May 17, 2016
In our previous blog post we discussed FHA loan appraisal standards and answered a reader question about what it means for FHA/HUD standards to include the term “whenever feasible” in relation to certain features such as city utilities (versus wells or cisterns, for example).
Further clarification of the FHA and HUD position on minimum property standards is available from the HUD official site (www.HUD.gov), which includes the following background information:
“Until the mid-1980’s, HUD maintained separate Minimum Property Standards for different types of structures. Since that time, HUD has accepted the model building codes, including over 250 referenced standards, and local building codes, in lieu of separate and prescriptive HUD standards.”
But, the official site adds, there is an important difference when it comes to the FHA/HUD standards versus other kinds of minimum property requirements. “…there is one major area of difference between the MPS and other model building codes: durability requirements. Homes and projects financed by FHA-insured mortgages are the collateral for these loans and their lack of durability can increase FHA’s financial risk in the event of default.”
Durability is clearly an important part of any home’s remaining economic life, and that includes specific features of the home mentioned in this section of the HUD official site.
“More specifically, the model codes do not contain any minimum requirements for the durability of such items as doors, windows, gutters and downspouts, painting and wall coverings, kitchen cabinets and carpeting. The MPS includes minimum standards for these, and other items, to ensure that the value of an FHA-insured home is not reduced by the deterioration of these components.”
As we mentioned in our previous blog post, FHA and HUD minimum standards do address certain aspects of the home, especially as mentioned above. But other areas are left to state or local building codes as the FHA and HUD do not have any power to overrule these codes. But what about areas that have no building codes? According to the HUD official site:
“HUD requires that each property insured with an FHA mortgage meet one of the nationally recognized building codes or a State or local building code based on a nationally recognized building code. In areas where such State or local codes are used, HUD determines if the State or local code is comparable to the model building code. There are also areas of the United States that do not have building codes. If no State or local building code has been adopted, the appropriate HUD Field Office will specify a building code that is comparable to one of the nationally recognized model building codes.”
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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