by usezloan | Aug 12, 2021 | Financial study
융자지식191- ENVIRONMENT HAZARD
ENVIRONMENT HAZARD
Environmental risk exposures are items such as gas tanks, railroad tracks, high tension wires, UFFI,
industrial areas, radon, mold, or any other risk exposure. We will only accept properties with the above
characteristics that meet the following requirements:
1. If a property inspection by the appraiser discloses a high potential for environmental risk, Flagstar
Bank may require a Phase I Environmental Risk Report before determining a property’s eligibility. A
loan is likely to be conditioned for a Phase I Environmental Risk Report if the following indicators
are present:
• Properties that include or are close to an existing or former gas site
• Properties that have served as or are close to a refuse or waste disposal site
• Properties where the past uses or the surrounding uses include the storage or usage of
hazardous or toxic substances
• Properties suspected of containing asbestos material that is or may be easily friable, easily
crumpled or crushed to powder and capable of being absorbed in the environment
• Properties where emanation of radon gas from the soil may result in detrimental health
effects to the building occupants
• Properties where there are known hazardous conditions on or in the property’s immediate
vicinity where Super Fund sites exist within a 1 mile radius; where the site is in close
proximity to oil and gas production; where there is asbestos within the building structure that
may have an effect on marketability; where the site is a corner lot property and is known to
have been previously used as a gas station locale; or where the historic use of the property
to its residential zoning is cause for concern.
• Properties that show evidence of mold must have the mold remediated by a certified firm.
After the mold has been remediated, a satisfactory inspection must be provided.
An approved environmental risk auditor must prepare the environmental risk report and Flagstar Bank must
show as the client on the risk report.
2. A property may not be approvable due to environmental factors including, but not limited to:
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• Presence of a sanitary landfill or other solid hazardous or municipal waste disposal site on
the property
• Presence of friable asbestos or substantial amount of non-friable asbestos on the property
• Evidence of spills or soil or ground water contamination on or around the property
• Radon levels above acceptable standards on the property that can only be corrected
through large capital improvements
• Conditions that represent violations of applicable local, state, or federal environmental or
public health statutes and laws on or near the property
• The property is currently the subject of environmental litigation or administrative action from
private parties or public officials or the property is on a federal, state, or local environmental
hazard list.
• There must not be any evidence of leakage on gas tank. If the property has a well, we will
require satisfactory well certification.
All comparables used should have same characteristics, i.e., gas tank, railroad tracks, etc. The appraiser
must state this is common to the area and has no adverse effect on marketability.
FREDDIE MAC HAZARDOUS SITE DISCLOSURE
Purchase transactions using LPA response requires a signed and dated Hazardous Site Disclosure,
Doc #3607 (or similar document), prior to close when the underwriter is made aware of hazardous
property information that may adversely affect the market value, condition, or marketability of the
subject based on the below requirements:
• Disclosure is required if the hazard has not already been disclosed through a purchase
agreement, property inspection or appraisal that would have already notified the borrower,
• The hazard includes, but is not limited to, the presence of any contaminate site, hazardous
substance or other environment condition affecting the subject property, and
• The hazardous site issue(s) has not yet been mitigated or remediated.
FLOOD INSURANCE
Refer to Flood Insurance, Doc. #4603 for additional information.
HAZARD INSURANCE
Refer to Hazard Insurance Requirements, Doc. #4602.
by usezloan | Aug 12, 2021 | Financial study
융자지식190- RESALE RESTRICTED PROPERTIES
RESALE RESTRICTED PROPERTIES
Deed restricted properties or resale restrictions are a right in perpetuity or for a certain number of years,
stated in the form of a restriction, easement, covenant, or condition in any deed, mortgage, ground lease
agreement, or other instrument executed by or on behalf of the owner of the land. Resale restrictions may
limit the use of all or part of the land to occupancy by persons or families of low-income or moderateincome or on the basis of age, senior communities must comply with applicable law, or may restrict the
resale price of the property to ensure its availability to future low-income and moderate-income borrowers.
The restricted resale price provides a subsidy to the homeowner, in an amount equal to the difference
between the sales price and the market value of the property without resale restrictions. The resale
restrictions are binding on current and subsequent property owners, and remain in effect until they are
formally removed or modified, or terminate in accordance with their terms, such as at a foreclosure sale or
upon acceptance of a deed-in-lieu of foreclosure.
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Flagstar Bank must review the terms and conditions of the resale restriction.
FANNIE MAE
Allowable Resale Restrictions
• Income limits
• Age-related requirements (senior communities must comply with applicable laws)
• Purchasers must be employed by the subsidy provider
• Principal residence requirements
• First-time home buyer requirements as designated by the subsidy provider
• Properties that are group homes or that are principally used to serve disabled residents
• Resale price limits
Eligible Subsidy Providers
Eligible subsidy providers, or sponsors, of resale restrictions must be:
• Nonprofit organizations
• Churches
• Employers
• Universities
• Municipalities (including state, county, or local housing agencies); or entities that are
otherwise administering government sponsored, federal, state, or local subsidy programs.
The subsidy provider must have established procedures for screening and processing applicants.
Eligible Borrowers for Affordability Related Deed Restrictions
Eligible borrowers must satisfy the specific eligibility criteria and resale restrictions established by
the subsidy provider. If the borrower income limits for the resale restrictions differ from the income
limits for Fannie Mae’s HomeReady mortgage loans and the borrower income limits for the
HomeReady mortgage loans are more restrictive, the HomeReady income limits apply.
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Loan Eligibility and Occupancy Types
Eligibility Based on Type of Deed Restriction
Affordable Age-Related
Transaction
Types Purchase and Refinance
Products Loans must be fixed-rate or adjustable-rate mortgages with an initial fixed period of five
years or more
Borrowers
Must meet applicable criteria of the deed restriction.
Age-related deed restrictions generally apply to the unit occupant and frequently require
only one occupant to be aged 55 and over. In such a case, the borrower could be younger
than 55 provided there is a unit occupant aged 55 and over. This occupant can be a nonborrower household member or a renter in the case of investment property.
(It is permissible for both affordable and age-related requirements to apply to a single loan.)
Occupancy Principal Residence Only All Occupancy Types
Properties
One- and two-unit properties, PUDs,
condos, and co-ops
Mortgages secured by manufactured homes
and three- and four-unit properties are not
eligible.
One- and two-unit properties, PUDs,
condos, and co-ops (second homes must be
one-unit properties)
Mortgages secured by manufactured homes
and three- and four-unit properties are not
eligible.
Default or Refinancing of Resale Restriction Loans
The subsidy provider may retain the right of first refusal or option to purchase a resale restricted
property when the borrower is in default or the property is in foreclosure.
The terms of the right of first refusal or option to purchase must be specified in the terms of the
resale restrictions.
The subsidy provider must exercise its right of first refusal or option to purchase within 90 days of
receiving notification of the borrower default or the property foreclosure.
The subsidy provider may permit borrowers to refinance their mortgage and take cash out of the
transaction. However, the resale restrictions may limit the cash-out amount in order to protect the
subsidy invested in the property. Lenders must document that the subsidy provider has approved
the refinance transaction and should ensure that the cash-out amount complies with the provisions
of the specific resale restrictions.
Duration of Resale Restrictions
Fannie Mae will purchase mortgages secured by properties subject to resale restrictions:
• When the restrictions terminate automatically upon foreclosure (or the expiration of any
applicable redemption period),
o Upon the recordation of a deed-in-lieu of foreclosure, or
o When the resale restrictions survive foreclosure.
There are no restrictions on the length of the period in which the resale restrictions may remain in
place on the property.
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If the resale restrictions survive foreclosure, the lender represents and warrants that the resale
restrictions do not impair the servicer’s ability to foreclose on the restricted property.
If the resale restrictions terminate at foreclosure, the subsidy provider is not entitled to obtain any
proceeds from future sale(s) or transfer(s) of the property after foreclosure or acceptance of a deedin-lieu of foreclosure.
If the resale restrictions survive foreclosure, the subsidy provider is not entitled to obtain any
proceeds from the initial sale or transfer of the property after foreclosure, from the foreclosing
mortgage holder who obtained the property at foreclosure or pursuant to a deed-in-lieu of
foreclosure.
Resale Restriction Appraisal Requirements
In cases where the resale restrictions terminate automatically upon foreclosure (or the expiration of
any applicable redemption period), or upon recordation of a deed-in-lieu of foreclosure, the
appraisal should reflect the market value of the property without resale restrictions.
The lender must ensure that the borrower and appraiser are aware of the resale restrictions and
should advise the appraiser that he or she must include the following statement in the appraisal
report:
• This appraisal is made on the basis of a hypothetical condition that the property rights being
appraised are without resale and other restrictions that are terminated automatically upon
the latter of foreclosure or the expiration of any applicable redemption period, or upon
recordation of a deed-in-lieu of foreclosure.
In cases where the resale restrictions survive foreclosure or deed-in-lieu of foreclosure, the
appraisal must reflect the impact the restrictions have on value and be supported by comparables
with similar restrictions.
The appraisal report must note the existence of the resale restrictions and comment on any impact
the resale restrictions have on the property’s value and marketability.
Title Requirements
The source and terms of the resale restrictions must be included in the public land records so that
they are readily identifiable in a routine title search.
Delivery of Mortgage Secured with a Resale Restrictions Survive at Foreclosure
A Special Feature Code (SFC) is used to identify a loan feature not defined by other attributes. If
the resale restriction will survive foreclosure, the following SFC must be associated to the loan.
SFC- 630 – Used to identify a mortgage secured by a property with resale restrictions that remain in
place or survive in the event of foreclosure or acceptance of a deed in lieu of foreclosure.
FREDDIE MAC
Length of Resale Restrictions; Effect of Foreclosure or Deed-in-lieu of Foreclosure
There are no restrictions on the length of the period in which the restrictions may remain in place on
the property. A mortgage secured by a property subject to a resale restriction is eligible for
purchase if the resale restriction:
• Survives foreclosure or completion of a deed-in-lieu of foreclosure, or
• Terminates upon foreclosure or completion of a deed-in-lieu of foreclosure.
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If the resale restrictions survive foreclosure or recordation of a deed-in-lieu of foreclosure, the
subsidy provider is not entitled to obtain any proceeds from the initial sale or transfer after
foreclosure or deed-in-lieu of foreclosure, from the foreclosing mortgage holder who obtained the
property.
Whether the resale restrictions survive or terminate upon foreclosure or recordation of a deed-inlieu of foreclosure, once Freddie Mac has acquired title to the property as an REO, the subsidy
provider is not entitled to obtain any “excess proceeds” from Freddie Mac’s sale or transfer of the
REO property except for mortgages secured by properties subject to income-based resale
restrictions, see below for tolerance.
Right of First Refusal
For properties subject to resale restrictions, there must be a right of first refusal which must run to:
• The enabling authority or jurisdiction that imposed the resale restrictions, or
• The subsidy provider or program administrator
With a time period not exceeding 120 days from the date of written notice to the parties that the
restricted property is being offered for sale.
Public Land Records
The terms of the resale restrictions must appear in the public land records for the property in a
manner discoverable by a routine title search.
Restrictive Agreements and Restrictive Covenants on Title
Exceptions restrictive agreements or restrictive covenants of record related to cost, use, setback,
resale restrictions, right of first refusal, minimum size and building materials, and architectural,
aesthetic or similar matters (other than single-family-use restrictions on 2 to 4-unit properties) are
acceptable provided that the following conditions are met:
• The restrictive agreements or restrictive covenants do not create or provide for any lien that
would be prior to the lien of the Home Mortgage nor provide for the elimination of the lien of
the Home Mortgage.
• The terms and provisions of the restrictive agreements or restrictive covenants are
commonly acceptable to private institutional mortgage investors in the area where the
Mortgaged Premises are located.
• An endorsement to the title insurance policy affirmatively insures that no violation of any
such restrictive agreement or restrictive covenant exists and that any future violation shall
not result in forfeiture or reversion of title.
Payment of Financial Obligations
Any requirement in the deed restrictions requiring the owner of the property to make payments
under certain circumstances or requiring repayment of financial subsidies must state that the
payment obligation is subordinate to the lien of the First Lien Mortgage.
Appraisal Requirements for Properties with Resale Restrictions
The appraisal report must note the existence of any resale restrictions and include an analysis that
addresses any impact the resale restrictions have on the property’s value or marketability.
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• When a resale restriction survives foreclosure or a deed-in-lieu of foreclosure, the appraisal
must reflect the impact the restrictions have on the subject value and when applicable, be
supported by comparables with similar restrictions. If recent sales are not available the
appraiser should then use older comparables sales from the neighborhood or consider
similar restricted sales in competing neighborhoods. Comparable sales without resale
restrictions must be justified by the appraiser to support their use in the appraisal report.
• When a resale restriction terminates upon foreclosure or a deed-in-lieu of foreclosure, the
appraisal must reflect the market value without resale restrictions by using comparables that
are not resale restricted. The appraiser must include the following statement “This appraisal
is made on the basis of a hypothetical condition that the property rights being appraised are
without resale and other restrictions that are terminated automatically upon the latter of
foreclosure or the expiration of any applicable redemption period, or upon recordation of a
deed-in-lieu of foreclosure.”
Additional Requirements Applicable Only to Mortgages Secured by Properties Subject to
Income-Based Resale Restrictions
Eligible property types, mortgage products and mortgage purpose requirements.
• The mortgage must be secured by a 1 or 2-unit Primary Residence (not a Manufactured
Home). The property must be an attached or detached dwelling unit located on an individual
lot or in a Condominium Project or Planned Unit Development (PUD).
• The mortgage must be a First Lien conventional mortgage that is not a Construction
Conversion Mortgage or Renovation Mortgage.
• The resale restriction controls must be administered and controlled by the subsidy provider
or a program administrator.
o Must be managed by or housed within a state or local government, a government
sponsored program or non-profit corporation that is legally chartered in the State in
which it is located and has a 501(c)3 tax exemption from the IRA. The subsidy
provider may employ a third-party non-profit or a for-profit (as allowable by the
applicable jurisdiction) corporation as a program administrator to management the
program and resale restrictions.
o The resale restrictions are imposed by State or local governments, municipalities or
nonprofit entities, to create and preserve affordable housing
o Must provide home counseling services or has established partnerships with at least
one organization that does
o Has established procedures for screening, processing applicants and approving
transactions (when applicable, i.e. cash-out transactions)
o Has procedures to approve capital improvements on the property and guidelines to
allow the borrower to receive credits for any costs of capital improvements paid by
the borrower that are eligible by the subsidy providers program
• Cash-out refinances are permitted only if the subsidy provider or administrator approves the
transaction and the transaction meets the product requirements. Approval must be provided
and state the amount of proceeds the borrower may receive.
• The minimum down payment requirement for purchases must be based on the resalerestricted price.
• Under a HomePossible mortgage, the HomePossible income limits must still be met to
determine product eligibility, even if the subsidy or program limits differ.
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• If the income-based resale restrictions survive foreclosure or recordation of a deed-in-lieu of
foreclosure, the subsidy provider may be entitled to obtain “excess proceeds” (not to exceed
an amount equal to the subsidy provided to the previous property owner by the subsidy
provider and secured by a subordinate lien) from Freddie Mac’s sale or transfer of the REO
property if the resale restrictions allow a foreclosing mortgage holder, who acquires title to a
restricted property as real estate owned, to recover from the initial sale or transfer of the real
estate owned property an amount satisfying the total indebtedness previously secured by
the property, as well as any amount incurred during the real estate owned holding period
attributable to the real estate owned property.
Delivery of Mortgage Secured by Properties Subject to Income Based Resale Restrictions
A Special Feature Code (SFC) is used to identify a loan feature not defined by other attributes. For
income based re-sale provide one of the following SFCs, if applicable.
• SFC 630 – Mortgages secured by properties with income- based resale restrictions only that
terminate automatically upon foreclosure.
• SFC 631 – Mortgages secured by properties with income-based resale restrictions only that
survive foreclosure.
by usezloan | Aug 12, 2021 | Financial study
융자지식189- APPRAISAL PORTABILITY
PROPERTIES AFFECTED BY A DISASTER
When there are instances of disaster events such as tornados, flooding, etc. it is the responsibility of the
correspondent or broker to warrant that the subject property is in an acceptable condition. See Natural
Disaster Procedures, Doc #4915, for reinspection requirements.
APPRAISAL PORTABILITY
ACCEPTING AN APPRAISAL FROM ANOTHER LENDER
All requests to accept an appraisal that was ordered from another lender should be sent to
appraisal.review@flagstar.com.
• Underwriting will condition for a compliance certificate from the original lender showing that the
appraisal was ordered by the lender in a manner compliant with Fannie Mae and Freddie Mac
Appraiser Independence Requirements. We will only accept the certificate from the original
lender. Flagstar will not accept the Appraiser Independence Requirements compliance
certificate directly from the customer.
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• Appraisal Review will need to receive the appraisal from an AMC or a competing lender to
determine if it is compliant. Flagstar will not accept the appraisal directly from the customer.
• Upon receipt of the appraisal, and the Appraisal Independence Requirements compliance
certificate from the lender, Appraisal review will upload the appraisal for Underwriting to review
and the customer will be notified by the underwriter.
• The appraiser must not appear on Flagstar’s ineligible appraiser list.
• Appraisals must be submitted in a UCDP-ready MISMO 2.6 XML file. Key ID number SSR will
not be acceptable in lieu of XML file.
Under no circumstances, will Flagstar accept an appraisal transferred or uploaded to Flagstar by the
loan originator or any employee of the originating lender. The appraiser must not appear on Flagstar’s
ineligible appraiser list.
MULTIPLE APPRAISALS FOR SUBJECT PROPERTY
If more than one appraisal for a loan due to applicable law, regulation, lender policy, or otherwise, the
lender must
• Adhere to a policy of selecting the most reliable appraisal rather than the appraisal that states
the highest value
• Document the reasons for relying on the appraisal
• Submit the appraisal selected by the lender through the UCDP prior to delivery.
APPRAISAL RELEASE FROM FLAGSTAR TO ANOTHER LENDER
To have a Conventional or FHA appraisal transferred to a lender other than Flagstar complete and
follow the directions on the Appraisal Release Form, Doc. #3105. Flagstar Bank will provide a letter
stating the appraisal was ordered in compliance with Appraiser Independence Requirements (AIR). VA
appraisals cannot be transferred as they are ordered through WebLGY.
.
USE OF AN APPRAISAL FOR A SUBSEQUENT TRANSACTION
The use of an origination appraisal for a subsequent transaction is acceptable if the following
requirements are met:
• The subsequent transaction may only be a Limited Cash-Out Refinance
• The appraisal report must not be more than 12 months old on the note date of the subsequent
transaction. If the appraisal report is greater than 4 months old on the date of the note and
mortgage, then an appraisal update is required. Age of Appraisal and Appraisal Update
Requirements, for requirements for completing an appraisal update, must be met.
• The property has not undergone any significant remodeling, renovation, or deterioration to the
extent that the improvement or deterioration of the property would materially affect the market
value of the subject property.
• The borrower and the lender/client must be the same on the original and subsequent
transaction
PROJECT APPROVAL FOR CONDOMINIUM AND COOPERATIVE PROPERTIES
Refer to Conventional Condominium Guidelines and Conventional Cooperative Guidelines for project
approval requirements for attached condominiums and all cooperative properties.
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DETACHED CONDOMINIUMS
A detached condo is defined as any condo unit that is completely detached from other condo units in
the project. The unit may share no adjoining walls, ceilings, floors, or other attached architectural
elements (such as breezeways or garages) with any neighboring unit. A detached condo unit may be in
a project consisting solely of detached units or in a development containing a mixture of attached and
detached units. Site condos in which the unit owner owns the detached condo unit and the land upon
which the unit is built are a type of detached condo.
A project review is not required, but the project must meet the following requirements.
• Mortgage is secured by a single detached unit in a condominium project
• The subject is a detached unit and does not include manufactured housing units.
• Project cannot be a condo-hotel, houseboat, timeshare project, or a project with segmented
ownership.
• Appraisals for units in condominium project that consist solely of detached dwellings may be
documented on Form 1004 or 1073.
• The subject is covered by a Title Insurance Policy that includes an ALTA Form 4, condominium
endorsement, or its equivalent.
• The property is covered by hazard, flood, liability, and fidelity insurance
o Fannie Mae – Evidence of liability insurance is not required if the projects common
elements consist of greenbelts and contains no structural improvements or amenities
such as playgrounds or retention ponds and does not contain any commercial space
Freddie Mac – It is not required to determine the existence or adequacy of the
project liability insurance and/or the fidelity or employee dishonesty insurance for
a detached condominium unit reviewed under the detached condominium
projects review type.
• Unit holders have an automatic non-severable interest in the homeowners’ association and pay
mandatory assessments
• When using Loan Product Advisor or Desktop Underwriter, the property type must be submitted
as a Detached Condominium.
• A condo rider will be required at closing
• Special Feature Code must be applied to the loan
o Fannie Mae – SFC 588
o Freddie Mac – SFC H04
by usezloan | Aug 12, 2021 | Financial study
융자지식188- APPRAISAL WAIVER
APPRAISAL WAIVER
When DU or LPA response indicates the loan is eligible for an appraisal waiver (PIW or ACE/PIA) the
following requirements must be met. The eligibility must be retained on the final AUS response.
APPRAISAL WAIVER ELIGIBILITY
Eligibility for Use of an Appraisal Waiver with
Fannie Mae (PIW) and Appraisal Collateral Evaluation Freddie Mac (ACE/PIA)
Requirement Fannie Mae Freddie Mac
AUS Response Approve/Eligible Accept
Appraisal Type PIW PIA
Property Types 1 unit properties including condominiums
Occupancy Owner Occupied
Second Homes
Investment properties
Owner Occupied
Second Homes
Transaction Type Purchase
• Owner Occupied and Second
Homes up to 80% LTV/CLTV
Rate-and-Term Refinance
• Owner occupied and Second
Homes up to 90% LTV/CLTV
• Investment properties up to 75%
LTV/CLTV
Cash-Out Refinance
• Owner occupied up to 70%
LTV/CLTV
• Second Homes and Investments
properties up to 60% LTV/CLTV
Properties in High-Need Rural locations
as identified by FHFA
Purchase
• Owner Occupied and Second
Homes up to 80% LTV/CLTV
Rate-and-Term Refinance
• Owner occupied and Second
Homes up to 90% LTV/CLTV
Cash-Out Refinance
• Owner occupied up to 70%
LTV/CLTV
• Second Homes up to 60%
LTV/CLTV
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• See Rural High-Needs Appraisal
Waiver section for requirements.
APPRAISAL WAIVER RESTRICTIONS
See below grid indicating property characteristics that restrict the use of an appraisal waiver for Fannie
Mae and/or Freddie Mac. When a characteristic is marked as restricted a full appraisal is required.
Restrictions for Use of an Appraisal Waiver for Fannie Mae (PIW) and Freddie Mac (ACE/PIA)
Restriction Fannie Mae Freddie Mac
Properties located in New York
• All purchase transactions
• Refinances with a LTV > 80% requiring MI
X X
Construction or Construction-to-Permanent Transactions X X
Renovation mortgage products X X
2 to 4-unit properties X X
Texas 50(a)(6) loans X X
The purchase price or estimated value of the subject is equal to
or greater than $1,000,000 X
The purchase price or estimated value of the subject is greater
than $1,000,000 X
Leasehold properties X X
Properties with Resale Restrictions X X
Cooperative Units X X
Manufactured Homes (including accessory units) X X
Loans for which the mortgage insurance provider required an
appraisal X X
An Appraisal is warranted based on additional information
provided (e.g. sales contract, property inspection or disclosure,
etc.) to indicate property is:
• Located in a contaminated site or hazardous substance
exists affecting the property or neighborhood in which
the property is locates, or
• Contains adverse physical property conditions.
X X
Transactions using gift of equity X X
Rental income from the subject is being used to qualify X X
Non-arm’s length transaction X
Purchase of REO Property (identified in sales contract) X
Investment property X
Ineligible or Caution AUS response X X
An appraisal has already been obtained in connection with the
mortgage X X
The lender is required by law to obtain an appraisal
• This does not apply for loans closed in Flagstar’s name
as the lender
• Correspondents that close a transaction with an
appraisal waiver represent and warrant the use of the
appraisal alternative is compliant with the
correspondent’s state legal obligation
X X
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RURAL HIGH-NEEDS APPRAISAL WAIVER- FANNIE MAE
In selected rural high-needs areas, Fannie Mae may offer appraisal with additional requirements
through DU for certain transactions. This appraisal waiver may be combined with other loan products,
such as HomeReady.
Fannie Mae Rural High-Needs Appraisal Waiver Requirements
DU Response Approve/Eligible
Appraisal Type PIW
Property Types 1 unit properties (excluding manufactured homes)
Occupancy Owner Occupied only
Transaction Type Purchase only with LTV up to 97% and CLTV up to 105% with a Community
Second
Eligibility Property must be otherwise eligible for use of a PIW. See Appraisal Waiver
Restrictions for ineligible transactions.
These following requirements must be met in order to exercise the Rural High-Needs Appraisal Waiver:
• Obtain a home inspection to determine the property condition. Must use a professional inspector
that meets the state license and education requirements for those states that regulate
inspectors.
o Confirm that the inspector has liability insurance
o In states that do not have inspector licenses, inspectors that are professionally
accredited members in good standing of a nationally recognized property inspection
organization must be used. The national organization must require education, testing,
and adherence to a code of ethics and to standards of practice.
• Review the inspection report to verify the property condition.
o Represent and warrant that the property is safe, sound, and structurally secure and that
the property is not in C6 condition;
o Any issues that compromise safety, soundness, or structural integrity must be repaired
before loan delivery
• Obtain an affidavit signed by the borrower(s) confirming that they received a copy of the
property inspection report, read the report, and were notified of any lender-required repairs.
• Confirm that the purchase contract contains an inspection contingency that offers that
borrower(s) enough time to cancel the contract without penalty if they so choose, should the
inspection reveal an issue with the property
by usezloan | Aug 12, 2021 | Financial study
융자지식187- APPRAISALS
ADDRESS DETERMINATION
Use the standardized (USPS address) but compare it to the legal description on Schedule A on the title
commitment. If the legal description’s city/township is different, use the legal city/township, but maintain the
street address portion provided by USPS.
• The appraiser must provide the legal address on an addendum
• For multi-unit properties, it is acceptable to use the legal street address.
• The city indicated on the appraisal can be either standardized or legal.
For condominiums and Planned Unit Developments that have a unique address, i.e., street number is
different for each unit), the unit number does not need to be included on the closing documents (e.g. note,
mortgage, etc., if the unit number is not part of the appraisal or purchase agreement and is referenced in
the legal description. If the unit number is part of the appraisal or purchase agreement and is referenced in
the legal description, the unit number must then be included on the closing documents.
APPRAISALS
All loans submitted to Flagstar Bank require an interior and exterior inspection regardless of AUS
requirements unless an Appraisal Waiver is utilized. Appraisal waivers are not eligible in certain
circumstances, see the Appraisal Waiver section for additional information.
Fannie Mae and Freddie Mac will require the use of Uniform Appraisal Dataset (UAD) – compliant
appraisal report forms for the four supported UAD appraisal forms:
• Uniform Residential Appraisal Report (Fannie Mae form 1004)
• Individual Condominium Unit Appraisal Report (Fannie Mae form 1073)
• Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Fannie Mae form 1075).
Flagstar Bank does not accept Form 1075 reports.
• Exterior-Only Inspection Residential Appraisal Report (Fannie Mae form 2055). Flagstar Bank does
not accept Form 2055 reports.
All appraisals are subject to Fannie Mae/Freddie Mac and USPAP guidelines.
Appraisals must be ordered through Loantrac Appraisal Management, refer to Doc #4903, or by an
Appraiser Independence (formerly HVCC) Compliant Correspondent. Refer to AIR Compliance
Questionnaire/Checklist, Doc. #3027 for application process details. For appraisals originally ordered by
another lender, refer to the Appraisal Portability section.
Any loan that has a unique or different characteristic other than the normal should not be considered for
maximum financing. You should have comparables with the same type of uniqueness or difference. For
example, log homes should have log home comparables, etc.
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Any physical deficiencies stated on the appraisal that affect the health or safety of the property’s occupants
must be corrected. If the appraised value is “subject to” by an appraiser, the appraiser must give a final “asis” value after the requested conditions are met and reviewed by the same appraiser. Note that while
Fannie Mae does permit an appraiser to add some certifications to appraisal report forms, Fannie Mae will
not purchase a mortgage for which the appraiser has added, modified, or deleted a Limiting Condition on
the appraisal report.
Properties in C5 and C6 condition are not eligible. The property must have a condition rating of C1, C2, C3,
or C4 and appraisal completed as is.
Properties with evidence of activities that are federally, state, or locally prohibited (e.g. marijuana growth,
processing, etc.) are ineligible. Property alterations cannot be made to achieve collateral eligibility.
Flagstar Bank reserves the right on any loan to order an AVM (Automated Valuation Model) and/or a
review appraisal.
All appraisal reports must include the following:
• Photographs of the subject property including:
o Exterior photos of the front and rear view of the subject and street scene photo
o Interior photos of the kitchen, all bathrooms and the main living area of the subject.
o Any additional photos, as needed, to show any physical deterioration, improvement,
amenities, conditions and external influences that materially impact the value or
marketability.
• Photographs of the front of each comparable sale
• Building Sketch
o If the floor plan is atypical or functionally obsolete, thus limiting the market appeal for the
property in comparison to competitive properties in the neighborhood, a floor plan sketch
that includes the interior walls.
• Location Map identifying subject and comparables used by the appraiser
APPRAISAL EXPIRATION AND UPDATES
Residential appraisal reports must be dated no more than 120 calendar days from the note date for
both existing and new construction. If the appraisal is greater than 120 calendar days, but no more than
12 months, and the loan has not closed, see below for requirements.
• For loans targeted to Fannie Mae, the appraiser must perform an update on form 1004D, which
includes:
o Inspection of the exterior of the property, and
o Review of the current market data to determine whether the property has declined in
value since the date of the original appraisal. If the appraiser indicates the property value
has declined, a new appraisal will be required
• For loans targeted to Freddie Mac, one of the following is required:
o An appraisal update reported on Form 442, Appraisal Update, and/or Completion
Report. If the appraiser indicates the property value has declined, a new appraisal will be
required, or
o A new appraisal based on an exterior-only inspection and reported on the appropriate
Freddie Mac form based on the property type. If the appraiser indicates the property
value has declined, a new appraisal will be required, or
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o A new appraisal based on an interior and exterior inspection and reported on the
appropriate Freddie Mac form based on the property type.
• For both Fannie Mae and Freddie Mac, if the original appraisal is more than 12 months, a full
new appraisal report will be required.
The appraiser who performed the original appraisal should perform the appraisal update. However,
another appraiser can perform the appraisal update.
APPRAISAL ADDENDUM REQUIREMENTS FOR INVESTMENT AND 2-4 UNIT PROPERTIES –
SUBJECT PROPERTY
In addition to the appropriate appraisal form, the following appraisal addendums are required for
investment and 2 to 4-units when rental income is used to qualify the borrower for the mortgage loan:
SUBJECT PROPERTY
Property
Type Occupancy Appraisal Form # Required
1-Unit Investment Fannie Mae form 1007/Freddie Mac form 1000
2-4 Unit Primary or
Investment Fannie Mae form 1025/Freddie Mac form 72 includes the Comparable Rent
Schedule
Report Requirements
Appraisers must give special attention to the valuation of the one-to-four family dwellings intended
for or currently used as, rental properties. For 2 to 4-unit properties, the appraiser must use the
Small Residential Income Property Appraisal report. Fannie Mae form 1025/Freddie Mac form
72(rev. 3/2005). The income approach would be given equal consideration with the market
approach in the appraiser’s final value reconciliation. The appraisal must include:
• The property’s legal description
• Layout sketches
• A location map
• Clear photos of property, street scene, and comparables used
On the single-family properties that will be rented, the appraiser must use the Single-Family
Comparable Rent Schedule (Fannie Mae Form 1007) as an attachment provided the borrowers do not
qualify with the full payment. The appraiser must develop an income approach to value that is
supported by rent comparable and must consider that information in the final reconciliation. The
comparables should be in close proximity to the subject in order to establish the existence of a viable
rental market in the neighborhood. For properties that are in established condominium or PUD projects
(those that have resale activity), the appraiser should use comparable sales from within the subdivision
or project as the subject property if there are any available. Resale activity from within the subdivision
or project should be the best indicator of value for properties in that subdivision or project. If the
appraiser users sales of comparable property that are located outside of the subject neighborhood, he
or she must include and explanation with the analysis.
COMPARABLES
The appraisal should contain a minimum of two conventional comparable sales, preferably three. Land
contract comparables are unacceptable. Generally, the appraiser should use comparable sales that
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have been closed within the 12 months preceding the effective date of the subject property appraisal.
More specifically, comparables should have closed within the average marketing time for the area as
indicated by the appraiser. However, the appraiser may use older comparable sales as additional
supporting data if he or she believes that it is appropriate. The appraiser must comment on the reasons
for using any comparable sales that are more than six month old and/or exceeds the marketing time for
the area. Each comparable should be similar to and located near the subject property. For properties
located in a declining market, the appraiser should provide comparables dated within three to six
months.
In selecting the comparables, the appraiser should keep in mind that re-sales from within the subject
neighborhood or project are preferable sales more distant from the subject property. Sales prices of
comparables should be in the same general range as the property. If the appraiser utilizes comparable
sales outside of the subject’s neighborhood when closer comparable sales appear to be available, the
appraiser must provide an explanation as to why he or she used the specific comparable sales in the
appraisal report. Because rural properties often have large lot sizes and rural neighborhoods can be
relatively undeveloped, there may be a shortage (or absence) of recent truly comparable sales in the
immediate vicinity of a subject property that is in a rural location. This means that the appraiser will
often need to select comparable sales that are located a considerable distance from the subject
property. The appraiser should include an explanation of why the particular comparables were selected.
The appraiser must fully disclose the 12-month listing history of the subject property, complete with the
dates and prices the subject was listed for, as well as the source of the listing information. If the
appraiser utilizes comparable sales outside of the subject’s neighborhood when closer comparable
sales appear to be available, Fannie Mae requires that the appraiser provide an explanation as to why
he or she used the specific comparable sales in the appraisal report. If the subject has not been listed,
the appraiser must list the data source(s) used to confirm that the subject has not been listed. “Public
records” is not an acceptable data source. The 36-month history must be provided for all comparables.
Sources of Comparable Market Data: It is important for the appraiser to ensure that the data he or she
is providing in the appraisal report is accurate. When the appraiser is provided with comparable sales
data by a party that has a financial interest in either the sale or financing of the subject property, the
appraiser is required to verify the data with a party that not have a financial interest in the subject
transaction. However, when appraising new construction, the appraiser may need to rely solely on the
builder of the property they are appraising to provide comparable sales data, as this data may not yet
be available through typical data sources such as public records or multiple listing services. In this
scenario, it is acceptable for the appraiser to verify the transaction of the comparable sale by viewing a
copy of the Closing Disclosure from the builder’s file.
The dollar value of the net adjustments of each comparable should not exceed 15% of the
comparables’ sale prices. The gross adjustment should not exceed 25%. The appraiser must comment
on the reason for any adjustments exceeding these limits.
REQUIREMENTS FOR NEW (OR RECENTLY CONVERTED) CONDOS, SUBDIVISIONS, OR PUDS
Fannie Mae
If the subject property is located in a new (or recently converted) condominium, subdivision, or
PUD, then it must be compared to other properties in the neighborhood as well as to properties
within the subject subdivision or project. This comparison should help demonstrate market
acceptance of new developments and the properties within them. The appraiser must use:
• One comparable sale from the subject subdivision or project,
• One comparable sale from outside the subject subdivision or project, and
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• The third comparable sale can be from inside or outside of the subject subdivision or project,
provided it is a good indicator of value for the subject property
Two of these sales must be verified from reliable data sources, other than the builder. Sales or
resales from within the subject subdivision or project are preferable to sales from outside the
subdivision, project provided the developer, or builder of the subject property is not involved in the
transactions.
To meet the requirement that the appraiser utilize one comparable sale from inside the subject
subdivision or project, the appraiser may need to rely solely on the builder of the property he or she
is appraising, as this data may not yet be available through typical data sources (for example, public
records, or multiple listing services). In this scenario, it is acceptable for the appraiser to verify the
transaction of the comparable sale by viewing a copy of the Closing Disclosure from the builder’s
file.
As a reminder, when providing builder sales from competing projects that are not presently
available through traditional data sources, the appraiser must verify the sale from the applicable
Closing Disclosure and indicate on the appraisal report that the Closing Disclosure was the
document utilized for verification. Additionally, the appraisal must include discussion and analysis of
sales concessions and upgrades for the subject property relative to concessions and upgrades for
each builder sale.
Two pending sales may be provided in lieu of one closed sale (as required above) in the subject
subdivision or project in the event closed sales are not yet available. When this flexibility is used,
the appraiser must also provide at least three closed comparable sales from outside the subject
subdivision or project.
Freddie Mac
To demonstrate the marketability and develop an opinion of market value for units in new
subdivisions, units in new PUDs or units in recently converted or New Condominium Projects, the
appraiser must comply with the following requirements:
• One comparable sale must be from inside the subject subdivision or project, when available.
Additionally:
o The comparable sale from inside the subject subdivision or project can be a sale by
the builder or developer of the subject property
o If there are no closed comparable sales from inside the subject subdivision or
project, contract sales may be used from inside the subject subdivision or project to
satisfy this requirement. However, the use of contract sales must be in addition to the
three actual closed sales obtained from outside the subject subdivision or project.
o In the event the subject subdivision or project is so new that a closed sale or a
contract sale is not available, comparable sales from outside the subject subdivision
or project may be used. However, the appraiser must comment on the marketability
of the new subdivision or project and justify and support the use of the comparable
sales from outside the new subdivision or project.
REQUIREMENTS FOR ESTABLISHED CONDOS, SUBDIVISIONS, OR PUDS
If the subject property is located in an established condominium, subdivision, or PUD, the appraiser
should use comparable sales from within the subject subdivision or project.
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NEIGHBORHOOD
The appraiser must report on the primary indicators of market condition for properties in the subject
neighborhood by noting the trends of property values (“increasing,” “stable,” or “declining”), the supply
of properties in the subject neighborhood (“shortage,” “in balance,” or “over supply”), and the marketing
time for properties (“under 3 months,” “3 to 6 months,” or “more than 6 months”) as of the effective date
of the appraisal.
The appraiser’s analysis of the property must take into consideration all factors that affect value. This is
particularly important in markets where value is fluctuating. The most recent and similar sales available
should be used in these markets.
The appraiser must perform a neighborhood analysis in order to identify the area that is subject to the
same influences as the property being appraised (based on the actions of typical buyers in the market
area). The results of a neighborhood analysis enable the appraiser not only to identify the factors that
influence the value of properties in the market area, but also to define the area from which to select the
market data needed to perform a sales comparison analysis. As a reminder, although it is preferable for
the appraiser to provide comparables from the subject’s neighborhood, Fannie Mae does allow for the
use of comparable sales that are located in competing neighborhoods, as these may simply be the best
comparables available and the most appropriate for the appraiser’s analysis. If this situation arises, the
appraiser must not expand the neighborhood boundaries just to encompass the comparables selected.
The appraiser must indicate the comparables are from a competing neighborhood and address any
difference that exist.
The appraiser must fully disclose the 36-month listing history of the subject property, complete with the
dates and prices the subject was listed for, as well as the source of the listing information. If the subject
has not been listed, the appraiser must list the data source(s) used to confirm that the subject has not
been listed. Public records is not an acceptable data source. The appraiser must provide a copy of the
MLS listing for all listed properties. The 12-month history must be provided for all comparables.
COMMUNITY-OWNED OR PRIVATELY MAINTAINED STREETS
Fannie Mae
If the property is located on a community-owned or privately-owned and maintained street, an
adequate legally enforceable agreement or covenant for maintenance of the street is required. The
agreement or covenant should include the following provisions and be recorded in the land records
of the appropriate jurisdiction:
• Responsibility for payment of repairs, including each party’s representative share
• Default remedies in the event a party to the agreement or covenant fails to comply with his
or her obligations
• The effective term of the agreement or covenant, which in most cases should be perpetual
and binding on any future owners.
If the property is located within a state that has statutory provisions that define the responsibilities of
property owners for the maintenance and repair of a private street, no separate agreement, or
covenant is required.
Freddie Mac
If the property is located on a community-owned or privately-owned and maintained street, a legally
enforceable agreement or covenant for maintenance of the street is not required to be recorded if
all the following is met:
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• The subject property must have legally appropriate ingress and egress that is recorded
• The streets serving the subject property must be maintained in a manner that generally
meets community standards.
• The comparable sales should have street maintenance similar to the subject property. When
differences exist between the ownership or maintenance of the subject property’s streets
and the comparable sale’s streets, adjustments, or lack of adjustments made to the
comparable sales for the differences must be explained in the comments area or on an
attached addendum. In addition, the appraisal must evaluate the effect these differences
have on the subject property’s value or marketability.
SHARED DRIVEWAYS
When joint driveway is constructed across two party lines, is wholly on the subject property or wholly on
the adjoining property, an easement must be recorded allowing for all present and future owners the
use of the driveway without any restriction other than the restriction by reason of mutual easement
owners’ rights in common and duties for joint maintenance.
DISCLOSURE OF INFORMATION TO APPRAISERS
The appraiser must state the effect of value of any non-realty items included in a sale, such as closing
costs paid by the seller or any subordination agreements with the property.
Fannie Mae
If the contract is amended after the effective date of the appraisal in a way that does not affect the
description of the property, then it is not required to provide the amended contract to the appraiser
nor obtain a revised appraisal. Some examples of amendments that do not require the lender to
provide the amended contract nor obtain revisions to the already-completed appraisal report
include:
• Sale price
• Transaction terms
• Financing concessions
• Seller-paid closing costs
• Names or initials
• Closing date
• Correction of minor clerical errors such as misspellings
Disclosure of changes to financing information, such as loan fees and charges, and subordinate
financing provided by interested parties only must be provided to the appraiser for purchase
transactions.
Freddie Mac
The following information on the subject property, as applicable, must be provided to the appraiser
in conjunction with all appraisal requests:
• The complete sales contract (A sales contract on a new home should state the base price of
the house and itemize each option.)
• All financing terms, financing and sales concessions granted by anyone associated with
transaction, and any gifts, buydowns and down payment assistance provided by anyone on
behalf of the Borrowers, whether for purchase or refinance transactions
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• Income and expense statements, property leases and a list of non-realty items that are
included in the transaction, and
• Any other information that the Seller knows that may affect the value or marketability of the
property. This information includes, but is not limited to, an affiliation between the property
seller and purchaser, proposed changes to the use of the property, and the presence of any
Contaminated Site or Hazardous Substance affecting the property or the neighborhood in
which the property is located.
o It is not required to provide the appraiser with an updated sales contract unless the
updated terms impact the physical description or condition of the property. Changes
to the sales contract that are not required to be provided to the appraiser include, but
are not limited to:
Changes to the transaction terms such as sales price, financing or sale
concessions, and
Date revisions, corrections to typographical errors, etc.
If the updates will impact the physical description or condition of the property, the appraisal must be
updated.
EFFECTIVE AGE
When adjustments are made to the appraisal for the effective age, the appraiser must provide an
explanation for the adjustments and the condition of the property.
ZONING
Zoning of the property must constitute a legally permissible use of the land. The property must
represent the highest and best use of the land. Non-conforming property must have the city zoning
authority letter or an appraiser’s addendum stating that it is a legal non-conforming use. Comparable
must have the same zoning influence.
Properties that are subject to coastal tideland, wetlands or setback laws and/or regulations that prevent
the rebuilding of the property improvements if they are damaged or destroyed are ineligible.
WELL AND SEPTIC
We will not require a well and septic test unless required by the appraiser, there is evidence to suggest
failure of the system, the purchase agreement requires an inspection, or appraiser notes property is in
the vicinity of environmental hazards with potential for contamination based on proximity.
SITE/VIEW ADJUSTMENTS
The appraisal must include the actual size of the site and not a hypothetical portion of the site. For
example, the appraiser may not appraise only 5 acres of an un-subdivided 40-acre parcel. The
appraised value must reflect the entire 40-acre parcel. For properties with larger than normal lots or
considerable acreage that do not have comparables with the same type of lots or acreage, any
excessive plus adjustments will be subtracted from the final value of the comparable and the new
adjusted value will be used for loan-to-value calculations.
We will only accept an electronically submitted PDF copy of the appraisal report. The document must
have an electronically reproduced signature of the appraiser and the report must comply with the
applicable requirements outlined in this section.
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The appraiser’s analysis of a property must take into consideration all factors that have an effect on
value. To assure that this is done in the development of the sales comparison approach to value, we
require the appraiser to analyze closed sales, contract sales, as well as current and expired listings of
properties that are the most comparable to the subject property (although we require the appraiser to
report only the comparable sales in the appraisal report). The appraiser should always include in the
appraiser report or in an addendum any other information that Flagstar Bank will need to make a
prudent underwriting decision. In arriving at the sales comparison approach to value, the appraiser
must make appropriate adjustments. “Time” adjustments are acceptable, as long as they reflect the
time elapsed between the contract date for the comparable sales and the effective date of the
appraisal. These adjustments must be representative of the subject market and supported by market
data that is reported in the appraisal report.
SOLAR PANELS
Ownership and financing/leasing structure of the subject property solar panels must be determined by
evaluating the credit report, copy of related solar panel documentation and title commitment to address
if the related debt is reflected in the land records. If insufficient documentation is available and the
ownership status of the panels is unclear, no value for the panels may be attributed to the property
value on the appraisal unless the lender obtains a UCC “personal property” search to confirm the solar
panels are not claimed as collateral by any non-mortgage lender.
Properties with solar panels financed with a PACE loan that will not subordinate are not eligible if the
PACE loan is not paid in full prior to or at closing.
UCC Filing Classifications
A UCC financing statement is a legal form filed to give notice that a creditor has or may have
interest in personal property.
Fixture Filing
UCC-1 financing statement authorized and made in accordance with the UCC
adopted in the state in which the related real property is located. It covers property
that is, or will be, affixed to improvements to such real property. It contains both a
description of the collateral that is, or is to be, affixed to that such property, and a
description of such real property. It is filed in the same office that mortgages are
recorded under the law of the state in which the real property is located. Filing in the
land records provides notice to third parties, including title insurance companies, of
the existence and perfection of a security interest in the fixture. If properly filed, the
security interest in the described fixture has priority over the lien of a subsequently
recorded mortgage
Precautionary
Filing
A precautionary UCC filing is one that lessors often file to put third parties on notice
of their claimed ownership interest in the property described in it. When the only
property described in the UCC filing as collateral is the solar equipment covered by
the lease or power purchase agreement, and not the home or underlying land, such
a precautionary UCC filing is acceptable
Borrower Owned and Financed Solar Panels
If the borrower is, or will be, the owner of the solar panels (meaning the panels were a cash
purchase, were included in the home purchase price, were otherwise financed and repaid in full, or
are secured by the existing first mortgage), standard requirements apply (for example, appraisal,
insurance, and title).
The following must be applied based on the structure of the solar panels when financed and
collateralized:
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Financing Term
requirements
Review sufficient documentation (credit, title, appraisal and/or UCC financing
statement, related promissory note and related security agreement) that reflects
terms of secured loan to determine if the solar panels are recorded as part of the
real property as a UCC fixture filing or considered personal property as collateral
is not recorded on title.
Debt Inclusion Debt must be included in the DTI calculation
Value
• When there is a fixture filing in property records- Appraiser may consider solar
panels in value unless the panels can be repossessed for default of financing
terms
• Financing does not appear on title- Appraiser may not provide a contributory
value because the panels are collateral for another debt
Loan to Value
When there is a UCC fixture filing recorded in the real estate record the debt must
be included in the CLTV ratio
• If the fixture filings is in the land records as a priority senior to the mortgage, it
must be subordinated
When the solar panels are collateral for separate (non-mortgage) debt but do not
appear on the title report, do not include in the debt in the CLTV as financing
treats the panels as personal property.
Property Freddie Mac only- must maintain access to an alternate source of electric power
that meets the community standards
Solar Panels Leased or Owned by a Third-Party
If the solar panels are leased from or owned by a third party under a power purchase agreement or
other similar lease arrangement, the following requirements apply
Lease or purchase
agreement
requirements
Copy of lease or power purchase agreement which must indicate all of the following:
• Any damage that occurs as a result of installation, malfunction, manufacturing
defect, or the removal of the solar panels is the responsibility of the owner of the
equipment and the owner must be obligated to repair the damage and return the
improvements to their original or prior condition (for example, sound and
watertight conditions that are architecturally consistent with the home); and
• The owner of the solar panels agrees not to be named loss payee (or named
insured) on the property owner’s insurance policy covering the residential
structure on which the panels are attached. As an alternative to this requirement,
the lender may verify that the owner of the solar panels is not a named loss
payee (or named insured) on the property owner’s property insurance policy;
and
• In the event of foreclosure, the lender or assignee has the discretion to
o Terminate the lease/agreement and require the third-party owner to
remove the equipment;
o Become, without payment of any transfer or similar fee, the beneficiary
of the borrower’s lease/agreement with the third party; or
o Enter into a new lease/agreement with the third party under terms no
less favorable that the prior owner.
Debt Inclusion
The monthly lease must be included in the DTI unless the lease is structured to:
• Provide delivery of a specific amount of energy at a fixed payment during a given
period, and
• Have a production guarantee that compensates the borrower on a prorated
basis in the event the solar panels fail to meet the energy output required for in
the lease for that period.
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• Payments under power purchase agreements where the payment is calculated
solely based on the energy produced and used may be excluded from the DTI
ratio.
Value Cannot be included in the appraised value of the property nor considered in the
determination for the LTV even if a “precautionary filing” UCC is recorded
Loan to Value Do not include in the CLTV as financing treats the panels as personal property
Property Property must maintain access to an alternate source of electric power that meets
the community standards
APPRAISER ELIGIBILITY
All appraisals must be completed by a Flagstar Bank eligible appraiser.
• Refer to Appraiser Independence Compliance Guidelines, Doc #4906.
• If the first appraiser on the report is not deemed eligible, we will accept the signature of a
Flagstar Bank eligible supervisory appraiser, provided that appraiser did physically inspect the
interior and exterior of the subject property and indicates so in the appropriate box.
• If an appraisal form is completed by an unlicensed or trainee (or similar classification) appraiser,
a supervisory appraiser must sign the appraisal form. A supervisory appraiser is not required to
inspect the subject property or comparable sales unless required by state law.
• Flagstar Bank will not accept an appraisal provided by the buyer, seller, builder, developer,
realtor, borrower, or anyone else with an interest (financial or otherwise) in the loan transaction.
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