FHA Standards on a Winterized Home

[lfurr]

For FHA loans, my inspection always includes (among other things) flushing the toilet and running the water on a few of the faucets. I also include photos of the water running and the toilet flushing.

If the home I am inspecting has been winterized, I cannot check those two items. In this particular case, the client is requiring that I do an "AS-IS" inspection (while I would have preferred to make it "subject to" the plumbing working (or words to that effect).

My question is, does the home meet FHA requirements if I am unable to check these items? My thought is that if the client requires an AS-IS report, then fine, I will include an extraordinary assumption that the plumbing is in working order. But still, I would prefer state that it does not meet FHA requirements because, quite frankly, I have no clue if the plumbing is operational or not since the home has been winterized.

Thoughts appreciated. Thanks.

 

[G-man]

Well, it's been awhile since I've completed an FHA report, as I'm still a licensed appraiser, but FHA requires that the utilities be in functional condition. That means working heat, electrical system and plumbing. If the home in question doesn't meet these M.P.R.'s, then the report MUST be completed "subject to". FHA has their requirements that can go above & beyond that of the lender/client. For FHA, there can be no "As Is" if there are repairs or inspections that need to be completed. Is it possible you are confusing an "As Is" inspection (I'll leave the obvious statement that appraisers don't "inspect" anything), with an "As Is" report?

 

[lfurr]

Thanks G-man. Yeah, I am not confusing the "as-is" terminology. The client's engagement letter says "This report MUST be made AS IS regardless if it doesn't meet FHA Standards. If subject does not meet FHA standards, please state so within the report however, the report SHOULD NOT be made subject to." The upper case words are theirs, not mine. I included exactly what is shown in the engagement letter.

 

[togatour]

For FHA loans, my inspection always includes (among other things) flushing the toilet and running the water on a few of the faucets. I also include photos of the water running and the toilet flushing.

If the home I am inspecting has been winterized, I cannot check those two items. In this particular case, the client is requiring that I do an "AS-IS" inspection (while I would have preferred to make it "subject to" the plumbing working (or words to that effect).

My question is, does the home meet FHA requirements if I am unable to check these items? My thought is that if the client requires an AS-IS report, then fine, I will include an extraordinary assumption that the plumbing is in working order. But still, I would prefer state that it does not meet FHA requirements because, quite frankly, I have no clue if the plumbing is operational or not since the home has been winterized.

Thoughts appreciated. Thanks.

No, it does not meet FHA minimum standards and needs to be subject to "either" a re-inspection with the water (and any other systems you may have be unable to check) being turned on for testing OR subject to a certification by a qualified licensed contractor that the systems are in good working order.

Educate you client that when items requiring repair per FHA guidelines exost, the report can not be "as-is", ever. Copy and paste the FHA regs and send it to them, if necessary. I have done this many times for Realtors who have told me..."I have never had an appraiser ask for that............." I always tell them that it my job to report my findings per FHA guidelines and the UW makes the call as to what needs to be repaired. I always suggest they call the UW if they feel a noted repair is not required.............and it is always repaired when I go back.

 

[Renee Healion]

Isn't the seller obligated to de-wint to permit your inspection (and then re-wint)?

 

[RSW]

G-Man is correct. All mechanical systems must be functional at the time of the inspection or an inspection is required after they are functional. The Lender is giving you an unacceptable assignment condition. Refer them to the revised app. d about the inspection of the mechanical systems.

 

[RSW]

Thanks G-man. Yeah, I am not confusing the "as-is" terminology. The client's engagement letter says "This report MUST be made AS IS regardless if it doesn't meet FHA Standards. If subject does not meet FHA standards, please state so within the report however, the report SHOULD NOT be made subject to." The upper case words are theirs, not mine. I included exactly what is shown in the engagement letter.

That is definitely an unacceptable assignment condition. I would send that to your HOC.

 

[togatour]

Ifurr,

Is this an FHA assignment OR do they just want you to note any FHA repair items. If it is not an FHA assignment, an Extraordinary Assumption that the systems are working and an AS-IS value may be acceptable.


I have done pre-listing and REO appraisals where the client wanted a list of items that may be required for FHA financing, but there were not FHA Appraisals. Due you have a HUD/ FHA case number?? If so, you need to educated your client that is must be "subject-to".

 

[lfurr]

Togatour - yep, it's an FHA assignment.....with a case number.

 

[RSW]

Ifurr,

Is this an FHA assignment OR do they just want you to note any FHA repair items. If it is not an FHA assignment, an Extraordinary Assumption that the systems are working and an AS-IS value may be acceptable.


I have done pre-listing and REO appraisals where the client wanted a list of items that may be required for FHA financing, but there were not FHA Appraisals. Due you have a HUD/ FHA case number?? If so, you need to educated your client that is must be "subject-to".

You can't make an EA in the 1004 URAR without making the report subject to an inspection.