Fannie Mae’s ADU Policy Updated
On September 2, 2020, FNMA updated their policy allowing for Accessory Dwelling Units (ADU) on Single Family Residential (SFR) properties to be a Manufactured Home.
This is in their Selling Guide Announcement SEL-2020-05, linked below.
An accessory dwelling unit (ADU) is an additional living area that is independent of the primary property and has basic bathroom, cooking, and sleeping facilities. With this update, we clarified ADU property eligibility and comparable sales requirements in the appraisal as follows:
- expanded the current definition of an ADU to improve proper classification of ADUs;
- expanded property eligibility by allowing multi-width manufactured homes titled as real property to be eligible as an ADU; and
- allow appraisal flexibilities that now include the use of
- an aged settled sale to demonstrate market acceptability, and
- an active listing, or a pending sale as a supplemental exhibit to show marketability.
Effective: Lenders may take advantage of these updates immediately.
NOTE: some properties have a small living unit called a ‘Park Model Home’ as an ADU, normally for the use of an aged family member. Park Model Homes are no more than 400 s/f in size, and are considered to be PERSONAL PROPERTY. These are not eligible for normal mortgage financing.
Park Model Homes are also not considered to be approved as an ADU under FNMA guidelines. In many cases, the wheels/axles are still attached, and the hitch may be also. These units often are placed on properties under a Conditional Use Permit by the local jurisdiction, with the stipulation that they be removed once the allowed use ends.
Appraisers who encounter a Park Model Home (or similar) on a SFR property should note the existence of the unit, and include at least one photo of it in the report, but do not include the Park Model living space in the home’s GLA, or value this unit in the appraisal.