Under Fannie Mae's Selling Guide, a draft neighborhood description notes the religious makeup of the area and the familial status of nearby residents. How should these remarks be handled?
Correct Answer
C) Remove them, since they are not appraisal factors
Fannie Mae states that characteristics that are not appraisal factors, including religion and familial status, must not be considered in the valuation process either partially or completely, and no reference to protected classes of nearby occupants should be considered or reported. Neutral wording does not cure the problem, and these remarks are not land uses. Giving them little weight is still partial consideration, which the guide forbids.
Why This Is the Correct Answer
Option C is correct because religion and familial status are characteristics that are not appraisal factors and must not be considered in the valuation process either partially or completely. The guide also says no reference to protected classes of present owners or occupants in the vicinity should be considered or reported, so the remarks come out.
Why the Other Options Are Wrong
Option A: Keep them if worded in neutral, factual terms
Option A keeps the remarks if worded neutrally, but the issue is the subject matter itself; references to protected classes of nearby occupants should not be considered or reported at all.
Option B: Keep them as part of the present land use entry
Option B moves the remarks into the present land use entry, but religious makeup and familial status describe people, not land uses, and they should not be reported.
Option D: Keep them but give them little weight in the value
Option D keeps the remarks with little weight, but the guide bars considering these characteristics even partially, so reduced weight is still not allowed.
People traits are not factors
Describe the place, not the people: land uses, market forces and amenities belong in the report; protected traits of residents do not.
How to use: Use this when a question asks whether a description of residents' characteristics belongs in a neighborhood analysis.
Exam Tip
Look for options that soften the problem with neutral wording or low weight; the guide bars any consideration of these characteristics.
Common Mistakes to Avoid
- -Thinking neutral wording makes protected-class remarks acceptable
- -Giving such characteristics reduced rather than no weight
Concept Deep Dive
Analysis
The question tests Fannie Mae's rule on characteristics that are not appraisal factors. The key is that the prohibition covers both partial and complete consideration, and also reporting.
Background Knowledge
Fannie Mae requires appraisers to report neighborhood conditions in factual, specific terms and to consider market forces such as economic, governmental and environmental factors. It separately lists characteristics that are not appraisal factors, such as sex, race, color, religion, disability, national origin and familial status, which must not be considered or reported.
Real-World Application
During review, an appraiser finds a trainee's draft describing the neighborhood by the faiths and family types of residents. The appraiser deletes those remarks and rewrites the section around boundaries, land uses, amenities and market data.
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