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Old 09-19-2007, 09:00 PM
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Default Feasability to connect to public water/sewer

In all my previous cases when an assignment was FHA and the subject was on a well or septic, it was not even remotely feasible to connect to city water or sewer except. So assume I have a property now that is on a well and septic and to connect to city services it would be feasible, although that term leaves some room for a lot interpretation I believe. Anyways say the city connections are with 500ft or so and the home owner has said it would cost approx. $10k to connect to them according to the city. How do you determine if it is feasible? Is it just a monetary test that it must pass to be feasible or is it just the connections being in reasonable proximity to the subject? If it is determined that it is feasible, how does the appraiser handle this in the appraisal? Is just a simple statement saying the connections are within 200ft and it would cost $10k according to the city to connect enough?
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Old 09-19-2007, 09:58 PM
Matt Mattina Matt Mattina is offline
 
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Newbie, here! Avid forum reader - new to posting........here goes.......

I just did one where the community water system was 1000+\- feet away, and went with the "I report, You decide" technique. Which is how I understand it from HUD.Gov

I think the appraisal questions to be answered are: does the lack of connection affect the marketabilty and/or, health and safety of the occupants? Does the system have a reasonable remaining life? Is expansion of the current improvements needed? and would connecting allow for use of excess land now reserved for the septic system?, etc.

The follwoing is from www.HUD.gov - which refers to a 3% benchmark................

.The lender is responsible to ensure the community system(s) is licensed and capacity is adequate to service the property. The appraiser must note if public sewer is available to the subject site.

B. Individual Sewage Systems:

1. Individual sewage systems may be acceptable when the cost to connect to a public or community sewage system is not reasonable as defined by the lender.


a) 3% or less of the estimated value of the property is the suggested benchmark.
b) The lender is responsible for determining if connection is feasible.

2. If the property cannot be connected to a public system, FHA will accept individual sewage systems that are acceptable to the local health authorities. This includes numerous types of sewage systems including cesspools, individual pit privies, and mound systems.
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Old 09-19-2007, 10:16 PM
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I have seen this comment throughout the 4150.2 regarding utilities,


Note: The appraiser shall indicate whether a public water or sewage disposal system is available to the site. If available, connection must be made to public or community water/sewage disposal system if connection costs are reasonable. The lender will determine whether connection is feasible.


However I have not seen the 3% rule you noted. Do you have a location for that?
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Old 09-19-2007, 10:36 PM
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Quote:
Originally Posted by Vegan702 View Post
..... Do you have a location for that?
HUD Handbook 4150.2.
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Old 09-19-2007, 11:24 PM
Matt Mattina Matt Mattina is offline
 
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http://www.hud.gov/offices/hsg/sfh/ref/chap1.cfm
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Old 09-20-2007, 12:22 AM
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Thanks, I have been reading more where they talk about filling out each section of the URAR.

What do you do when you go to a home and the home owner does not know the location of the well or septic?
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Old 09-20-2007, 06:50 AM
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A few answers for you:

8. If hook-up to public water is available, must the homeowner do it?
The appraiser is required to report on the availability of connection to public and/or community water/sewer systems. The lender is responsible for the determination of the feasibility for requiring connection.

Utilities - Well and Septic
1. Is the appraiser still required to report well, septic and property line distances on an addendum to the URAR or is this only required when problems are noted? How is the lender to determine if these distance requirements are met if the appraiser is not required to identify?
The appraiser is not required to sketch the distances between the well and septic, however, he or she should be mindful of FHA's minimum distance requirements between private wells and sources of pollution (septic systems) in the performance of FHA appraisals; and, if discernible, comment on them. Prudent appraisal practice would have the appraiser requesting a copy of a survey from the homeowner, if available.
If the appraisal notes a distance issue it could be potential for contamination. If the appraisal notes any adverse site conditions, that may warrant further inspections or due diligence. In either case, it is the lender's decision as to whether a qualified third party should map the distances and/or require testing for compliance with local or state requirements, or, in their absence, FHA requirements. Appraisers are expected to have geographic competency, which would include familiarity with local or customary inspection requirements. Local or customary requirements should be noted within the appropriate area of the appraisal report. However, the decision to require a test, certification or inspection, other than what is automatically required as noted in ML 2005-48, is made by the lender and FHA requires the lender to be familiar with the market areas in which they lend.
2. Is it mandatory for a well/septic report to show distance to lot lines?
There is no standardized well/septic report and its contents would typically be determined by what is requested. If a lender determines that there is a need to confirm distances between well and septic systems, or lot lines, then the lender would specifically request that a qualified third party measure such distances.

Found here: http://www.hud.gov/offices/hsg/sfh/appr/aprval.pdf
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Old 09-20-2007, 12:40 PM
Matt Mattina Matt Mattina is offline
 
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Mr. Rex beat me to it!
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Old 09-20-2007, 12:59 PM
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Quote:
Originally Posted by Mr Rex View Post
Utilities - Well and Septic
1. Is the appraiser still required to report well, septic and property line distances on an addendum to the URAR or is this only required when problems are noted? How is the lender to determine if these distance requirements are met if the appraiser is not required to identify?
The appraiser is not required to sketch the distances between the well and septic, however, he or she should be mindful of FHA's minimum distance requirements between private wells and sources of pollution (septic systems) in the performance of FHA appraisals; and, if discernible, comment on them. Prudent appraisal practice would have the appraiser requesting a copy of a survey from the homeowner, if available.
If the appraisal notes a distance issue it could be potential for contamination. If the appraisal notes any adverse site conditions, that may warrant further inspections or due diligence. In either case, it is the lender's decision as to whether a qualified third party should map the distances and/or require testing for compliance with local or state requirements, or, in their absence, FHA requirements. Appraisers are expected to have geographic competency, which would include familiarity with local or customary inspection requirements. Local or customary requirements should be noted within the appropriate area of the appraisal report. However, the decision to require a test, certification or inspection, other than what is automatically required as noted in ML 2005-48, is made by the lender and FHA requires the lender to be familiar with the market areas in which they lend.

Thanks for the link Rex, however they do leave a lot for interpetation by people who are not experts in this. It would seem that in every report I would be better served by annotating that the distances between the well and septic could not be discerned, so I recommend an inspection by a qualified individual in this area. I have yet to have a home owner provide me with a survey of the site, except when doing plans and specs.
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Old 09-20-2007, 01:01 PM
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