Current through Register Vol. XLI, No. 50, December 13, 2024
Section 88-1-4 - Determining eligibility of dwelling4.1. General. -- Program Loans may be made only to finance the purchase, construction or improvement of Eligible Single-Family Dwellings. Each Participating Lender is responsible for assuring that the property which is the subject of a Program Loan is an Eligible Single-Family Dwelling. This determination will be based largely on an appraisal report made by a qualified appraiser. This report must be sufficient to support a conclusion by the Participating Lender that the condition of the property conforms with the requirements of these regulations. Normal and appropriate measures should be undertaken to verify the information contained in the appraisal, either independently or concurrently with other reviews. A Participating Lender may rely, however, on the information contained in the appraisal and plat of survey unless the Participating Lender has, or should have, reason to believe that such information is incorrect.4.2. Appraisal report. -- Program Loan appraisals will be submitted on the appropriate form prescribed by the Housing Development Fund in the case of conventional Program Loans and on the FHA/VA equivalents in the case of FHA/VA Program Loans. FHA/VA appraisal reports will be prepared in accordance with applicable regulations and conventional Program Loan appraisals will be prepared as follows: (a) All blanks completed. -- Each section must be filled out, those not applicable being indicated as such.(b) Needed repairs. -- The report must indicate what repairs are needed and the appraised value must reflect the completion of these repairs. A compliance inspection report will be required when repairs are needed.(c) Consideration of comparables. -- In performing the market data analysis, comparable properties may be adjusted no more than fifteen percent (15%) in value. However, higher adjustments will be acceptable if better comparables are not available. In the case of a new construction or rehabilitation, comparable house data are required.(d) Effect of interest rate. -- The appraiser must consider in the valuation of the Eligible Single-Family Dwelling the effect of the below-market interest rate. Because below-market interest rates tend to increase the value of a house a financing adjustment factor may be required. It is suggested that only comparable sales be used which reflect a cash sale or adjusted to indicate a cash sale, then all comparables must be adjusted to reflect the below-market interest rate loan proposed for the subject property.(e) Location and nature of dwelling. -- The appraiser must also determine and state whether the dwelling is in a location and of a nature and design for use which is consistent with the Program requirement that the dwelling will be occupied as the principal residence of the Eligible Borrower, that no property will be included in the purchase price other than land, improvements and fixtures (i.e., no items of personal property) and that it cannot reasonably be expected to be used in a trade or business, as an investment property or as a recreational house.(f) Required assumptions. -- The appraisal report must report the highest price which the property will bring assuming the consummation of a sale, and the passing of full title from seller to buyer by deed, under conditions whereby: (1) Buyer and seller are under no unusual pressure to buy or sell and are engaged in normal arms-length negotiations as to sales price; (2) both parties are well informed or well advised and act prudently, each for what he considers his own best interest; (3) reasonable exposure is given to the property in the open market; and (4) payment is made in cash or on terms reasonably equivalent to cash, assuming typical financing terms are available in the community for similar property.(g) Required attachments. -- The appraisal report for conventional loans must have the following attachments: (1) Three (3) photographs, one (1) of which must show the roof of the structure, as follows: A) Front and one side of the structure;B) Rear and other side of structure; andC) Street scene in front of structure showing dwelling and general view of neighborhood.(2) Location map referring to a landmark and showing the location of subject property to the nearest paved road.(3) Interior floor plan and exterior dimensions of all structures on the property.(4) Plans and specifications in the case of a proposed construction Eligible Single-Family Dwelling. The appraiser has the responsibility to review the plans and specifications for completeness and accuracy. Any deviations from the plans must be acknowledged by the appraiser.4.3. Appraiser qualifications. -- The Housing Development Fund will accept appraisal reports only if they are prepared by appraisers whom it has previously approved. Approval will be granted on the basis of the submission to the Housing Development Fund of a resume which includes the information required by FNMA Form 1001 (FNMA Seller's Nomination and Recommendation of Appraiser) and which indicates that the appraiser meets at least one (1) of the following requirements: (a) Minimum experience and course work. -- Has a minimum of two (2) years of single-family property appraisal experience and has completed a nationally recognized basic appraisal course.(b) Accreditation. -- Is a member of one (1) of the following professional appraisal societies: (i) American Institute of Real Estate Appraisers; (ii) National Association Independent Fee Appraisers; (iii) Society of Real Estate Appraisers; (iv) American Society of Appraisers; or (v) American Society of Farm Managers and Rural Appraisers.(c) Minimum experience. -- Has at least three (3) years experience in single-family property appraisal.4.4. Property condition. -- In addition to the general property condition requirements stated in these regulations, the following specific requirements apply: (a) Lot size. -- Lot size must be not less and not greater than that needed for basic livability. The land must not provide, other than incidentally, a source of income to the borrower.(b) House size. -- A house must contain more than one (1) bedroom and must have a minimum of 800 square feet.(c) Trailers and double-wide excluded. -- No trailers or double-wide mobile homes are acceptable.(d) Floor plan. -- A house must have an acceptable floor plan. For example: One should not enter the bath directly from the kitchen nor pass through a bedroom to gain entrance to another room in the house.(e) Roof and heater. -- No rolled roofs or unvented space heaters are permitted.(f) Access roads. -- All access roads must be year-around, all-weather roads.(g) Electric power. -- A house must be served by a minimum of one hundred (100) electrical amperes.(h) Design. -- Significant evidence of poor design or construction, such as poor construction features, steep unmaintained access roads, poor painting, wet crawl spaces, weak retaining walls or foundations, poor plumbing or heating, insufficient electrical systems, evidence of termite damage, inoperative gutters or downspouts, poor roofing, could result in Program Loan denial if not repaired.(i) Water and sewage. -- If the property is served by a nonpublic water and sewage system, the system must have received the approval of the State Health Department no more than ninety (90) days earlier. If the property has been vacant for over sixty (60) days, the size of the lot and existence of septic tank problems in the area must be considered.