One-unit Housing Trends In Neighborhood Section

[Frederick R. Ruffell]

I don't do a lot of Mortgage Origination work these days but I do an occasional assignment to stay in the game.
Here is the part of the current assignment's engagement document that give me pause:
"Neighborhood Price Range and Predominant Price. The price range must reflect high and low prevailing prices
for residential properties that are comparable to the property being appraised. Isolated high and low extremes
should be excluded from the range, which means that the predominant price will be that which is the most
common or most frequently found in the neighborhood."

The use of the words "residential properties that are comparable to the property being appraised." is what gives me pause.

Is there anything in FNMA guidelines that states we are to use only "residential properties that are comparable to the property being appraised" in the Neighborhood Section, One-Unit Housing Trends analysis?

I have always used all sales of "One-Unit" properties in the neighborhood which includes SFR, condos, Manufactured, and Co-op's to determine Property Values, Demand/Supply, and Marketing Time.

Your Opinions are welcome but I also need to know if there is any guidance from FNMA.

Thanks!

 

[BarrySW1963]

That particular section needs to match the trends of the 1004MC.

 

[The Bob]

The only part of that section that should match the 1004MC is the "One Unit Housing Trends" section. "Neighborhood Characteristics", "One Unit Housing" (Price and age) and "Present Land Use %" should all reflect the entire neighborhood.
Here's a recent FAQ that addresses this. Notice it applies only to the "Trends" section.

Q17. Are the trends that are reported on the Market Conditions Addendum to the Appraisal Report (Form 1004MC) the same trends that are to be reported in the One-Unit Housing Trends section of the appraisal report (Form 1004)?

Yes. The conclusions regarding trends that are obtained from the Form 1004MC must be the same trends reported in the Neighborhood trends section of the Form 1004. The information reported on both forms must be consistent to provide the lender with a clear and accurate understanding of the market trends and conditions present in the subject neighborhood, based on properties that are considered competitive with the subject being appraised.

https://www.fanniemae.com/content/FAQ/appraisal-property-report-faqs.pdf

 

[Rich Heyn]

Here's a link to a blog that specifically addresses this issue: https://www.aciweb.com/1004mc-revis...edominant-price-and-age-rangepredominant-age/

 

[Frederick R. Ruffell]

Here's a link to a blog that specifically addresses this issue: https://www.aciweb.com/1004mc-revis...edominant-price-and-age-rangepredominant-age/

Thanks Richard! Can you point me to where specifically in the FNMA selling guide or other publications where it spells out "The One-Unit Housing Trends are Submarket specific. That is, they apply only to neighborhood properties that are comparable to the subject." It is confusing that the form says "One-Unit Housing Trends" and not "Comparable One-Unit Housing Trends". The 1004MC does use the word "Comparables" through out the form.

 

[Deleted member 134708]

I personally state in my reports the 1004 pre-printed language conflicts with Fannie selling guide and Fannie FAQ. I state page 1 is all 1 unit housing trends. 1004mc is comparables only. I state to not mislead reader of report, report directions followed since that's what they are reading and I know 100% they have in front of them at the time.

I sleep just fine at night doing it this way as it's fully explained why.

Change page 1 to say "comparables trends" and problem solved.

 

[Frederick R. Ruffell]

Here's a link to a blog that specifically addresses this issue: https://www.aciweb.com/1004mc-revis...edominant-price-and-age-rangepredominant-age/

Also is it possible to report the Predominant Price in the One-Unit Housing section as a range when using UAD format? My software (ACI) does not appear to.

 

[Frederick R. Ruffell]

I personally state in my reports the 1004 pre-printed language conflicts with Fannie selling guide and Fannie FAQ. I state page 1 is all 1 unit housing trends. 1004mc is comparables only. I state to not mislead reader of report, report directions followed since that's what they are reading and I know 100% they have in front of them at the time.

I sleep just fine at night doing it this way as it's fully explained why.

Change page 1 to say "comparables trends" and problem solved.

nottrav, thanks for the response. I too put the following language in all my 1004MC:
"The above information is based upon a search of "Comparable" LISTINGS (i.e. Active, Pending, Sold, Cancelled, Expired, and Withdrawn) specific to the subject property within the subjects Neighborhood/Market Area as reported by the local MLS. The conclusions in the Neighborhood section of the 1004 are based upon a search of all SALES of ALL one unit residential property types within the subjects Neighborhood/Market Area. As such the trends indicated can be different. ":

However if there is published guidance by FNMA somewhere I think we are duty bound to know of and implement said guidance. I will still maintain that if I use only "comparable" sales in the One-Unit Housing section then the amount of Data Points or population will be too small to draw any statistically meaningful conclusions in most "neighborhoods" here in San Diego County.

 

[Frederick R. Ruffell]

The only part of that section that should match the 1004MC is the "One Unit Housing Trends" section. "Neighborhood Characteristics", "One Unit Housing" (Price and age) and "Present Land Use %" should all reflect the entire neighborhood.
Here's a recent FAQ that addresses this. Notice it applies only to the "Trends" section.

Q17. Are the trends that are reported on the Market Conditions Addendum to the Appraisal Report (Form 1004MC) the same trends that are to be reported in the One-Unit Housing Trends section of the appraisal report (Form 1004)?

Yes. The conclusions regarding trends that are obtained from the Form 1004MC must be the same trends reported in the Neighborhood trends section of the Form 1004. The information reported on both forms must be consistent to provide the lender with a clear and accurate understanding of the market trends and conditions present in the subject neighborhood, based on properties that are considered competitive with the subject being appraised.

https://www.fanniemae.com/content/FAQ/appraisal-property-report-faqs.pdf

Link does not work, can you re-post or redirect me to the source, Thanks

 

[RSW]

Fannie Mae wants page 1 to match the 1004mc which is what is comparable to the subject. FHA and USDA wants all sales reported on page 1. There is a difference.