economic life
482) Remaining Economic Life
05/01/09
Dear H2,
A house was built in 1970, and the remaining economic life is 21 years. The borrower is doing a 30 year fixed loan, but with the remaining economic life noted on the appraisal, the lender will not do the loan. Please advise if anything can be done about this. What do you recommend?
David L. Waller dlwall1@mchsi.com
Dear David,
It is not up to the appraiser to try and make a mortgage work. However, it is also not clear how you could come up with exactly a 21 year remaining economic life. It sounds like you may have used some mathematical formula, which is not an acceptable way to do this. The estimate of remaining economic life should be based on your judgment about the condition of the improvements, and what you find in your market. If you add the existing age of 39 years to your 21 year remaining economic life estimate, you get a total economic life of 70 years for similar houses in your market area. Is this true based on your observations?
H2
A house was built in 1970, and the remaining economic life is 21 years. The borrower is doing a 30 year fixed loan, but with the remaining economic life noted on the appraisal, the lender will not do the loan. Please advise if anything can be done about this. What do you recommend?
David L. Waller dlwall1@mchsi.com
Dear David,
It is not up to the appraiser to try and make a mortgage work. However, it is also not clear how you could come up with exactly a 21 year remaining economic life. It sounds like you may have used some mathematical formula, which is not an acceptable way to do this. The estimate of remaining economic life should be based on your judgment about the condition of the improvements, and what you find in your market. If you add the existing age of 39 years to your 21 year remaining economic life estimate, you get a total economic life of 70 years for similar houses in your market area. Is this true based on your observations?
H2