Illegal Accessory Units on Conventional Transactions

HomeBridge would like to remind brokers of Fannie Mae’s policy on properties with illegal accessory units.

One or two unit properties with an illegal (non-permitted) accessory unit (aka in-law/granny unit) addition are eligible subject to the following:

  • The appraiser must indicate the illegal use conforms to the subject neighborhood and market.
  • The property must be appraised based upon its current use.
  • The borrower qualifies for the loan without considering any rental income from the illegal unit.
  • The appraisal must state the improvements represent an illegal use.
  • The appraisal demonstrates that the improvements are typical for the market. A minimum of three comparable properties, with the same type of illegal use, must be provided.
  • The illegal unit cannot jeopardize any potential future hazard insurance claims.

The HomeBridge Agency Conforming and Agency High Balance matrices have been updated with this information and posted on the HomeBridge website at www.homebridgewholesale.com.

If you have any questions, please contact your Account Executive.