Defective Paint - Fannie Mae

[TKA524]

First time poster and would like to get some feedback from fellow appraisers. For homes built prior to 1978, does anyone else call for defective paint to be corrected for conventional mortgages? Does anyone else consider this a safety issue requiring repair?

 

[Mile High Trout]

If you use alamode, find the environmental addenda, and use that.

For HUD direct, they have a convenient process where they test potential flaking paints for certain age of homes, if flaking is present. Handling much of it via property preservation. So sometimes I get corrected for calling the paint, because they have specific engagement that states within certain age ranges they run tests, and so appraisers don't need to call it.

But for typical mortgage lending, you don't have a client assisting you with lead testing, so there is no stop gap like that.

You see potentially lead based paint flaking off substantially for an older home, you photograph it closely and call repair.

http://www.HUD.gov/offices/lead/training/LBPguide.pdf Picked this up from another poster, good link to keep.

Your specific guidance is in there somewhere. http://portal.HUD.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee

This is the convenient one which filters out for appraisers: http://portal.HUD.gov/hudportal/HUD?src=/program_offices/housing/sfh/appr/apprmls

Bookmark, read up, and you'll have a great gameplan I'm sure.

 

[CANative]

I'd describe the condition but I would not condition the appraisal on repair unless it was a very serious problem.

 

[TKA524]

If you use alamode, find the environmental addenda, and use that.

For HUD direct, they have a convenient process where they test potential flaking paints for certain age of homes, if flaking is present. Handling much of it via property preservation. So sometimes I get corrected for calling the paint, because they have specific engagement that states within certain age ranges they run tests, and so appraisers don't need to call it.

But for typical mortgage lending, you don't have a client assisting you with lead testing, so there is no stop gap like that.

You see potentially lead based paint flaking off substantially for an older home, you photograph it closely and call repair.

http://www.HUD.gov/offices/lead/training/LBPguide.pdf Picked this up from another poster, good link to keep.

Your specific guidance is in there somewhere. http://portal.HUD.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee

This is the convenient one which filters out for appraisers: http://portal.HUD.gov/hudportal/HUD?src=/program_offices/housing/sfh/appr/apprmls

Bookmark, read up, and you'll have a great gameplan I'm sure.

Thanks for the links! I will check them out. Preservation is also another aspect of peeling paint, may lead to a soundness issue. This home in particular does have some peeling paint which I would have repaired if it were FHA but I have always been on the fence regarding conventional 1004s. HUD appearently sees it as a safety/soundness issue so I was curious how others were handling this since the Fannie changes their protocols in regards to C6 condition items. Thank you for your repsonses.

 

[TKA524]

Thanks. Sort of how I have been handling them up until this point. BTW, love the quote, that guy was something.

 

[incognito]

It is a scope of work issue. FNMA has no specific requirement, but most lenders do. Ask the lender how to proceed. Seems pretty simple?

 

[TKA524]

FNMA is concerned with safety/soundess/scrutural issues. Whether defective paint surfaces are a safety/soundness issue is somewhat of a grey area just like many other safety issues. FHA makes is clear defective paint has to be remediated on homes built prior to 1978, FNMA doesn't specifically address it. If you are using the 1004 and FNMA is an end user, then the scope of work should include identifying conditions and requiring repair when needed.

 

[JSmith43]

https://www.fanniemae.com/content/announcement/sel1106.pdf


Fannie Mae did some guidelines "clarifying" after the UAD roll out.

Condition items that affect the Safety, Soundness and/or Structural Integrity of the property are items that should be conditioned for repair.

Fannie Mae will accept loans for delivery that are rated C1 through C5.

Last I heard, Freddie Mac wanted only C1-C4. Has anyone heard any different?

Edit: Right on, what TKA524 said above in post #7.

 

[huntercharlie]

[url]https://www.fanniemae.com/content/announcement/sel1106.pdf[/URL]


Fannie Mae did some guidelines "clarifying" after the UAD roll out.

Condition items that affect the Safety, Soundness and/or Structural Integrity of the property are items that should be conditioned for repair.

Fannie Mae will accept loans for delivery that are rated C1 through C5.

Last I heard, Freddie Mac wanted only C1-C4. Has anyone heard any different?

Edit: Right on, what TKA524 said above in post #7.

Per Freddie's Selling Guide;


A Mortgaged Premises that has a UAD condition rating of C5 or C6 is not acceptable collateral in the "as is" condition to secure a Mortgage sold to Freddie Mac. Mortgages secured by a property with a C5 or C6 rating are eligible for delivery to Freddie Mac only if all issues that caused the property to be rated C5 or C6 are cured prior to delivery of the Mortgage to Freddie Mac. It is acceptable for an appraisal to be completed subject to repairs or alterations required for the subject property to be rated C4 or better. If the appraisal is completed subject to repairs or alterations, then the UAD condition rating should reflect the overall condition of the subject property on the basis of a hypothetical condition that the repairs or alterations have been completed

 

[pat outlaw]

related question; i have a house that is a solid c4, no issues; but it has a detached garage that is in very poor/falling down condition; i know this has been discussed regarding FHA, but how about on a conventional/fannie report