FHA Septic & Well Appraiser Lawsuit

[Mike Ault]

I have been curious about the outcome of your predicament since you first posted it. I'm sorry that you're still in legal limbo. Thanks for the update, and please keep us abreast of your case as it evolves. It's an excellent example of what can happen when appraisers don't verify important facts regarding the subject. Best of luck to you!

 

[jay trotta]

The seller listed it correctly as septic and well, there was a seller's disclosure as well as a septic pump receipt provided to the appraiser since my agent and I asked for the tanks to be pumped in the sales contract. Yes first home.

Are there more than (1) septic tank ?
What is the Local Municipal Health Dept. requirement in regard to distance Well to Septic? Different States, different requirements.

Noting what you stated above, it all being noted in the Purchase & Sales Agreement, I find it interesting no one, picked it up (IE: Lender/UW/In House reviewer-machine technology)

 

[Huds_Harm]

I have been curious about the outcome of your predicament since you first posted it. I'm sorry that you're still in legal limbo. Thanks for the update, and please keep us abreast of your case as it evolves. It's an excellent example of what can happen when appraisers don't verify important facts regarding the subject. Best of luck to you!

Thank you!

 

[Huds_Harm]

Are there more than (1) septic tank ?
What is the Local Municipal Health Dept. requirement in regard to distance Well to Septic? Different States, different requirements.

Noting what you stated above, it all being noted in the Purchase & Sales Agreement, I find it interesting no one, picked it up (IE: Lender/UW/In House reviewer-machine technology)

Only 1.
Local codes require a waiver for the replacement systems water well being less than 100 ft from the drainfield, but FHA does not accept anything less than 75ft in this case even the replacement system would not meet minimum property requirements. 66ft

It makes sense to me now that they have no incentive to point out the error when they can close the loan knowing HUD will not hold them accountable.

They told the lender "there was no way they could have known."

I've seen posts about this particular lender "forcefully" telling appraisers they only accept as is appraisals meaning any subject to further inspection to meet FHA minimum property requirements conditions would have to be removed.

 

[Terrel L. Shields]

I take it the well is being contaminated by the septic? And the septic was defective and you now are faced with trying to hook to city water and there is no sewer? I mean, I'm a mite behind on this situation. But it does look like the appraiser was negligent in this case and the lender/FHA, by not reviewing it, has some responsibility but OTOH, someone doing a desk review of the report would likely just have assumed the original appraiser was correct in determining it had well and septic.

 

[Elliott]

So how much did checking the wrong box cost? By the way, my brother lives in a subdivision that has a septic holding tape, then it is pumped to a 'community drain field' that is under control of the HOA. The system is not private, but not public either.

And what difference did it make in the properties market value?

 

[Huds_Harm]

I take it the well is being contaminated by the septic? And the septic was defective and you now are faced with trying to hook to city water and there is no sewer? I mean, I'm a mite behind on this situation. But it does look like the appraiser was negligent in this case and the lender/FHA, by not reviewing it, has some responsibility but OTOH, someone doing a desk review of the report would likely just have assumed the original appraiser was correct in determining it had well and septic.

The system has failed and there is not sufficient room for repair or replacement to bring it up to today’s code at a reasonable cost.
Per HUD the lender was required to order a field review due to it being an older home in average condition with zero repair requirements prior to closing.

 

[Huds_Harm]

So how much did checking the wrong box cost? By the way, my brother lives in a subdivision that has a septic holding tape, then it is pumped to a 'community drain field' that is under control of the HOA. The system is not private, but not public either.

And what difference did it make in the properties market value?

It has cost two years of having to live in a health hazardous home due to not having the funds for alternate living expenses on top of an attorney and $30,000 of unnecessary attorney fees due to HUD not enforcing the required field review to prove the property was not eligible for the loan that would have forced the bank to mitigate 2 years ago. If I have to walk away it will also cost the difference in home prices from 2021-2023 at more than double the interest rate.

 

[Elliott]

In Oregon, when a septic system is approved for a new house, it requires an area for a replacement drainfield. My neighbor recently had his 'original' drainfield completely dug up and replaced with new coarse sand (previous owner, a greenskeeper, 'made up' the last one). In my county, all septic tank records are public and on line for the last 40-years.

 

[Dublin ohio]

If the appraiser had listed the information about the well and septic. The result would have been FHA turning down the loan. No inspections would have been required. FHA insures the loan. They do not "guarantee" the condition of the property. If you had gone conventional. The lender may or may not have required any inspections. Unless the appraiser observed any visible surface issues with the septic.