Freddie Mac Single-Family Seller/Servicer Guide 4502.6 — Appraisal requirements for Community Land Trust Mortgages

Freddie Mac Single-Family Seller/Servicer Guide 4502.6 — Appraisal requirements for Community Land Trust Mortgages

Effective 2025-03-05 · Freddie Mac's stamp for this section

In addition to the other Guide requirements related to appraisals, an appraisal for each Community Land Trust Mortgage must meet the requirements in this section. Freddie Mac requires the appraiser to develop the opinion of value for the leasehold interest based on the hypothetical condition that the property rights being appraised are the leasehold interest without the resale and other restrictions included in the Community Land Trust Ground Lease, which are removed by Form 490, Community Land Trust Ground Lease Rider, upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure. Appraisal requirements include: ■ The Seller must ensure that the appraiser is knowledgeable and experienced in appraising a property subject to a leasehold estate held by a Community Land Trust ■ The appraiser must analyze the property subject to the Community Land Trust Ground Lease ■ The appraiser must describe the terms and restrictions of the Community Land Trust Ground Lease and Form 490 ■ The appraised value of the property must be well supported and correctly developed by the appraiser ■ The appraiser must develop the opinion of value for the leasehold interest based on the hypothetical condition that the property rights being appraised are the leasehold interest without the resale and other restrictions included in the Community Land Trust Ground Lease, which are removed by Form 490 upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure ■ On the appraisal report form, the appraiser must: ❑ Indicate “leasehold” as the property rights appraised ❑ Report the applicable ground rent paid to the Community Land Trust ■ For a property subject to a leasehold interest created by a Community Land Trust, the appraiser should use sales of similar properties that are subject to other types of leasehold interests as comparable sales. If this is not possible, the appraiser may use sales of properties that are owned in fee simple. The appraiser should make appropriate adjustments to reflect the differences in market value for the properties subject to the other types of leasehold interests based on the terms of leases and the properties that are owned in fee simple. ■ When the Market Area has sales activity for other leasehold interests created by a Community Land Trust, the appraiser should analyze and report them in the appraisal report but not use them as comparable sales if their sales prices were impacted or limited by restrictions in the ground lease ■ Because Freddie Mac’s appraisal report forms do not include space to provide all the details required for appraising a property subject to a leasehold interest held by a Community Land Trust, the appraiser must attach an addendum to the appraisal report to provide any information that cannot otherwise be presented on the appraisal report form. The appraiser must check the box “as is” and include in the addendum an expanded discussion of the comparable sales used and considered. The addendum must also include the following statement: “This appraisal is made based on the hypothetical condition that the property rights being appraised are the leasehold interest without resale and other restrictions that are removed by Form 490 upon foreclosure.”

Source: Freddie Mac Single-Family Seller/Servicer Guide 4502.6 — Appraisal requirements for Community Land Trust Mortgages · source URL · snapshot 4c94f67729042dd6