306: Mixed-Use Properties

Although we will purchase or securitize mortgages that are secured by properties that have a business use in addition to their residential use -- such as a property with space set aside for a day care facility, a beauty or barber shop, a doctor's office, a small neighborhood grocery or specialty store, etc.  -- we have special eligibility criteria for them.  Therefore, the appraiser must provide an adequate description of the mixed-use characteristics of the subject property in the appraisal report and the lender must make sure that it considers these criteria and adequately addresses them.  Specifically, for a mixed-use property to be acceptable, the following criteria must be met:

The property must be a one-family dwelling that the borrower occupies as a principal residence.

The mixed use of the property must represent a legal, permissible use of the property under the local zoning requirements.  

The borrower must be both the owner and the operator of the business.    

The property must be primarily residential in nature.  

The market value of the property must be primarily a function of its residential characteristics, rather than of the business use or any special business-use modifications that were made.