I have a borrower that was looking to refinance property. The evaluation on the property stated that the upper two floors of the 3-story collateral building contained 2 residential units. However, the owner of the property stated to the lender that the two upper floors were rented to one individual as a single rental unit. Soooo....do I report this as 1 unit, or 2. It is technically being used as a one unit.....

4. Best information available. A financial institution may rely on the best information readily available to the financial institution at the time final action is taken and on the financial institution's own procedures in reporting the information required by § 1003.4(a)(31). Information readily available could include, for example, information provided by an applicant that the financial institution reasonably believes, information contained in a property valuation or inspection, or information obtained from public records.

I think you could rely on this language to report it as 1 unit (or conversely, if your appraisal says it's 2 units, i think you could rely on this language to report 2 units). In other words, as long as you're relying on the best information available, i think you can defend your choice either way.

Thank you Raitchjay

However, the owner of the property stated to the lender that the two upper floors were rented to one individual as a single rental unit.

So in a nutshell the owner is renting 2 units to one renter. How the renter uses the 2 units does not IMO change the fact there are 2 units.