Violation of building codes question

[Mike Kennedy]

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[Mike Kennedy]

Welcome Houston,

It depends. Is it a safety or structural issue? If so, make it subject to repair on a hypo condition that repairs have been completed (check box2) or subject to an extraordinary assump that it doesn't need repair (cb 3).

One need to be careful in not to set him/herself up as code police. But if it is an obvious one, then you say "Houston...we've got a problem"

Here is Fannie's take on as is vs subject to


In what situations should a property be appraised "as-is" versus "as-repaired"?

[FONT=Arial,Arial][FONT=Arial,Arial]Fannie Mae permits an appraisal to be based on the "as-is" condition of the property as long as any minor conditions, such as deferred maintenance, do not affect the livability, soundness, or structural integrity of the property, and the appraiser’s opinion of value reflects the existence of these conditions. Minor conditions and deferred maintenance items include worn floor finishes or carpet, minor plumbing leaks, holes in window screens, or cracked window glass. Minor conditions and deferred maintenance typically are due to normal wear and tear from the aging process and the occupancy of the property. Such conditions generally do not rise to the level of a "required repair." Nevertheless, they must be reported. [/FONT]

[FONT=Arial,Arial]The appraiser must identify physical deficiencies that could affect the soundness, structural integrity, or livability of the property as part of his or her description of the physical condition of the property. These may include cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped roof shingles, inadequate electrical service or plumbing fixtures, etc. In situations where an adverse property condition may be observed by the appraiser but the appraiser is not qualified to decide whether that condition requires immediate repair, the property must be appraised subject to an inspection by a qualified professional. In such cases, the lender must have the property inspected and any material conditions repaired before it delivers the mortgage loan to Fannie Mae. The appraiser may be asked to update his or her appraisal based on the results of the inspection, in which case the appraiser would incorporate the results of the inspection and measure the impact, if any, on his or her final opinion of market value.[/FONT][/FONT]​

OP : obvious building code violations observed during visual observation


Part B, Origination Through Closing
Subpart 4, Underwriting Property
Chapter 1, Appraisal Guidelines, Appraisal Report Assessment
June 26, 2012
FANNIE re Illegal Use

Subject Property Zoning
Lenders must ensure that the specific zoning class has been reported in the appraisal, along with a general statement as to what the zoning permits.
The appraisal must include a statement that the subject property presents a legal conforming use, a legal non-conforming (grandfathered) use, or an illegal use under the zoning regulations; or that there is no local zoning.

Permissible Use of Land
Fannie Mae does not purchase or securitize mortgage loans on properties if the improvements do not constitute a legally permissible use of the land.
Certain exceptions to this policy are made provided the property is appraised and underwritten in accordance with the special requirements imposed as a condition to agreeing to make the exception. >>>>> see link below

Printed copies may not be the most current version. For the most current version, go to the online version at
http://www.efanniemae.com/sf/guides/ssg/. 556


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[residentialguy]

Not sure why you quoted my post.

 

[HoustonRE]

Very informative thanks a bunch!

 

[HoustonRE]

It was more general and an example would be if the owners converted their garage into a bedroom. I get everyone's response and I understand essentially I just continue business as usual and document the details in the reports. Thanks all.

 

[Mike Kennedy]

Not sure why you quoted my post.

OP If an appraiser see observe building code violations on a residential home what is her responsibility?

Your post focussed on Deferred Maintenance and CONDITION not illegal uses.:icon_lol:

 

[ZZGAMAZZ]

I hope to start working again after a long hiatus, so I'm a functional newbee.

I'm only familiar with the "as is" versus "as repaired" dichotomy in context of a REO assignment.

Is the distinction symonomous with "as is" versus "subject to" in a conventional report on a 1004 form?

 

[residentialguy]

OP If an appraiser see observe building code violations on a residential home what is her responsibility?

Your post focussed on Deferred Maintenance and CONDITION not illegal uses.:icon_lol:

It was added for reference of FNMA's stance...but I have a strong feeling that if the house has issues with soundness, structural integrity, or livability of the property....you probably have some code issues going on