Two homes/One Lot for Reverse Mortgage?

[Gina Martin]

Per tax records the subject property has two homes on one lot. This is for a Reverse Mortgage. I'm not sure what the regulations are, is this allowed? Please help! I have not done the inspection yet. Thank You for any help.

 

[hastalavista]

Gina-

You are FHA approved, correct?
Follow FHA guidelines for the process.
Is it the two-improvements/one-lot that's throwing you? Identify the subject's zoning and determine how the subject's current use/configuration conforms/fits to what is allowed: (duplex, SFR w/accessory unit, etc., SFR with non-permitted unit, etc.).
Take it from there- I'm not sure what "regulation question" you have?

 

[Gina Martin]

Yes it's the two homes on one lot that has thrown me. I am FHA approved and I din't see where it said it is not permitted for two homes to be on one lot and just wanted to make sure all the procedures are the same. The city planning says this is now zoned commercial and it is legal-non conconforming. If burned down they could be rebuilt to the same specifications. The tax record county use code is: Trans Comm Hgh Best. As far the the best use goes, subject is located on a high traffic main street, right on the outskirts of town. What procedures are taken to determine if the highest and best use is commercial? This situation is unique to me. All the homes I've appraised have been located in a residential neighborhood, zoned SFR, so highest and best use has never been an issue. Thought I'd ask before I get all those books out! Thanks for any help.

 

[hastalavista]

What procedures are taken to determine if the highest and best use is commercial? This situation is unique to me. All the homes I've appraised have been located in a residential neighborhood, zoned SFR, so highest and best use has never been an issue. Thought I'd ask before I get all those books out! Thanks for any help.

A tough-one, for sure! You may have to get out the books.

The "no-help" answer (from me) is to determine if the subject's site, vacant, would exceed the value of the subject "as improved". Another way would be to determine what the likely buyer of such a property would do with it? Purchase it to use as a residence or purchase it to develop?

I suppose what I would do is to research the area and see what kind of development has occurred in the past (the more recent, the better); has their been purchases of residential properties that have been then torn-down and developed into commercial use? Are there any current properties listed with such potential?
By comparing a past sold property or current listing of a residential property in this commercial zone with a similar property outside of the commercial zone, and if that closed property has been developed or the listing property is advertised as having development potential, and then if the comparison of the residential zoned property shows that the commercial properties sold at a premium (even with the heavy traffic influence), that would be a good argument that the HBU is something other than residential. Calling the local agents who specialize in these properties would be something I'd do too.

The only "twist" I see in your case is that the intended use of the assignment is to provide a value specifically for a Reverse Mortgage (backed by FHA). As you know (but others who read this thread may not), this program is designed to allow seniors to stay in their home and give them some kind of cash-flow to assist in their living expenses. Its a great program.
I don't know if FHA has some unique exception that would allow the "as improved" use to be acceptable if the HBU is something else? If you find out the answer to that question, please post to let us know!

Also, search the HBU threads in the residential forums; much discussion by those who really know the ins & outs of this type of analysis (I am not one of them) can be of great help.

Good luck!