Earth Contact Home, Fannie Mae and Financing

[Dena Wesley]

Hi BP Community,

Back in March, I came across two properties for sale owned by a non profit that was using them for office space. They are located in Kansas City and the area is currently undergoing gentrification so increase in value is most likely. One is a two story ($59,500), the other an earth contact home ($35,500). I was well aware of lenders shying away from earth homes due to comps but the appraiser was in fact able to find comps and give it a market value of $36,000. Yay right? The appraiser did note in the report that it's an earth contact home, not of the traditional style of the other homes in the area. I din't take the notation as being a negative, just a fact. Monday, the loan officer called and told me that the earth home wasn't eligible for Fannie Mae because of it not conforming to the style of homes in the area and they have to deny the loan. I was floored!...and pretty mad quite honestly which prompted me to go to the Fannie Mae website. I've reviewed everything on the Fannie Mae website and can find anything to support the underwriter determining this. In fact, there is a recent FAQ sheet (2016) that states that unique properties including earth homes, are eligible and can be located in all areas, including rural provided the appraiser has adequate info to develop a reliable opinion of market value. I've e-mailed the lender to challenge the decision and am waiting to hear back but in the meantime, if someone knows of any lender who can possibly make this work, please let me know. Thanks.