Nightmare Partial Release that FHA just won't let go.

[Andee]

I'm dealing with a partial release where the current property as a whole is 2 full lots within a subdivision, which is 2.32 acres total (each lot is 1.16 acres), with ALL the improvements but a small loafing shed on one lot. Owner is giving the lot with the small loafing shed to his son, which is cause for the release. The original order came in as a typical conventional partial release, ok, no problem, took care of it. A few months later they come back and tell me that it was actually supposed to be FHA, well, that's not what my order said, so I go back out and take more pictures and complete the FHA inspection...nothing has changed on the interior or exterior. I get back, change the few things that need to be changed, add the additional photos of the attic and submit...remember there were no issues with it when it was thought to be conventional. Additionally, the LTV ratio is well below what it needs to be for this to go through without issue as current owner has had the property for like 14 years.

Now HUD is beating me up on revisions that never would have been an issue if this was a conventional. They didn't like the way I calculated the land adjustment, they didn't like that I didn't grid out for the two different scenarios of "As Is" and "Subject To" and only stated the "As Is" value (which was the requirement of the original order), plus a whole host of other things. OK, I go through clean things up, answer all their ridiculous questions and resubmit the report thinking that I'm done now. NOPE!!! HUD continues to beat me up with revisions for something that was not even part of the original order, nor the FHA order. It is like they are bored and rewriting the rules as they go along to what this particular HUD Reviewer feels it should be interpreted as, which I spent an hour on the phone going over everything with her, yet she keeps sending it back for more. Did she just forget that some other question she had needed to be answered, even if it is erroneous???

So, now I'm on like my 4th revision or something like that because now they want an HBU for the parcel that is being released...HELLO, did I miss something here??? First I give you everything you want, then you ask for more, of which one request was the value for the parcel being release which has absolutely nothing to do with the order as it will not be retained as collateral to the Lender, nor was it part of the original order. That parcel should only be given value as part of the current "As Is" value. Now, they are coming back and asking me for the HBU for the proposed released parcel...again, not part of the original scope of work or order, conventional or FHA. I even have a statement in the report that states that the HBU is for the 2 separate scenarios, "As Is" and "Subject To", that the proposed parcel release has nothing to do with it. The lender seams ok with everything but for some reason HUD does not.

Anyone been dealing with a ridiculous HUD Reviewer or anything similar to what I'm being asked? Also, how do I politely tell her to stick it where the sun don't shine and that it's really none of her business as it was not part of the original order, nor effect the final outcome of the "Subject To" value, which is way higher than the original loan ever was?

 

[RSW]

HUD needs to go back and look at the original appraisal report to see if the appraisal was done with the 2nd lot being surplus or excess land. That will tell them what the H&BU for the 2nd lot is. I'm not talking about your original appraisal report.

 

[Andee]

HUD needs to go back and look at the original appraisal report to see if the appraisal was done with the 2nd lot being surplus or excess land. That will tell them what the H&BU for the 2nd lot is. I'm not talking about your original appraisal report.

The thing that is killing me is that the 2nd lot literally has the same amount of street frontage as the lot being retained, nothing crosses the lot line and a fence is already in place and has been for a really long time. Common sense for them just isn't kicking in, it's not land locked.

 

[sputnam]

HUD needs to go back and look at the original appraisal report to see if the appraisal was done with the 2nd lot being surplus or excess land. That will tell them what the H&BU for the 2nd lot is. I'm not talking about your original appraisal report.

Good luck telling HUD that they need to change their ways.

 

[J Grant]

I'm dealing with a partial release where the current property as a whole is 2 full lots within a subdivision, which is 2.32 acres total (each lot is 1.16 acres), with ALL the improvements but a small loafing shed on one lot. Owner is giving the lot with the small loafing shed to his son, which is cause for the release. The original order came in as a typical conventional partial release, ok, no problem, took care of it. A few months later they come back and tell me that it was actually supposed to be FHA, well, that's not what my order said, so I go back out and take more pictures and complete the FHA inspection...nothing has changed on the interior or exterior. I get back, change the few things that need to be changed, add the additional photos of the attic and submit...remember there were no issues with it when it was thought to be conventional. Additionally, the LTV ratio is well below what it needs to be for this to go through without issue as current owner has had the property for like 14 years.

Now HUD is beating me up on revisions that never would have been an issue if this was a conventional. They didn't like the way I calculated the land adjustment, they didn't like that I didn't grid out for the two different scenarios of "As Is" and "Subject To" and only stated the "As Is" value (which was the requirement of the original order), plus a whole host of other things. OK, I go through clean things up, answer all their ridiculous questions and resubmit the report thinking that I'm done now. NOPE!!! HUD continues to beat me up with revisions for something that was not even part of the original order, nor the FHA order. It is like they are bored and rewriting the rules as they go along to what this particular HUD Reviewer feels it should be interpreted as, which I spent an hour on the phone going over everything with her, yet she keeps sending it back for more. Did she just forget that some other question she had needed to be answered, even if it is erroneous???

So, now I'm on like my 4th revision or something like that because now they want an HBU for the parcel that is being released...HELLO, did I miss something here??? First I give you everything you want, then you ask for more, of which one request was the value for the parcel being release which has absolutely nothing to do with the order as it will not be retained as collateral to the Lender, nor was it part of the original order. That parcel should only be given value as part of the current "As Is" value. Now, they are coming back and asking me for the HBU for the proposed released parcel...again, not part of the original scope of work or order, conventional or FHA. I even have a statement in the report that states that the HBU is for the 2 separate scenarios, "As Is" and "Subject To", that the proposed parcel release has nothing to do with it. The lender seams ok with everything but for some reason HUD does not.

Anyone been dealing with a ridiculous HUD Reviewer or anything similar to what I'm being asked? Also, how do I politely tell her to stick it where the sun don't shine and that it's really none of her business as it was not part of the original order, nor effect the final outcome of the "Subject To" value, which is way higher than the original loan ever was?

Never had it happen, also never did a release appraisal though I understand what it is.

You do not, as in, do not want to get on the bad side of 'HUD. So have patience, and do what the reviewer asks. It is no big deal to come up with the HBU of the vacant partial to be released and that should have been done from day one.

When the client changed it from conventional to FHA, it should have become a new assignment, not use the original making some FHA changes. Be thankful they are not dinging you on that.

Again, forget that it was not part of the original order and your annoyance at things. It is easy to get exasperated in this kind of situations and I have gotten that way myself ( and regretted it later ) You want to satisfy this reviewer because if HUD puts you on a do not use list or warning list, you might not get FHA work through lenders. You 100% do not want that to happen. So make your HBU conclusion, or whatever else they want, turn it in, and that is that.

 

[J Grant]

HUD is god. That is how the OP should treat them in this scenario.

HUD does not need to go back and look at the original report, or do anything else. They actually are not asking for anything weird. A HBU of the vacant lot or statement that it is street access on the road is expected. It should have been done in the beginning. This should have been a new assignment the moment it got switched to an FHA assignment. If the lender did not order the second assignment correctly, wrt an as-is and a subject-to-value, that is the client's fault, but the appraiser now is stuck covering for the lenders mistake, or their own hard to tell which is which. Note that if HUD gives up at some point and feels like this appraisal is not trustworthy, they will order a new one.

 

[BRCJR]

Someone does not totally understand partial release. OP is dealing with someone that may be confused as to what they actually need.

Who cares what the highest and best use of the parcel that will no longer have a lien on it is?

Who cares what the value is?

The appraisal for the release is to value what is left for LTV lien purposes, period.

Sorry for bolded sentences --- could not get them to "unbold".

 

[glenn walker]

Good luck I have rarely seen HUD approve a partial lot release as they lose the security of that parcel, thats why I tell people do not encumber both lots if you plan on using /building on the other lot until you pay off the mortgage. But good look and its not just HUD conventional too until your loan is paid down over 50% most wont budge. Just hope and pray the second parcel is not worth much by itself

 

[RSW]

Someone does not totally understand partial release. OP is dealing with someone that may be confused as to what they actually need.

Who cares what the highest and best use of the parcel that will no longer have a lien on it is?

Who cares what the value is?

The appraisal for the release is to value what is left for LTV lien purposes, period.

Sorry for bolded sentences --- could not get them to "unbold".

I completely agree. The lot that is to be separated from the lot being appraised has nothing to do with the value of the lot being appraised. It may be necessary to use a hypothetical condition to appraise the property without both lots. That may be where the HUD is tied up with the H&BU.

 

[Dublin ohio]

I even have a statement in the report that states that the HBU is for the 2 separate scenarios, "As Is" and "Subject To"

I am a little confused. You provided an "as is" and "subject to" value for the FHA report?