REL for FHA Condo

[redfish]

Opinions from the forum regarding

1.) Remaining Economic Life for FHA condo appraisals, include or impossible to determine?

2.) Combination of REL for the project and common elements with the REL of the air and cosmetic elements of the unit (and mechanicals in some cases).

The reason I ask is we are having a polite dispute about this one with a client and within the office. I am checking the letters manuels and everything else while I wait for replys, hopefully someone beats me to it.

 

[redfish]

Does anyone have any opinions on this?

 

[ghrousseau]

I'll try to research it for you. Our DE underwriters seem to make the determination of the remaining economic life on the HUD Form 92800.5B which is the Direct Endorsement Statement of Appraised Value that they sign. The underwriters I work with use 70 years as a baseline and subtract the actual age from 70 years to get a REL figure. Most appraisals I have been reviewing are doing the same or leaving it out of the report. One thing to keep in mind on Condos: Even if the project is approved by FHA and shows on FHA connection as approved, they require 51% owner occupied units in the project. The underwriter will condition for a 51% letter from the association. If you find in your research there is more than 50% investor units in the project call your client asap, because it will be a problem.


Hope this helps.

 

[redfish]

Thanks,

After reading my original post........ it doesn't make much sense. So here are my thoughts restated.

What elements would you consider in the determination of REL for an apartment style condominium and would this be a requirement for a FHA appraisal. Opinions please.

 

[Mike Boyd]

Opinions from the forum regarding

1.) Remaining Economic Life for FHA condo appraisals, include or impossible to determine?

2.) Combination of REL for the project and common elements with the REL of the air and cosmetic elements of the unit (and mechanicals in some cases).

The reason I ask is we are having a polite dispute about this one with a client and within the office. I am checking the letters manuels and everything else while I wait for replys, hopefully someone beats me to it.

FHA considers REL of a property assuming typical upkeep and maintenance. That said, if the HOA is not functioning properly or there is no provision in the condo docs. for the HOA to provide exterior maintenance then you have another problem you should report along with a possibly shortened REL. Also, if a specific location is in transition from residential to commercial or industrial, that, too, could affect REL.