Ask Henry

Actual Age of Renovation
Hi Mr. Harrison,
I inspected a home in one of the 5 Boroughs of NYC. The improvements to the property include a two family large structure that appeared to be brand new construction. I spoke to the developer who stated that in the construction process, they had left part of the old foundation. In other words, the old structure had been completely demolished, aside for part of the original foundation walls, and the new existing structure was put up in its place. This was done for tax purposes, as the NY tax dept considers this a 'renovation' not a new construction, and therefore, the taxes would not be drastically increased. The old structure was built in 1920. The new structure in 2012. My question is, if the entire new structure (above grade) and part of the foundation were built in 2012 and only a small amount of the foundation was built in 1920, What is the actual age of the structure?

Thank you for taking time to answer my question!
Nechama Arnold

Dear Nechama,
Since this is important information, the USPAP says you must provide it somewhere in your appraisal or in on addenda form. You actually have answered your own question: “The part of the foundation is 90 years old and the house is (new or less then 1 year)” is a perfectly adequate response. What stumps many appraisers is how to get this information on to the form being used. This depends on which form fill program you use. Depending upon the program, you might put into the box "90/1”, or “*”, or "see comments”.

If your form fill program does not let you indicate that an answer is incomplete, you should send a complaint to your software provider. If you use an addenda, which is often the best way to provide any special information, it is a good idea to put a statement on the first page of the form such as “Important information about this appraisal is included in the addenda.” This prevents anyone from removing the addenda from the report.

There is no number that will accurately reflect the actual age when different parts of the building were constructed at different times. However, you should reflect your estimate of the effective age in a single number.

You also might want to make a comment in your appraisal as to why this was done as it does effect the value of the property.



FHA Announces Substantial Reforms
12/19/12 - The Federal Housing Administration’s Acting Commissioner, Carol J. Galante, announced Dec. 18 that she would implement substantial reforms to shore up the government mortgage program, which reported Nov. 14 that it was $16.3 billion in the red, Mortgage Daily reported.

The changes Galante will implement include limiting borrowers with credit scores less than 620 to a 43 percent total debt-to-income ratio. Borrowers with high debt-to-income ratios will be subject to manual underwriting and potentially to higher down payment requirements. The change is expected to cut claim rates by 20 percent.

The FHA also will eliminate its standard, fixed-rate home-equity conversion mortgages — a reverse mortgage program that allowed seniors to draw a large lump sum at closing, ranging from 62 to 77 percent of the property’s appraised value. Many seniors now are unable to keep up with payments and facing foreclosure.

Additional changes include reducing FHA market share by cutting loan-to-value ratios to 95 percent on loans greater than $625,000 and more closely scrutinizing borrowers with prior foreclosures.

“I've been working closely with (U.S. Department of Housing and Urban Development) Secretary (Shaun) Donovan and Acting Commissioner Galante over the past few weeks on ways we can put FHA on sound financial footing,” Sen. Bob Corker, R-Tenn., said in a news release, Mortgage Daily reported. Corker is member of the Senate Banking, Housing and Urban Affairs Committee. “While this is only a first step, I am encouraged that Acting Commissioner Galante has committed to structural reforms that we both believe put FHA in a much stronger position,” he said.

Read the full story here.

Ask Henry

Cost Approach for Mortgage Transactions
Dear Henry,
Have you run across many lenders requesting the Cost Approach for insurance values when the intended use is for mortgage transaction? They are wanting the CA for properties where the result is not a credible result (very old homes).

It even states in the certification that the intended use is for mortgage financing, not insurance.

How would you handle this?
Tammy VanScoy
Office Manager
Daugherty Appraisers, Inc.

Dear Tammy,
I find nothing in the USPAP that prevents you from doing what the client requests as part of their scope of work. Some appraisers disagree with this opinion. They seem to base their opinion on the statement on most Fannie Ma/Freddie Mac forms that says: “INTENDED USE: The intended use of this appraisal report if for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction.” From the sound of your question it seems to me that this is what the lender is trying to do. The lender wants to be sure the property owner carries adequate insurance to protect the lender.

The only thing I could find in the current USPAP are Frequently Asked questions #174 and #292. They to me, support my position.



No Spellchecker Will Help You:
How You Can Avoid Text Disasters

by Dr. Poly Syllabic

Dear Friends,
As an editor and technical advisor for the past 30+ years — both for my husband, real estate appraisal author Henry S. Harrison; and our daughter, Kate Lambert Harrison, CEO of — I feel uniquely qualified to report on the state of written materials in our ever-more complex computerized era.

It's simple: much of the text material I read each day is incredibly, egregiously, annoyingly flawed!

In this age of spellcheckers and auto-fill, Siri and sexting, writing often becomes a process of "
guesstimation" on the part of our computer helpers, and a current lack of skill on the part of many younger assistants and clerks.

I'm here to tell you that there are moments every day — in your correspondence, preparation of slides and PowerPoint presentations, and that press release your company wants sent out immediately to 2,000 reporters online — when no spellchecker can help you.

Reed this send tense and you'll sea rite of way what I mean.

In short, so many words in English are homonyms that a spellchecker can easily be fooled into misspelling a common word, and the only way I know to catch these errors is a very old trick:

Yes: after you've written and polished that excellent p.r. release,
read it aloud. Read it to a colleague, read it to your six year old daughter, or even to your Golden Retriever -- but do not fail to read it out loud. Hearing what you've written is one tried and true method for catching those "idiot mistakes" that make your company look sloppy.

Bottom line: If you don't think spelling and grammar errors can damage your image, think again.

Dr. Poly Syllabic

Editor’s Note: Dr. Poly Syllabic is a new blog that REV will publish on a semi-annual basis written by our former editor, Ruth Lambert. For grammar or writing questions, feel free to contact Ruth at


Fed Alleges Mortgage Fraud, Sues Bank of America for $1 Billion
10-31-12 - Bank of America was hit with a $1 billion civil mortgage fraud lawsuit Oct. 24 in which Manhattan U.S. Attorney Preet Bharara alleged the bank ran a scheme to defraud Fannie Mae and Freddie Mac, USA Today reported.

According to the lawsuit, Countrywide Financial, which was purchased by Bank of America in 2008, ran a program known internally as “Hustle” or “High Speed Swim Lane,” which pushed mortgages through the approval process without checking for fraud, misstatements and inaccuracies or missing information.

Bharara’s lawsuit, filed in U.S. District Court in New York, is the sixth such case filed against the nation’s biggest banks in the last 18 months by the Manhattan U.S. Attorney’s office.

Lawrence Grayson, spokesman for Bank of America, told USA Today that “at some point, Bank of America can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.”

However, federal prosecutors said that it was fraud and not a bad economy that caused Bank of America to allegedly sell unqualified mortgages to Fannie and Freddie in order for them to be packaged into mortgage-backed securities. The lawsuit alleged that Countrywide employees were given bonuses between 2007 and 2009 based on the volume of mortgages they processed. The suit also claimed that the bank’s executives were aware of the faulty mortgages being issued; a January 2008 internal review indicated that 58 percent of “Hustle” loans defaulted, USA Today reported.

The complaint also noted that Fannie and Freddie failed to review the mortgages before purchase, instead relying on the bank’s statements regarding the quality of the loans.

Bank of America has denied all allegations.

Read the full article here.


China’s New “Urban Forest”
Inspired by mountainous Chinese landscapes and the traditional villages built their hillsides, MAD Architects has unveiled plans to create a towering vertical Urban Forest. Designed for Chongqing, China, the projects consists of a stacked vertical forest set in the heart of the city, designed to bring more nature and open space in a dense and compact way. MAD Architects is becoming more known for their sustainable designs, and hopefully the green design aspects of this new tower extend beyond the garden spaces on each floor.

Urban Forest is a commercial high-rise building that takes the form of an urban mountain with over 70 floors, each one different and unique. Each floor is an abstract curved shape, layered slightly off-center to give the facade an organic look as it rises up into the sky. A central cylindrical core structure supports all the floors and hosts the mechanical systems and elevators.

Each floor is also covered in floor-to-ceiling glass windows, providing expansive views of the city. A walk-around balcony of differing widths hosts the green garden space, as well as pools, trees, and courtyards. Some floors are nothing but open space, while others contain offices or residential space. Each floor is seen as a separate and unique level of the urban forest and is meant to combine both nature and the urban metropolis.

Read more at SkyScraper Page Forum

Ask Henry

Vinyl vs. Brick Veneer
Hi Henry,
The subject is vinyl and a comp is brick veneer. Should an adjustment be made?


Dear Susan,
Most adjustments, including the one that you are asking about, depend upon how buyers in the market area of the subject property react to the difference between the subject property and the comparable sale. In some market areas there may be little difference in value between these two types of siding materials. In the market area where I live, brick veneer is more desirable than vinyl. Therefore, it would be necessary to make a downward adjustment to the comparable sale with brick veneer siding to reflect this difference.