PUD or No?

[Ostensibly]

I appraised a property that, as of the effective date, the common elements (pool, pickleball, etc.) were not completed, and per the borrower, they were not yet being charged mandatory HOA fees. There have been CCR's recorded, and it will be a PUD in the near future (less than 2 months). I did not mark the PUD box and also put $0 for HOA fees, and explained in an addendum the reasoning. The client asked that I mark the PUD box in a revision request. I readdressed it with the client, stating similar to what I had already told them. A month later, the borrower sent an email to the lender and me stating their intent to file a complaint against my report due to my not accounting for the PUD elements, which they feel "add a lot of value" to their home that I did not include. I responded to them and cc'd the client in a USPAP acceptable manner, citing the reasons that were already in the report. A week later the AMC requested I revise the report and check the PUD box. While it is my understanding that on the 1004 FNMA form, I would not mark the PUD box due to NO MANDATORY HOA fees. But some research has indicated that if CCR's have been recorded that it is a PUD that I should still check the PUD box. Thoughts?

 

[CCAAMO]

Do they have an interest in the common area?

 

[Dublin ohio]

Here are Fannies guidelines. Seems like you would check the pud box and explain.

PUD Project Requirements​

For a project to qualify as a PUD, all of the following requirements must be met:

• each unit owner’s membership in the HOA must be automatic and nonseverable,
• the payment of assessments related to the unit must be mandatory,
• common property and improvements must be owned and maintained by an HOA for the benefit and use of the unit owners, and
• the subject unit must not be legally created as part of a condo or co-op project.

Zoning is not a basis for classifying a project or subdivision as a PUD. Units in projects or subdivisions simply zoned as PUDs that include the following characteristics are not defined as PUD projects under Fannie Mae’s policies. These projects

• have no common property and improvements,
• do not require the establishment of and membership in an HOA, and
• do not require the payment of assessments.

Fannie Mae classifies PUD projects as either

• Type E—established PUD projects in which the developer has turned over voting control of the HOA to the unit purchasers.
• Type F—new PUD projects in which the developer has not turned over voting control of the HOA to the unit purchasers.

 

[Ostensibly]

Do they have an interest in the common area?

I would say yes. Below is from the CCR's.

"...and the owners of lots in Tract 4198-C shall be members of said Association together with all rights, privileges and obligations incidental thereto and shall be subject to the general plan for the protection, maintenance, development and improvement of .... as set forth in the Declaration; this Declaration of Annexation is for the mutual benefit of all owners in said .... and all Tracts therein; that Declarant hereby fixes the protective conditions set forth in the Declaration on all lots, parcels or portion of said Tract 4198-C, and all interest therein shall be held, leased, sold and/or conveyed by the owners or users thereof, each and all of which is and/or for the mutual benefit of the lots in Tract 4198-C as well as the lots in all other tracts of...., and shall run with the land, and shall inure to and pass with each lot and parcel of land in ..., Tract 4198-C and shall apply to and bind the respective successors in interest thereof and further are and each thereof is imposed upon each and every lot, parcel or individual portion of said subdivision as a mutual equitable servitude in favor of each and every lot, parcel or individual portion of the land therein as the dominate tenement."

 

[J Grant]

Imo, yes check the box, explain why you changed it and be done with it.

 

[glenn walker]

It's a Planned Unit Developed paying the dues or not being completed doesn't change what it was built designed and permitted for.

The Lender's Title Report Normally Has What's Called A PUD Rider Attached To Their Title Insurance.

 

[Ostensibly]

It's a Planned Unit Developed paying the dues or not being completed doesn't change what it was built designed and permitted for.

The Lender's Title Report Normally Has What's Called A PUD Rider Attached To Their Title Insurance.

While I get that, the UAD doesn't allow me to put a "0" in the hoa dues box. There are no HOA dues. Do I put a "1" in there and then just explain it in commentary?

The borrower is unhappy with my valuation and has expressed intent to file a complaint with the State Board against me for not valuing the PUD elements (that were incomplete as of the effective date and I couldn't find any data supporting any sort of anticipatory value based on lot sales vs other lots in the area.) So, just marking the box and explaining gives me more anxiety with a looming appraisal board review. I'm not worried about my value conclusion or support, but just don't want the reviewer to be like, "Well, you changed this portion, and FNMA says.... So you're wrong, here's a fine".

 

[J Grant]

While I get that, the UAD doesn't allow me to put a "0" in the hoa dues box. There are no HOA dues. Do I put a "1" in there and then just explain it in commentary?

The borrower is unhappy with my valuation and has expressed intent to file a complaint with the State Board against me for not valuing the PUD elements (that were incomplete as of the effective date and I couldn't find any data supporting any sort of anticipatory value based on lot sales vs other lots in the area.) So, just marking the box and explaining gives me more anxiety with a looming appraisal board review. I'm not worried about my value conclusion or support, but just don't want the reviewer to be like, "Well, you changed this portion, and FNMA says.... So you're wrong, here's a fine".

Imo, put a 1 or the symbol for unknown number that some keyboards have and explain the fees are not known as of X date by the appraiser..

If your comps come from the subject PUD, add a comment to the revision that the comps came from the same PUD with the value of the amenities baked into the prices, thus the subject market value opinion did include any PUD impact on appeal. A statement like that might shut down the validity of a borrower's complaint if they go that route.

 

[Dublin ohio]

The borrower is unhappy with my valuation and has expressed intent to file a complaint with the State Board against me for not valuing the PUD elements

So where did your comps come from? I would guess either from the same pud or a similar competing pud. The contributory value of the common elements should be baked into the sales prices