FHA Requirements-well And Septic

[Appraisal Solutions]

I did an FHA appraisal for a purchase transaction and called for the subject to be hooked into the muni water available because subject was on a well.

I'm being told that FHA "no longer requires connection to public utilities on purchase transactions regardless of the feasibility to connect." That's news to me, especially considering that the well and septic distance requirements are impossible due to the lot size only being 50 feet by 80 feet.

Has anyone heard that FHA doesn't require hookup to muni svcs if available and feasible anymore? I couldn't find any such changes on FHA.gov.

 

[Deleted member 128537]

That must be new. I thought that if municipal water and sewer were feasible it was required. Interesting. Then why do we put in the report no municipal sewer or water is available? You just have to love the bureaucracy. Did you call the regional office on that? I would before I would depend upon any lender statement.

It wasn't too long ago that I did an FHA and they didn't get the loan because well and septic distances were too close. It was OK for the county, but not FHA. Which again doesn't make much sense.

 

[Appraisal Solutions]

That was plan B. I spent a little time trying to look it up so I could just send the relevant citations but I couldn't find anything recent.

Thanks for the input.

 

[Mike Kennedy]

https://www.HUD.gov/sites/documents/40001HSGH.PDF scroll to pages 510-512.

 

[residentialguy]

It wasn't too long ago that I did an FHA and they didn't get the loan because well and septic distances were too close. It was OK for the county, but not FHA. Which again doesn't make much sense.

Esp when they state that if it's OK for the county, it's OK for FHA

 

[Appraisal Solutions]

This is what Regional had to say:

"The feasibility for public water hook-up is still a requirement, but it is the Mortgagee that makes that determination. That said, if the site is too small to support the minimum distance requirements mandated by HUD Minimum Property Requirements, and a public water hook-up is available, then the hook-up becomes mandatory. Otherwise the property is unacceptable as an eligible entity for FHA insurance. The Appraisal should reflect and detail the requirements. Refer to HUD Handbook 4000.1 for additional information."

 

[Mike Garrett RAA]

Of course common sense never comes into play.