Public Sewer Connection: Feasibility

[David S. Roberson]

Who gives a crap what the borrower can afford? Does the borrower's financial situation determine market reaction? Are you appraising the property, or the borrower?

 

[Mike Ault]

Oh, boy. Lot of FHA appraisers here don’t know this.

1. If it is economically feasible, FHA requires connection. It is not up to the borrower.
2. FHA gives us a guideline on economically feasible. If the cost to connect is less than 3% of the mortgage, it is “economically feasible”.

3. Yes, it is our responsibility to note this! We can get an estimate to connect. If a purchase, the contract will state the loan amount the buyer is looking for. If it it is a refinance, we can ask the lender.

4. We can use our head. If no public sewer is available on the street, say so and find out how far away it is and state that it is not feasible. If it runs in front of the property and the dwelling is not hundreds of feet back from the road, revert to 1, 2, and 3.

Appraisers are not required to estimate the cost to connect to a public sewer system.

ii. Required Analysis and Reporting

The Appraiser must note the deficiency of MPR or MPS and notify the Mortgagee if the
Property is not served by an off-site sewer system and any living unit is not provided with
an Onsite Sewage Disposal System adequate to dispose of all domestic wastes in a
manner that will not create a nuisance, or in any way endanger the public health.
The Appraiser must visually observe the Onsite Sewage Disposal System and its
surrounding area. The Appraiser must require an inspection to ensure that the system is in
proper working order if there are readily observable signs of system failure. The
Appraiser must report on the availability of public sewer to the site.
The Appraiser must note the deficiency of MPR or MPS and notify the Mortgagee if the
Appraiser has evidence that the Onsite Sewage Disposal System is not sufficient.

* Excerpted from page 848 of HUD Handbook 4000.1, Revised 05/20/2024

 

[jay trotta]

Appraisers are not required to estimate the cost to connect to a public sewer system.

ii. Required Analysis and Reporting

The Appraiser must note the deficiency of MPR or MPS and notify the Mortgagee if the
Property is not served by an off-site sewer system and any living unit is not provided with
an Onsite Sewage Disposal System adequate to dispose of all domestic wastes in a
manner that will not create a nuisance, or in any way endanger the public health.
The Appraiser must visually observe the Onsite Sewage Disposal System and its
surrounding area. The Appraiser must require an inspection to ensure that the system is in
proper working order if there are readily observable signs of system failure. The
Appraiser must report on the availability of public sewer to the site.
The Appraiser must note the deficiency of MPR or MPS and notify the Mortgagee if the
Appraiser has evidence that the Onsite Sewage Disposal System is not sufficient.

* Excerpted from page 848 of HUD Handbook 4000.1, Revised 05/20/2024

Agreed.
IMO-Health hazard needs to be addressed by the Field Expert in the municipality. On a visual observation, in my personal opinion, I would limit my comments and call for a Field Experts report.
Never understood why anyone would think an appraisal license, IS a license to cover ALL aspects of required State License Laws (Health, Structural etc). If a Buyer elects to not have a Home Inspection, how does that shift to an appraisal interpretation? Does anyone remember the days when a One Page - Order Form got the job done???

 

[Carnivore]

So it all comes down to feasibility and this is where it gets a little tough for the appraiser. the Appraiser is always caught between a rock and a hard place. but is he?

1. Does the septic system and drain field appear to be functioning properly? This is just a casual observation of the septic drain field. 4000.1 spells out what the appraiser is to do. The appraiser walks around the septic drain field to observe or detect any smells and also any excessive water or dampness or pooling. If he does then this must be noted in the report. It would also require the appraiser to make it subject TO and inspection by a well/septic company or county environmental health department. under a Hypothetical condition on the 1004. All of you regular members are well aware of what 4000.1 says. You may have to refer to 4000.1, to refresh your memory. The most Current version of FHA 4000.1 is May 20. 2024. There were a lot of changes to this current version.

II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENTD. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages3. Acceptable Reporting Forms and Protocols (08/19/2024)

https://www.HUD.gov/program_offices...nsistent,Single Family products and programs.

The vast amount of the changes had nothing to do with appraisers and our role in this process.

In my county we do not have very many condo projects. So I just focus on SFR. This means I can bypass most of it until page 815 (bottom right corner)

That's where the 1004 SFR stuff is! This Page 843 is where " Limited Required Repairs The Appraiser must limit required repairs to those repairs necessary to:• maintain the safety, security and soundness of the Property;• preserve the continued marketability of the Property; and• protect the health and safety of the occupants.

Page 842 Utility Services (04/18/2023)i. Definition Utility Services refer to those services consumed by the public such as individual electric,water, natural gas, sewage, and telephone.
Page 845 Individual Water Supply Systems(A)Definition An Individual Water Supply System refers to a potable water source providing water to an individual Property.(B) Standard When an Individual Water Supply System is present, water quality must meet the requirements of the health authority with jurisdiction. If there are no local (or state)


Page 846 The Appraiser must note any readily observable deficiencies regarding the well and require test or inspection if any of the following apply:• the water supply relies upon a water purification system due to the presence of contaminates;• corrosion of pipes (plumbing);• areas of intensive agricultural uses within one quarter mile;• coal mining or gas drilling operations within one quarter mile;• a dump, junkyard, landfill, factory, gas station, or dry cleaning operation within one quarter mile; or• an unusually objectionable taste, smell, or appearance of well water

Page 847 The Appraiser must also be familiar with the minimum distance requirements between private wells and sources of pollution and, if discernible, comment on them.The Appraiser is not required to sketch or note distances between the well, property lines, septic tanks, drain fields, or building Structures but may provide estimated distances where they are comfortable doing so. When available, the Appraiser should obtain from the homeowner or Mortgagee a copy of a survey or other documents attesting to the separation distances between the well and septic system or other sources of pollution

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Here is my problem: I used to have to compete with a bunch of incompetent Fast Eddie and cheap Charly appraisers coming from Charlotte/Mecklenburg.

I am done ranting.


Retirement from this Profession is wonderful. I do miss it though.





ght

 

[Jayjay25]

It’s the lenders responsibility to determine feasibility. If they want me to take the time to do it for them, I charge $200 for a feasibility study which includes quotes to connect. Most of the time they decide to do it themselves.

 

[Mark K]

One of the last R/W appraisals I completed involved C2C due to the new R/W encroaching into the septic finger system. Sewers were available at the street but the house was lower in elevation than the sewers.
Cost: Private lift station cost plus installation including electric for the pump and physical connection to the main line, $28,000. Abandon septic tank, pump and fill with sand, $1,500, Connection fee to municipality $5,600, landscaping and lawn repair, $2,500. Ballpark of $38,000 to connect for a $150K house. Yes, the state paid the cost.

Just because there are sewers at the street doesn't mean that it is financially feasible to connect.

 

[RSW]

Oh, boy. Lot of FHA appraisers here don’t know this.

1. If it is economically feasible, FHA requires connection. It is not up to the borrower.
2. FHA gives us a guideline on economically feasible. If the cost to connect is less than 3% of the mortgage, it is “economically feasible”.

3. Yes, it is our responsibility to note this! We can get an estimate to connect. If a purchase, the contract will state the loan amount the buyer is looking for. If it it is a refinance, we can ask the lender.

4. We can use our head. If no public sewer is available on the street, say so and find out how far away it is and state that it is not feasible. If it runs in front of the property and the dwelling is not hundreds of feet back from the road, revert to 1, 2, and 3.

Please provide your source to support your post.

 

[Carnivore]

So as an appraiser you do state estimates of distance to nearest municipal water/sewer connections. Thinking rural, that's if they even exist. In my county we do not have county wide water or sewer service. So its nearly it impossible to give any distance to those services. Why is that? Well county roads are not in a straight line. They zig/z & zag...or a better way they follow the terrain. Kinda like a snake moves, You could use google street maps. If you have hilly terrain it is so expensive because that requires pumping stations, no county would even discuss trying to do that, because they would be forced to raise the county millage rate.x cents per hundred tax valuation. To a politician, who would dare do that will not just be voted out, no the citizens would run him out of town on a rail.

Long time ago FHA use to require well water sample lab test and septic system perk test. Apparently, they figured out most of these test were not worth the time or expense because most passed / A-OK. So, FHA says, lets let the Boots on the Ground Appraiser do a cursory inspection. So here we are today.

 

[Terrel L. Shields]

FHA gives us a guideline on economically feasible. If the cost to connect is less than 3% of the mortgage, it is “economically feasible”.

I don't think that is in the 4000.1 now but it does say it must be economically feasible. I would think any system that requires boring under a highway to get to the sewer line, or has to have a lift station who not be "economically feasible."

 

[Carnivore]

Below are just the fees. Then you have the cost


As of July 1, 2023, the tap fees for the City of Gastonia's water system development are:

• 3/4 in: $2,120

The Gaston Rural Community Water District has the following tap and reinstatement fees:

• Residential tap fee: $1,000
  
  
• Commercial tap fee: $1,500
• Residential reinstatement fee: $350
• Commercial reinstatement fee: $500

The Gaston Rural Community Water District also has other fees, including:
A 10% late fee for accounts not paid before the 16th of the month

• A customer security deposit of $150
  
  
• A fee of $42 for returned checks
• A fee of $1 for payment without a large portion of the bill
• A convenience fee of 3%
• A non-payment fee of $50