Organizing AL State appraisers against the State Board

[JonB]

Do any other AL appraisers find the restrictions the State Board has put on appraising manufactured housing as real estate absurd?

For those of you that don't know the State Board in AL is defining how manufactured housing is to be appraised is their state. This is no a recommendation of guidance by the board it is an enforced law.

They state that for a home(any home factory built or not) to be appraised as real estate it must be place on a HUD/FHA approved foundation (poured concrete below the frost line), regardless of if the financing is conventional. I have also heard rumors that they are telling appraisers that they should only use comps that have this same type of foundation.

For many lenders (both Fannie Mae and Freddie Mac) this is overkill, and by requiring this it is making it impossible to appraise mobile homes in AL and therefore get a loan on one, and therefore buy one. This is economic prejudice against factory built housing.

What I am interested in knowing is are there AL appraisers that agree that the State board (an unelected body making policies) has over stepped their bounds and in so doing not only has affected the commerce of the state as a whole in regards to appraisal industry but also the loans and purchasing of factory built housing.

If so would you be willing to sign a petition as such to send to the governor and get him involved.

Thank you

 

[rtubbs]

JonB

I think you are misinterpreting the boards position. My reading of the information at http://www.reab.state.al.us/news/manuf_hous.htm says that the foundation has to comply with either HUD or Fannie Mae guidelines. Let me know if I'm wrong.

 

[Jeff Horton]

I think first thing is we need some clarification from the Board. AND they should have sent something out to all the Appraisers. I stumbled up on this requirement on the web site. I was not aware of this till recently and I do appraise MH's fairly regular. I wonder why we were not notified by letter of this?

Direct from the web site:

"In the absence of well defined guidelines that identify the criteria necessary to meet the standard of “permanently affixed”, the Board officially recognizes HUD’s Permanent Foundation Guide for Manufactured Housing as set out in Handbook 4145.1, REV-2, CHG-I, effective February 14, 1992 and Fannie Mae’s guidelines as set out in Section 304, Page 730 of Fannie Mae publication Property and Appraisal Analysis (11/16/94 Ed.)."

I found and read (not necessarily understood) the HUD’s Permanent Foundation Guide for Manufactured Housing. You have to have more of an engineering background than I have to understand it. But it boils down the definition of a permanent foundation. What exactly is that?

Well I found that definition and it is still not really clear. Basically it says

1 Properly rated anchorage to prevent uplifting......

2 Properly sized footing .........

3 Footing below the frost line. (I think our frost is line is 0"?)

4 lateral stability. (from the anchors)

Now that I found that I still don’t know. I think we need to get the board to give us some guidelines that we can understand. I am not sure I want to appraise any MH's right now because after reading the guidlines I dont think appraisers are qualifed know if it the foundation is acceptable.

If it's now we use the NADA method to appraise it but I dont know any lenders that will accept NADA appraisals. I have one that has been looking for over 2 years for a company that will.

 

[cebo]

I think that Fanniemae needs to clarify the foundation question. HUD says it has to be on poured in place concrete footings. If less than a year old certified by a structural engineer. If more than a year old the appraiser is supposed to get under the home to scratch around for the concrete. If an FHA is ordered on a MH I won't even accept the assignment without an engineer stating the foundation complys with HUD guidelines.

For the FNMA question. The MH addendums that the lender sends always asks in the subject is "pemanently affixed" or has a "pemanent foundation". If its not poured in place concrete with mortared block piers & skirting I really don't think it could be considered pemanent. Even with this a good mover can be wheeling off with the home by dinner time.

I called FNMA a few weeks ago & asked for a copy of their appraisal guidelines. His first 2 questions were "The MH guidelines?" & "Are you from Alabama?". What he sent me said the home must be permanently affixed. That's it. My specific question was what does this mean? 99% of the homes are stacked conc blocks set upon a 4" solid cap block, vinyl skirting, & metal straps tied to anchors screwed into the ground. According to the guy at the service policy center pemanently affixed means that the home was set up to local code. In our case that meant installed to state regs. Most homes that have been set up in the past few years has a certified installation sticker on them. Until I get further clarification I am desribing the foudation in detail & stating that per the service policy center @ FNMA the subject is permanently affixed.

 

[Jo Ann Meyer Stratton]

I had read the article some time ago and was in complete agreement with it, in fact I have been referring people to the article when discussing manufactured homes.

What is the procedure in Alabama for the assessment and taxation of manufactured homes? How do the assessment authorities determine whether a home is taxed as real property or as personal property? In Arizona we have a recorded Affidavit of Affixture that enables the home to be taxed as real property. That affidavit has absolutely nothing to do with the physical installation of the home. But a manufactured home cannot get financing as real property until that affidavit is recorded and ownership records, deeds of trust, etc are then handled just like a site built home.

As far as physical installation, it does become a gray area. HUD requires the foundation supports/piers under the home and the perimeter enclosure to be concrete, or masonry or pre-treated wood. HUD also requires anchors or tie downs attached to the concrete footings underneath the foundation. HUD will not accept steel piers for foundation support. Also the National HOC Reference guide requires the foundation of all manufactured homes to be inspected by a licensed engineer--which means a licensed engineer does the crawling and digging under the home--not the appraiser. The appraiser puts a condition on the VC sheet that an on site physical inspection by a licensed engineer is required.

Fannie Mae has new guidelines for manufactured housing and everything else that goes into effect June 30. You can down load it to your computer at http://www.srappraisal.com/FNMA Download the 4_12 file, the other file is the old property and appraisal chapter. Their requirements are still in Section 304. Their new statement reads "We require the factory built home to be permanently affixed to a foundation system that is appropriate for the soil conditions of the site and designed to meet local and state codes." Fannie Mae does not require anchors or tie downs unless the local authority requires them. So if Alabama has an inspection system for the installation and of the foundation system by either city, county or state inspectors and they have approved that foundation, it is acceptable to Fannie Mae; Fannie Mae does not have specific required materials like HUD.

Everybody requires the wheels, axles and tongue to be removed. Then that home is as permanent as a site built home on a crawl space with a pier foundation. Some type of perimeter enclosure would be recommended/required to give the manufactured home the appearance of similar site built homes in the subject neighborhood. Yes, the wheels, axles, and tongue can be reattached but so can a site built home be placed on a trailer and hauled hundreds of miles away. Which includes in Arizona masonry constructed homes on concrete slabs that are moved hundreds of miles.

Actually, in my opinion, Alabama's Real Estate Appraisers Board article is very informative, clear cut and does not create any problems--that is why I have referred it to people. If the appraiser considers the home to be permanently set up, all local applicable legal requirements and codes have been met--an appraisal on a URAR or 2055 can be completed without any problems (value is another story). You can read my complete opinion in my article on the NAIFA website. Both Alabama and I do need to do some updating though because of Fannie Mae's new guidelines that go into effect in five days. My article is at http://www.naifa.com/gram/2001oct/stratton-oct01.html

 

[JonB]

You all have very accurate assessments of the situation. At first glance the information provided by the State board does look clear and straight forward. If only that were the way they actually are enforcing it. I spoke with Barry Hollyfield who in very impolite and unprofessional terms states that they need the foundation to be to BOTH Fannie Mae and HUD. I expressed my confusion and requested clarification, and also to clarify that they "recommend" this is how one would approach this situation not that they "require" it since they are not a legislative body that can create state laws. He also stated that the county assessors and zoning officials "don't know what they are doing" and that even if the county or other municipality has there own guidelines on what they consider Permanent that I need to override that and use both HUD and Fannie Mae. I asked him why hey thought he(they) could feel that they have the power to determine zoning and other issues decided upon by elected officials, his response was "I report to no one, the board has no one to answer to, this is the way it is going to work an is not going to change."

Like I said, they are overstepping there bounds and are becoming some kind of appraisal gestapo.

And getting clarification is a whole other thing, depending on when you call you will here any number of differing ideas. I encourage you to call Barry if you would like but be prepared to be in more confused then you were before you called him.

I think the big key for me is that all of this is not presented as guidance to confused appraisers. Suggestions to tackle tough property. Leaving it ultimately up to the appraiser to consider all of the factors and appraise it the way he or she know will best reflect the market and the value of the subject, isnt that what appraising is. But they do not do that at all, it is there way only and if you dont do it that way they threaten to suspend you. They spend all this time threatening us good appraisers looking to properly appraise real estate rather then going after the number pushers and the "deal" makers on all the ugly stick built refi get all my credit cards no down payment crap.

I appreciate all of your incites, but like I said they are trying to do things they do not have the power to do. I want to get the governor to smack them up side the head and tell them to be more reasonable. It is affecting a large amount of commerce and the governor seems to hold that in the highest regard.

 

[Bob Ipock]

Jon,

This kind of stuff will continue to happen as long as appraisal boards are made up of political appointees based on contributions made, party affiliation, favors owed etc., rather than on qualifications, appraisal knowledge, honesty, ethics and an understanding that the best way to "PROTECT THE PUBLIC" is to engouage, support, educate and work with appraisers who want to do the right thing.

We need more "average Joes and Jospehines" on appraisal boards across the country. I don't see any push to make it happen by appraisers on this Forum or anywhere else. We are destined for more of the same until practicing appraisers speak up...and out.


Bob

 

[Alan Simmons]

JonB:

I think there is already a group of Alabama Appraisers trying to organize. If I remember correctly they call themselves the Alabama Appraiser Coalition [Board Watch]. I am afraid that I do not know too much concerning their efforts. Contact Ev Brooks in HSV if you would like any information.

Earlier this year I was told that MH salesmen were licensed (2 years ago) in part to stop “Realtors” from encroaching on their territory. There was some sort of turf war. Maybe the AAB actions are in retaliation
.
My first question is where are the MH and lending industries? They are the one that should be fighting this battle. How long until they mobilize? Having seen what passed as MH appraisals in the past I can understand why the Board did something. This is not to say I agree or disagree with their methods or conclusions, but I am VERY interested in seeing how the chips fall.

My second question is who is the Board protecting? Were they inundated with complaints from lenders or owners? What happened to facilitate the new rules? They had to start somewhere.

 

[cebo]

There is one qualification for a MH to be taxed as real estate in Alabama. The owner of the home & land must be the same. I believe that prior to 91 this was also the case, but in 91 the dept of revenue decided to send a manual to county tax offices that was sort of a NADA type book where they divined the MH cost per Mfg/yr (like they do with cars) & then the land was added. I think it was in 99 they went back to measuring & classing the homes as real estate. If you rent the lot then you assess as personal property & pay like you pay for a vehicle.

Also, just a few years ago the state passed laws stating that MH movers had to be licensed & that the homes were to be tied down. That usually means the stacked block piers, a long rod that screws into the ground & is attached to metal straps that are attached to the frame. My county has no regulations concering permits, zoning, or codes other than a .34 acre site that will perk.

Joann has HUD updated the guidlines for MH over 1 year? The handbook says (for MHs over 1 year old) "The appraiser must inspect the crawl for the following: poured in place conc. footing below the frost line, etc." I require the engineer's report anyway because I don't want the responsiblity.

 

[George Hatch]

Not to beat a dead horse.....

his response was "I report to no one, the board has no one to answer to, this is the way it is going to work an is not going to change."

Actually, I look at this as a good news-bad news scenario.

The good news is that the state board has an opinion and they have put it in writing. Appraisers in their jurisdiction have a written standard to conform to, even if they don't agree with it. Right or wrong, appraisers in that jurisdiction can't be punished for following that rule. This is far better than having an unwritten standard of conduct or making the rules up on the fly, as has been alleged of other boards.

The bad news (assuming the state board was quoted correctly) is the state's concept that they make up all the rules and answer to no one. Setting a appraisal practice that only applies to their state's appraisers does nothing to contribute to standardized appraisal practice. Particularly when the subject property is being mortgaged, bought, sold, or taxed by an out-of-state entity. I don't know what the laws are in Alabama regarding these types of properties; it may be that their state law already has a rigid definition and the appraisal board is looking to make sure that definition is observed in their appraisals. Based on the original post above, it doesn't sound like that's the case here.

One of the complaints that some of the state appraisal boards are making in regards to the current system is that the Appraisal Subcomittee sets policy and forces the states to comply without accepting input from the states or individual appraisers. For a state board to (allegedly) openly state that they answer to no one and things are never going to change very much sounds like the pot calling the kettle black.

Let us hope the Alabama board continues with the practice of publishing and codifying their specific appraisal regulations and positions; but also chooses to adopt standardized and reasonable appraisal practices that will better conform to a nationwide standard.


George Hatch