November 19, 2015
We’ve been reviewing appraisal standards and minimum property requirements as listed in the new HUD single family FHA loan rulebook, HUD 4000.1. One important section concerns environmental standards for any home purchased with an FHA mortgage.
In general the lender is responsible for insuring that homes purchased with FHA loans are, “free of all known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Propertys ability to serve as collateral, and the structural soundness of the improvements.”
The lender cannot approve homes for FHA mortgages, for example, when power lines cross over certain water-based features of the home such as swimming pools. The existence of high pressure gas pipelines may also be a problem depending on the nature and location of such lines.
Some of these environmental/safety rules are carried over from the previous guidelines (which include HUD 4155.1 and HUD 4155.2) but some are new. One of the carryover rules has to do with lead paint hazards or potential hazards in the home. Not every home purchased with an FHA mortgage is new construction, and not all are existing construction built in the last 20 years.
Some homes are much older, and as a result there may be lead paint issues to content with. When it comes to lead-based paint, FHA minimum property standards are clear:
“The Mortgagee must confirm that the Property is free of lead paint hazards.”
Other provisions of the FHA loan environmental standards are new–one such recent addition is a requirement that a home be free from contamination from methamphetamine manufacture or consumption:
“If the Mortgagee or the Appraiser identifies a Property as contaminated by the presence of methamphetamine (meth), either by its manufacture or by consumption, the Property is ineligible due to this environmental hazard until the Property is certified safe for habitation.”
As you can see, the FHA takes such considerations very seriously. The lender will be required to get a determination (via the appraisal process) to see what corrections may be required in order to bring a home into compliance with these regulations as a condition of loan approval.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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