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# II. Origination Through Post-Closing/Endorsement
## D. Appraiser and Property Requirements for Title If Forward and Reverse Mortgages
### 3. Acceptable Reporting Forms and Protocols (04/10/2025)
Any nonresidential use of the Property must be subordinate to its residential use, character, and appearance. Nonresidential use may not impair the residential character or marketability of the Property. The nonresidential use of the Property must be legally permitted and conform to current zoning requirements.
#### (2) Required Analysis and Reporting
- The Appraiser must calculate the nonresidential portion of any residential Property. Storage areas or similar spaces that are integral parts of the nonresidential portion must be included in the calculation of the nonresidential area.
- The Appraiser must comment on any nonresidential use within the Property and state the percentage of the Total Floor Area that is utilized as nonresidential. The Appraiser must report whether the nonresidential usage is legal and in compliance with current zoning requirements.
- The Appraiser must contact the Mortgagee if the nonresidential portion of the Property exceeds 49 percent.
### (C) Zoning
#### (1) Standard
FHA requires the Property to comply with all applicable zoning ordinances.
#### (2) Required Analysis and Reporting
- The Appraiser must determine if current use complies with zoning ordinances.
- If the existing Property does not comply with all of the current zoning ordinances but is accepted by the local zoning authority, the Appraiser must report the Property as “Legal Non-Conforming” and provide a brief explanation. The Appraiser must analyze and report any adverse effect that the nonconforming use has on the Property’s value and marketability, and state whether the Property may be legally rebuilt if destroyed.
### (D) Encroachments
#### (1) Definition
An Encroachment refers to an interference with or intrusion onto another’s property.
#### (2) Standard
The Appraiser must report the presence of any Encroachments so that the Mortgagee can determine eligibility.
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**Handbook 4000.1 823**
**Last Revised: 01/10/2025**