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FHA Lead Paint Issue.

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GCJim

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New Jersey
This is probably more of an FHA underwriting question than an appraisal issue. A Realtor asked me a question about this, and after spending 1-1/2 hours plus on the FHA site, I can't say that I found a direct answer.
Thus, I am throwing it out there. I'm interested, as this situation may be common in some areas.

Here is the scenario.......
Realtor listed older home, needs some work; FHA buyer had a home inspection and lead paint inspection; lead paint was detected on 2 walls and on some 'friction' surfaces (window glides); buyers had a Certified lead remediation company come in to estimate cost of remediation; Remediation company wants to sheet rock 2 walls and strip the paint from around the offending windows. (pretty big $ number, btw........)

What does FHA / Underwriter / Lender want to see in order to approve FHA loan in a case like this? What should sellers do? Can they have the place painted to 'encapsulate' the existing lead paint?

(PS - I have to believe that a very large percentage of homes in NJ have at least some lead paint. It seems like there is a certain hysteria surrounding the lead paint issue with some??? I am envisioning the abatement company cordoning off the block, erecting a huge air-tight bubble over the offending home, federal haz-mat teams in rubber suits, evacuating the neighborhood, the helicopters, you know, like right out of ET when the little fella was discovered living with the kid.................is the state-certified lead abatement business also..........dare I say it...........a good scam these days???.....just asking......)

Anyone been thru this? Thanking you all in advance for any insight.
 
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GCJim

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New Jersey
Thank you Greg.
I was hoping (no, make that PRAYING) for a straight(er) answer than what I have already been reading for hours.....I can't seem to locate a direct answer in the FHA regs.
 

CANative

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I can't tell if the reference solved your problem or not.

The "FHA reg" is to comply with CFR 24, Part 35. You can find the "FHA reg" in many of the handbooks including 4150.2 and specifically in Appendix D where it states:

Lead Based Paint Hazards
For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint. For all FHA insured properties, correction is required to all defective paint surfaces in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35. Provide a detailed description and identify the exact location of any deficiency under “physical deficiencies” affecting livability.
 

Jerry Bone Jr

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Oregon
Jim, Lead-based paint is not the issue. Defective lead-based paint is the issue.
If the lead-based paint is not defective (chipping, pealing, or scaling) then it's OK with HUD/FHA.
If any paint is defective then "correction is required to all defective paint in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35." This applies to non-lead-based paint too.
 

CANative

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I don't think Jim was asking a question from the appraiser's point of view.
 

Farm Gal

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Nebraska
Encapsulation is fine, BUT it must be done properly or the remediation process can make more of a problem than the original issue. Encapsulation does not neccesarily require layering additional drywall - probably the windows are a bigger problem and those are cheaper and easier to jsut remove and replace!

The property owner should ensure that any work is done 'properly' and yeah that may involve hiring a Lead certified company...

There is a house in Lawrence KS where the owner hired a local contractor, who had college kids sandblast and repaint the place... only problem was it was ALL LBP which they cheerfully puverized and sent airborne...

The dust drifted several hundred feet, the blasters, the kids in the neighboring DAY CARE and homes all around wound up with Elevated Blood Levels of lead, LBP contamination requiring scraping of the top layers of dirt all around, and serious decontam issues.

It woudl have been a lot cheaper to strip off all the siding and start over!

The other problem is depending on how the LBP testing was done, there may or may NOT be a situation requiring remediation!!! XRF testing may indicate LBP several layers down - which is NOT a situation requring remediation, but may forever 'scar' the value, because it is now a known problem requring disclosure!

First find out what you are dealing with, then find out what IS required... not just recommended.
 

GCJim

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Certified General Appraiser
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New Jersey
Thanks all for the input so far....much appreciated! This is a very interesting situation that raises lots of questions (for me, anyway). The situation for sellers appears to be a lose-lose proposition, and I'm also dying to know more about these 'certified' companies. (I think I may be in the wrong business.....lol).
FARM GAL, your response is more of what I am looking for.

1.) A lead inspection (separate from the home inspection) ordered by the buyers revealed 2 interior walls (I think) and several window friction surfaces as having DEFECTIVE lead-based paint via a lab test.
2.) Then, a state-certified remediation company (there are only a handful in the state) came in with their 'recommendations', to the tune of many thousands.
3.) THE BIG QUESTIONS:
a.) What exactly is required by the FHA DE Underwriter / FHA to approve an FHA mortgage based on this scenario? (I called FHA directly and I was told they would only accept a call from a DE Underwriter. I thought this was very odd.) Sellers intend to comply, I believe, but don't know what is needed. No one seems to have a definitive answer.
b.) What do the sellers specifically need to do? Can it simply be painted by a painter using safe techniques? Does it have to be done by a Certified Lead Abatement company? They are backed up for months and want to charge usurious fees, imho. (If the sellers painted it themselves prior to the sale, in any manner, by any painter, lead paint could still be detected below the surface, but no one would be asking questions (dontcha think?), as it is very much assumed around here that houses built before 1978 have lead paint.) Where does all the contents of the dumpsters filled with rubble from house remodeling projects all over the country go? Do you think there might be lead paint in any of those? Do you think each one gets inspected? Tested? (I certainly don't. And, the genie is permanently out of the bottle when it comes to lead paint, kids....let's face it.)
c.) What if the sellers disagree with the 'findings' of the certified lead abatement company, wanting to sheet rock? What are the alternatives?
(I think the bottom line is, that if every house built prior to the outlawing of lead paint was actually inspected, there would be complete chaos in the world of real estate sales. Dontcha think?)
What do the sellers need to do? and.... what does the FHA DE Underwriter need?
 
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OCApp

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It would be interesting to find out how many people nationwide have died or even gotten sick from lead based paint in pre 1978 homes.
 

Doug DeMars

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Mar 20, 2009
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Certified Residential Appraiser
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California
Seems like a lot of hysteria around this issue. I was only 8 when lead-based paint was being removed from the market. I vaugely remember lead being removed from gas because of the impact it had in the air from auto exhaust.

I think I remember a story of some babies that would chew on a crib painted with lead-based paint and subsequently get brain damage...the ol' "did you eat paint chips as a kid?" joke comes to mind. Or maybe the story was a window sill painted with lead-based paint and a toddler was chewing on the window sill? I've been under the impression that incidential contact was not an issue. Ingesting or breathing it...well that was a different story.

31 years since 1978 and you bet there are a lot of homes built before then. Most homes at least 30 years old usually have some type of updating. If they still have chipping paint...the place must be very neglected by now. Unless it's a dump from yesteryear...I'm guessing the current chipping paint is more likely to come with paint from after 1978 than before.
 
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