All Forum Posts by: Manoucheka Guillaume

@Todd Pultz In your experience, did the appraiser or lender mention the property could not be rebuilt as is when processing the FHA loans? It seems as though some people did not have any issues getting FHA to approve legal nonconforming properties but others did and had to get the zoning appealed.

@Stephanie P. I called the city and was told I could apply to appeal but it takes about 6 months, a couple thousand dollars, 2 public hearings, and there is no guarantee it will get approved. I might need to move to Alabama 😉.

@David Krulac Thank you for sharing your various cases. It give me some hope that this could possibly end in my favor.

@Jonathan Klemm

The property was vacant when the appraisal was done but I am not sure if this played a determining factor in the rejection because the appraiser noted that the property is grandfathered to continue its existing use but the exemption would be lost if the property remains vacant for 6 months or more. I will ask my mortgage broker if the vacany made a difference in the final decision but I believe the decision was made assuming the grandfather status was still in place.

@Stephanie P.

Curious - how long did the appeal process take?

@Stephanie P.

Interesting. I was previously approved for another loan for this same property and the lender was ready to close although the appraiser noted the zoning situation on the appraisal. We didn't close due to an unrelated issue which has since been resolved. When I transitioned to FHA it was rejected due to the zoning.

I will call the city to verify if they could provide me with a similar letter. I'll keep you posted - hopefully with good news.

@Jay Hinrichs First I'm hearing of this. Will be interesting to see if other states follow suit.

@Stephanie P. I've only had this experience with FHA.

@John Warren

The vacancy duration is 6 months (per the appraiser).

It makes sense that the city would want any newly built/rebuilt properties to comply with the current zoning. I am not sure under what circumstances they would allow otherwise.

@John Warren Yes, it is legal nonconforming. I ran the scenario by another company and I received the same conclusion - FHA will not accept it.

The fact that the city stated the property could not be rebuilt as is if destroyed seems to be the underlying issue for FHA. It would have to be rebuilt as a single family (not a duplex) if destroyed.

I'm assuming the city made this statement because they want the property to comply with current zoning ordinances if it had to be rebuilt. The property can continue its existing use.

I am not sure why rebuilding as a single family if destroyed makes a difference since my mortgage broker confirmed I would qualify for the property without factoring in the rental income (i.e. if this was a single family at the same purchase price I would still be able to afford the property). If I can afford to pay the mortgage and the city does not have an issue with the property continuing its existing use, then why would FHA have an issue.

Have you recently closed using FHA on a legal nonconforming property? Maybe the requirements recently changed.