5703.6: Appraisal requirements for Manufactured Homes (03/02/16)

The Seller must obtain an appraisal with an interior and exterior inspection that meets Freddie Mac requirements, including the following requirements:

(a) Additional appraiser qualifications for appraisals of Manufactured Homes

In addition to the appraiser qualifications stated in Section 5601.3, the Seller must determine that the appraiser demonstrates the knowledge and experience to perform quality appraisals for Manufactured Homes. The appraiser must:

Have adequate experience and must have previously completed real property appraisals of Manufactured Homes
Have adequate education and/or training related to the appraisal of Manufactured Homes
Understand the unique features that affect the quality of Manufactured Homes and the factory construction techniques for Manufactured Homes
Understand the manufacturers' and federal, State and local requirements for the installation of Manufactured Homes
Be knowledgeable concerning the local Manufactured Home market, and
Have access to appropriate data sources to establish an opinion of valueTraditional appraisal data sources may not provide sufficient quality Manufactured Home data for the appraiser to develop a supportable and well-documented appraisal. Although the Multiple Listing Service and public records information remain an important source of data, the appraiser must develop other sources such as Manufactured Home retailers and builders experienced in the installation of Manufactured Homes.The N.A.D.A. Manufactured Housing Appraisal Guide® and Marshall & Swift® Residential Cost Handbook may also be used to provide support for the appraiser's quality adjustments and value conclusions.

(b) Contract for sale of a Manufactured Home provided to appraiser

In addition to the requirements in Section 5601.3, the Seller must provide the appraiser with:

A complete copy of the executed contract for sale of the Manufactured Home and the land, or if the Manufactured Home and land have separate contracts, the executed contract for each is required. If the Borrower has owned the land for 12 months or more, a copy of the executed contract for the land is not required.
A copy of the manufacturer's invoice and the Manufactured Home Purchase Agreement when:
- The Manufactured Home is a new Manufactured Home and the transaction is a purchase transaction; or
- The Mortgage is a Construction Conversion Mortgage and the transaction is either a purchase transaction or "no cash-out" refinance transaction
The appraiser must analyze the contract for sale and other documents for the transaction, including, if required, the manufacturer's invoice and Manufactured Home Purchase Agreement
If the Manufactured Home was installed after October 20, 2008, the Seller must provide the appraiser with a copy of the Certification of Installation or the comparable State-specific form, and any additional information the appraiser may need as part of the ordering of the completion report or appraisal update.

(c) Appraisal requirements for a Manufactured HomeThe appraiser must, at a minimum:

Perform a complete visual inspection of the interior and exterior areas of the Manufactured Home
Inspect the neighborhood
Inspect each of the comparable sales from at least the street
Research, verify, and analyze data from reliable public and/or private sources
Develop an opinion of the market value of the Manufactured Home based on the sales comparison approach to value. Non-realty items, such as insurance, warranties or furniture must be excluded from the value conclusion
Develop the cost approach to value as support for the sales comparison approach
Report his or her analyses, opinions, and conclusions on Form 70B, Manufactured Home Appraisal Report
Match the manufacturer's serial number(s) and the HUD Certification Label number(s) on the dwelling to the number(s) on the contract for sale, manufacturer's invoice, and any other documentation provided. If the numbers do not match, the appraisal report must clearly state that the Manufactured Home is not the same dwelling referenced on the contract for sale or other applicable documentation.
Complete the Form 70B in its entirety

(d) Sales comparison approach for Manufactured Homes

The appraiser must state the specific number of manufactured home sales and listings as well as the respective price ranges that were used in the analysis
The appraisal report for the Manufactured Home must contain at least two comparable manufactured home sales of similar configuration (i.e., single-wide comparable sales for a single-wide subject property and multiwide comparable sales for a multiwide subject property) and similar quality

The appraiser may use either site-built housing or a different type of factory built-housing as the third comparable sale if the appraiser explains the reason for selecting the comparable and makes and supports the appropriate adjustments in the appraisal report. More than three comparable sales may be used if needed to adequately support the appraiser's opinion of value.

If the Manufactured Home is in a controlled market (such as a new subdivision or project, a newly converted project or an area where the property seller owns a substantial number of units), at least one comparable sale must be outside the influence of the developer, builder or property seller. Resales from within the subject project or subdivision may be used to meet this requirement. When comparable sales from outside the subject project or subdivision are used, they must also be outside the influence of the subject property's developer, builder or property seller.

The appraiser must not create comparable sales by combining vacant land sales with the contract purchase price of the Manufactured Home. If the appraiser is unable to develop an appraisal based on at least two comparable sales of similar Manufactured Homes, the Mortgage is not eligible for sale to Freddie Mac.

(e) Cost approach for Manufactured Homes

The cost approach and sales comparison approach are complementary for the valuation of manufactured housing and must support the final value conclusion. A detailed cost approach to value based on published sources and supported by market data is required for all Manufactured Home appraisals. It must, at a minimum, provide the information indicated on Form 70B, and provide sufficient information and data to allow the Seller and other reviewers to replicate the cost figures and calculations.The cost figures must come directly from a published cost service without modification by the appraiser. The appraiser must report the source of the cost data and the effective date of cost data.The appraiser must provide a quality rating from the cost service used. The appraiser's quality rating must be based on objective criteria.The appraiser must provide his or her opinion of site value supported by a summary of comparable land sales or other methods used for estimating site value.
(f) Income approach for Manufactured Homes

The income approach to value is not required; however, the appraiser must consider the income approach to value and develop it if applicable and necessary to develop a credible report.
(g) Completion documentation for Manufactured Homes

If the appraisal is performed before the Manufactured Home is delivered and installed on a permanent foundation, the Seller must document that the Manufactured Home is complete. If a new appraisal is required, the appraiser must provide an analysis of previously unavailable information. If the new appraisal is an appraisal update that also acts as documentation of completion, the appraiser must state that the conditions of the underlying appraisal have been satisfied.