April 27, 2015
A reader asks, “I have a client that is FHA approved, and has had their appraisal done but can not locate the well. Well and septic have been tested and municipality has signed off on both stating they were ok with the way they are.”
“My clients lender says no way, must meet the 50′ set back, other lenders say we can do it as long as you have the letter from the township My buyers dont want to start over as they are set to close on the house they are selling in 2 weeks. How can one bank say something different from another while following FHA guidelines?”
There are several unanswered questions to go along with this reader question–are the lenders interpreting local or state building code or other ordinances when they make these decisions?
Have state or local codes been updated recently and are the lenders making these decisions aware of those changes? Or is this a question of the FHA appraiser filling out an appraisal report in this case that requires the “50′ set back” as described in the reader question?
FHA loan rules–and FHA appraisal rules–are not the only requirements that must be met. If a property meets FHA minimum standards, but does not also live up to state or local code, this may be a sticking point at appraisal time.
Based on our reading of this question (and nothing else) it sounds as if some lenders are willing to make provisions for something that technically does not meet an on-paper state or local requirement, but only if the township with jurisdiction is willing to sign off on the exception.
That may or may not be acceptable at FHA appraisal time, so the borrower or seller should know that in situations like these such an issue may be handled on a case-by-case basis. It may be necessary in some transactions to contact the FHA directly for a waiver, in other cases that may not be possible. Contact the FHA directly for assistance in cases where a waiver may be required by calling 1-800 CALL FHA.
Do you have questions about FHA loans? Ask us in the comments section. All questions and comments are held for review before they appear on the site.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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