Spoof definitions and lending on rural properties

What is a rural property and why does it matter for lending purposes? Let’s look at how Fannie Mae defines a rural property, but first let’s take a pitstop through three spoof definitions that are commonplace among appraisers. At least a couple of these came from the REAA online appraiser’s forum. Do you have any definitions to add? What issues have you experienced with rural loans?

Rural – If you pee outside and nobody sees you
Suburan – If you pee outside and your neighbors call the police
Urban – If you pee outside and nobody cares

Rural – Green Acres, Lassie
Suburban – Leave it to Beaver, Desperate Housewives
Urban – Seinfeld, Ally McBeal

Pizza Definition: If they deliver pizza it’s urban or suburban. If they don’t deliver pizza, it’s rural.

Fannie Mae and most lenders view definitions of rural, suburban and urban as follows.

Urban – relates to a city
Suburban – relates to an area adjacent to a city
Rural – relates to the country or beyond the suburban area

Why does this matter whether a property is rural or suburban/urban? Sacramento area loan specialist Beth Gewerth says: “Basically, we just need to make sure the house has value. We don’t want to see a 900 sq ft home on 10 acres, as we don’t do land loans. Anything over 10 acres can be an issue and we need to look at it case by case. Also, we run into a lot of unpermitted buildings with rural properties and not all lenders will approve. We sell directly to Fannie Mae and they will allow this.” Contact Beth at 916-926-8124 or 916-730-2499 with further questions.
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