Cal. Code Regs. tit. 21 § 7109.5
Financial institutions have a legitimate interest in the current fair market value of the security property and in its future value if a decrease in value would result in there being inadequate security for the loan. However, making an estimate of remaining economic life for a period longer than three to five years may be a difficult task which requires particular care by the appraiser. Therefore, in order for the estimate and consideration thereof to be as objective as possible, the appraiser should furnish adequate explanatory support for any estimate less than the loan term requested in a particular case. If the estimate of remaining economic life is based upon factors related basically to the building itself, such as condition, the financial institution should exert its best efforts to bring about correction of the deficiencies and have the cost included in the mortgage so that the loan amount would be based on the value of the property "as-rehabilitated" rather than "as-is." In any event, the concept of remaining economic life shall not be used by underwriters to deny or unfavorably adjust loan terms except in the limited circumstances referred to above.
Cal. Code Regs. Tit. 21, § 7109.5
Note: Authority cited: Section 35814, Health and Safety Code. Reference: Sections 35810- 35815, Health and Safety Code.