Should I note the FHA MPR (minimum property requirements) comment for FHA 1004 exterior reporting?

[ipari21]

I recently performed an FHA 1004 Exterior reporting, I just noted The subject property may or may not be met the FHA MPR ..., but AMC condition is insisting the FHA MPR comment should be noted with extraordinary assumption.
The property can not observe deficiencies, observed garage conversion to living space from the street level.
1. Is the MPR comment mandatory even for the exterior reporting?

According to the owner, the garage conversion has been performed about 60 yrs ago with permits, but no permit had/provided. It deemed converted with no permits. Typically illegal conversion may be involved safety or health issues.
2. Should I need to report 'as-repair' with this issue?

Any advice can be helpful. Thank you.

 

[Mike Ault]

Extraordinary assumptions are your friend in this situation. How would you deal with the garage that was possibly illegally converted in your appraisal if you laid your own eyes on it? Most of the actual health and safety issues with illegal conversions lie hidden behind sheet rock anyway. I did precisely 1 FHA exterior appraisal under the new protocols because of situations like this, I don't like having to issue so many disclaimers over so many important things either. That being said people still need FHA loans during the pandemic and we have to do the best we can to serve the public in a socially responsible manner. In some cases that means exterior appraisals with the appropriate extraordinary assumptions is the best we can do. The MPR comment is required even on exterior assignments. Illegal garage conversions and the best way to deal with them can ignite several days of heated debates on this forum, FHA or otherwise so I cannot get you any solid advice on the "as is/as repaired" issue. Make sure that the homeowner has supplied ample photographic evidence for you to make the call and the fact that you didn't actually lay your eyes on the interior due to ongoing pandemic concerns will help you to craft a pretty convincing disclaimer whichever route you go.

 

[ipari21]

Extraordinary assumptions are your friend in this situation. How would you deal with the garage that was possibly illegally converted in your appraisal if you laid your own eyes on it? Most of the actual health and safety issues with illegal conversions lie hidden behind sheet rock anyway. I did precisely 1 FHA exterior appraisal under the new protocols because of situations like this, I don't like having to issue so many disclaimers over so many important things either. That being said people still need FHA loans during the pandemic and we have to do the best we can to serve the public in a socially responsible manner. In some cases that means exterior appraisals with the appropriate extraordinary assumptions is the best we can do. Illegal garage conversions and the best way to deal with them can ignite several days of heated debates on this forum, FHA or otherwise so I cannot get you any solid advice on the "as is/as repaired" issue. Make sure that the homeowner has supplied ample photographic evidence for you to make the call and the fact that you didn't actually lay your eyes on the interior due to ongoing pandemic concerns will help you to craft a pretty convincing disclaimer whichever route you go.

Thanks for your advice.
Yes, the garage conversion is a headache for me.
The conversion was observed from the street level and I assumed maybe some of the safety issues on it (something like an illegal kitchen etc).
Maybe I have a sleepless night today.
Thanks again.

 

[Meandering]

I don't know but,

wasn't there are a requirement that if the interior could not be verified, EAs could not be used and the scope of the work had to be changed to include an interior inspection? Or the assignment had to be declined?

Seems I've read that a few places.

But why would you do an FHA appraisal as exterior only?

 

[glenn walker]

BELOW IS THE GUIDELINE: FOR A COVID-19 EXTERIOR FHA.

Exterior-Only Option when FHA done on the 1004

Exterior-Only Option The updated protocols and exhibits under the Exterior-Only Option are: •Appraiser will observe the Property and Improvements from-at least-the street;• The Appraisal will be completed “AS IS” unless Minimum Property Requirements (MPR) related deficiencies are observed from the street or otherwise known;• The Appraiser may utilize extraordinary assumptions when necessary;• At a minimum, the exterior photos-must include the front and sides of the dwelling (rear photo is not required);•Front view of each comparable utilized is required. Multiple Listing Service (MLS) photographs are acceptable to exhibit comparable condition at the time of sale; however, Appraisers must include their own photographs as well, to document compliance;• Interior photos and sketch are-not required; and• The Map Reference field-of the appraisal form-must be reported as Exterior.


Personally I would have done it "As IS" because the exterior protocol on FHA allows you to declare the assumption that the garage conversion does not have any H & S issues -As far as the permit-FHA does not require permits unless there is a H & S issue and you have no idea, because you have never even been inside the garage.

Also I highly advise that you learn to use the word Non-Permitted or No Permit Found rather than the word "illegal. which gets the Red-Lights turned on. by Underwriters and Reviewers. Think of it like a traffic ticket, when pulled over the officer writes you a ticket for the infraction, he does not tell you that you just did something illegal therefore you are committing a crime. Garage conversion and Non-permitted room additions may be a code compliance infraction at best , but most are able to be cured or mitigated one way or another if push comes to shove.

Example-Exterior Only Report. The appraiser observed from the street the detached two car garage had its door removed and it has been converted , a follow up call to the point of contact confirmed that it was done approximately 50 to 60 years ago. The visual observation from the street did not show any evidence of any deficiencies or H & S issues that would have a negative effect on future sale or marketability. Based on the visual observation from the street and contact with Owner-Realtor etc , the home meets ( MPR )