Code of Massachusetts Regulations
761 CMR - MASSACHUSETTS HOME MORTGAGE FINANCE AGENCY
Title 761 CMR 21.00 - Seller's Guide
APPRAISAL GUIDELINES
Section 21.54 - Neighborhood and Property Location
Current through Register 1531, September 27, 2024
The relationship of the location of the property to the evaluation of the loan application is perhaps the most sensitive and difficult aspect of the success of the MHMFA loan program. The MHMFA loan program requires the accurate evaluation of risk in making individual Mortgage Loans, yet seeks to increase Mortgage Loans in older urban neighborhoods. Therefore, the following factors will be taken into consideration:
(1) More than suburban or rural areas, urban neighborhoods are relatively small in size; neighborhoods of diverse character may compatibly exist in close proximity. Therefore, neighborhood evaluations will be based on conditions in the block face including the property being appraised and the immediately contiguous block faces. Whenever possible, comparable properties used for valuation will be drawn from the neighborhood as defined in 761 CMR 21.54.
(2) "Urban" neighborhoods are more likely than suburban or rural ones to contain a mixture of uses, ages, design and this may contribute to their stability and value. For instance, a variety of housing types -- i.e., 1-4 unit structures and apartments or condominiums can be compatible uses. The presence of commercial, light industrial or other employment opportunities are not automatically incompatible in urban neighborhoods.
(3) The racial or ethnic composition of the neighborhood is not a relevant appraisal factor and must not be considered in the appraisal report or in any decision on Mortgage Loan approval. Federal and state laws and regulations make it illegal to consider the racial composition or changes in a neighborhood for purposes of Mortgage Loan decision.
(4) When evaluating the neighborhood the appraiser should base his/her evaluation on a relative comparison with other existing neighborhoods containing similar housing price ranges. A neighborhood should be evaluated in terms of realistic alternatives available to the Mortgage Loan applicant.
(5) The existence of any of the following factors will be interpreted as a positive influence when analyzing the neighborhood :
(6) Nothing in the Seller's Guide is intended to preclude the appraiser from considering characteristics of the neighborhood to the extent that they presently, or are likely to, affect the value of the subject property. However, the appraiser is to report detrimental neighborhood conditions in factual, specific terms by giving the addresses of the affected properties and an exact description of the nature of the conditions involved in each case. For example: "There are junked and abandoned cars (or refrigerators, etc.) in the front (or rear) yards of the properties at (address) or "the houses at (addresses) are vacant (or boarded up, or vandalized as evidenced by broken windows, etc.);" or, "a lack of maintenance is evident in the neighborhood by uncut grass (or peeling paint, or fallen gutters and downspouts, etc.) at (addresses)." Another example of a relevant detrimental condition would be disinvestment by the local government, which is frequently characterized by broken sidewalks, poor condition of streets, infrequent trash collection, or inadequate police and fire protection. Furthermore, if the value trend in the neighborhood is declining as a result of detrimental conditions, statements to that effect must be supported by reporting actual property sales which demonstrate the trend. Such information may be provided in the comment section or in the addendum to the report.
