HUD - Site Condo on a CONDO Form????

[Paula Lombardo]

Has anyone been conditioned by HUD to put a single family/ site condo on a condominium form? I have?? I went through this a few years ago with out of state banks that were not familiar with site condos. I wrote letters and explained what a site condo was and why it could not and should not be put on a condominium form. Now, I get this as a condition from HUD: written just like this: Provide satisfactory appraisal on condo forms to support $224,000. (Site condo PUD). (HUD requires on condo form even if site condo). Should I fight with them, or is this just the way it's going to be? Does anyone know? Thanks for any help you can be.

[Peter Spannenberger]

I'v seen a lot of confusion on this, even from underwriters. But the fact is that no matter what type of condo your talking about, you are appraising property rights not style. "Condominium" is a form of ownership, no matter if it is attached or detached. Site condo's may be detached, have a private fenced yard and appear to be more similar to a SFR. But it is still classified as a condo, as all the properties have a site in common as seen on the plat map. The comps used should also be similar condo units and not SFR's, even if the condo is a detached site condo.

[Paula Lombardo]

So adjustments for land size should just go where ever makes sense? And all the questions that to not apply should be filled in with N/A? Well, this makes a lot of sense. Go government.

[Glenn Sarlitto]

Paula,

Is this a Detached Condo?

Be that as it may, if you feel you need to adjust for site and have ample support for site adjustments then create a line for Site on the Condo form Page 3 of 6 in the grid section.

Not sure what questions you have that do not apply and that would be filled in with N/A.

I tend to agree with Peter in that you are appraising a Condo and the appraisal report should be written on the Condo form. I also agree that I would not typically use SFRs for comps. I would try and find similar condo units.

Best advice I would give you is not to make it more difficult than it is. Keep it Simple/Stupid just like the Real Estate Market typically is.

One more thing regarding the HUD request....did the request actually include the value to support?

Regards,

Glenn Sarlitto
ValSpec Appraisal & Marketing Services

[Paula Lombardo]

Not a detached condo. A single family home. THE ONLY REAL DIFFERENCE IS THAT THE SITES ARE DEVIDED AND RECORDED BY CONDOMINIUM DOCUMENTS RATHER THAN A PLAT. LOT SIZES ARE GOVERNED BY THE SAME LOCAL ZONING RESTRICTIONS THAT WOULD APPLY TO TRADITIONAL SUBDIVISIONS. THE DISTICTION BETWEEN PLATTED AND SITE CONDOMINIUM SUBDIVISIONS ONLY INVOLVES THE STATE LAWS USED TO DEVIDE AND CONVEY THE LAND ITSELF. IT HAS NOTHING TO DO WITH THE HOMES OR THE QUALITY OF THE SITES. THE ROAD MUST BE BUILT TO LOCAL ROAD STANDARDS. SITE CONDOMINIUM SUBDIVISIONS ARE GAINING IN POPULARITY. DEVELOPERS CHOOSE THE SITE CONDOMINIUM METHOD OF LAND DIVISION BECAUSE IT REMOVES MANY OF THE DELAYS INVOLVED WITH THE STATE, COUNTY AND LOCAL DEPARTMENT AGENCIES UNDER THE CONVENTIONAL PLATTING PROCESS. And yes, they did write provide satisfactory appraisal on condo form to support etc...

[Glenn Sarlitto]

Paula,

No need to SHOUT your reply!

Still sounds like you have a condo. Here's a def I found online....

Quote On

A detached single-family dwelling characterized as a site condominium by the way it is platted by the builder, however it is still considered a condominium.

Quote Off

A few more questions I ask in these situtations How does the Subject's market area treat these; as condos or single family dwellings? Is your Subject part of a condo association? Is it recorded as Condo?

We have projects here in SE Wisconsin similar to yours. Single family dwellings that are part of a condo project. They are treated as Condos.

Cheers,

Glenn

[Paula Lombardo]

LOL I was not shouting, I promise you. I have a very long definition of a site condo in my appraisal form which I use when I complete an appraisal on a site condo.. I remember the day we had to fight with out of state banks, to get them to understand what a site condo in MI is......So, I wrote and I wrote it in caps....I copied a piece and put it in...sorry if I scared you!!! What you are speaking of, we have also, but our site condo is not what you are describing. Yes, when their are condos and retail and single family that would fall into a PUD. Well, I am doing this, just don't want to. Thanks for you help, everyone seems to agree, just do it and save myself headache, so I will.

[Peter Spannenberger]

Paula, I think the stip must have come from the underwriter and not HUD. If you are using similar condo units as comparables, the site sizes are typicly similar with no marketable difference, so no adjustments would be made for the site unless you have something out of the ordinary. You will be much better off by using the condo form and not trying to fight it. If the report was done on a 1004 form and HUD reviewed it, they might be sending you a letter of non-compliance.

[Cynthia]

I always put site condo's on the Condo form, they are Condo's. That is what a condo form is for and it only makes sense. As stated by another here Condo is a form of ownership and the form is designed to answer the questions for this type of property.

[Paula Lombardo]

If this is true, then the condo form was designed incorrectly as it does not have a place holder for some of the pertinent information that should be reported with regard to a site condo. Additionally, it asked questions that do not pertain to a site condo. There lies the confusion.

[Cynthia]

None of the forms cover all contingencies of information on a property. We are not ment to be just form fillers but to report what is pertent regardless of the form. The site condo, at least in our area here in CA is a fairly new "beast" coming well after the condo form was released.

Our forms also do not have specific days on market / sales price % list price etc etc etc. We work in a fluid environment which requires us to modify the information needed depending on the property and luckly for us IMHO they do not change the forms for every instance or we would never get use to any of the "standard" residential forms.

You are correct tho, the site condo does not fit "perfectly" on any of the forms. I have seen many agents and lenders not understand what a "site condo" is and to muddy the waters further (or not) FHA is now treating site condos as SFR's as far as no longer needing to have the project approved. The dear ol "site Condo" is a hybrid that is not a perfect fit but we are resourceful and can include the needed information as we have adapted to other changes in our industry.

[Paula Lombardo]

I have to agree that the site condo fits better into a SFR type. There is little similarity to a site condo to condominium versus a site dondo to a SFR. I have written letters to banks for years and they have excepted my explanation and allowed the site condo to be written on the 1004- not again, it appears there is resistance from HUD. I think in time, they too will come around.

[Joe The Appraiser]

well to end this thread here is the newest letter about site condos..

IMPORTANT INFORMATION

· Effective for appraisals with FHA Case numbers assigned on or after December 7, 2009; site condominiums are to be reported on FNMA form 1004.

HUD defines a site condominium in Mortgagee Letter 2009-46 B as “single family totally detached dwellings (no shared garages or any other attached buildings) encumbered by a declaration of condominium covenants or condominium form of ownership.”

Attached condominiums are to continue to be reported on FNMA form 1073. Condominium manufactured homes will also continue to be reported on FNMA form 1004C.

HUD Mortgagee Letter 2009-46 B is available for full review using the link below:

http://www.hud.gov/offices/adm/hudclips/letters/