity, desire, and effective purchasing power.

nothing in the FNMA selling guide says it cant be considered:

Objective and Unbiased Appraisals
A lender must ensure that the appraiser
• described the property and the neighborhood in factual, unbiased, and specific terms;
• considered all factors that have an effect on value; and
• was objective and unbiased in the development of the opinion of market value in the appraisal
report.
A number of federal, state, and local laws prohibit discrimination in the appraisal of housing.
Fannie Mae expects professional appraisers to fully understand that discriminatory valuation and
appraisal reporting practices are not only illegal, but also unethical. Unintentional discrimination
can occur as the result of what an appraiser states, or fails to state, in his or her appraisal report.
The lender and the appraiser must ensure that the integrity of the loan decision is not influenced
by subjective, racial, or stereotypical terms, phrases or comments in the appraisal report.
Prohibited practices include:
• use of unsupported, descriptive comments or drawing unsupported conclusions from
subjective observations. These actions may have a discriminatory effect;
• use of unsupported assumptions, interjections of personal opinion, or perceptions about factors
in the valuation process. These actions may have a discriminatory effect, and may or may not
affect the use and value of a property;
• use of subjective terminology, including, but not limited to:
– “pride of ownership,” “no pride of ownership,” and “lack of pride of ownership”;
– “poor neighborhood”;
– “good neighborhood”;
– “crime-ridden area”;
– “desirable neighborhood or location”; or
– “undesirable neighborhood or location”;
• use of subjective terminology that can result in erroneous conclusions;
• actions that may have a discriminatory effect or may affect the use and value of the property;
or
• basing the analysis or opinion of market value (either partially or completely) on the race,
color, religion, sex, handicap, familial status, or national origin, of either the prospective
owners or occupants of the property being appraised or the present owners or occupants of the
properties in the vicinity of that property.