Septic Tests / Lenders / Appraiser Liability

[Dorrie Klatt]

Hello Everyone-

I know this post has been addressed before but I would like to vent alittle and hear what you folks are doing.......

I am getting different views on when and when not to call for a septic cert. Some appriasers call for it on the VC sheet everytime to help alleviate liability, some appraisers are calling for one only if they see a problem or the house has been vacant.

I recently ran into a situation where the lender did not want to see it on the VC sheet if we were calling for it with no viable reason, merely to cover our butts. (sounds like a good reason.......) Their viewpoint was if it is not a repair and FHA doesn't require a septic cert, don't put it on the VC sheet. And basically if we continue to address it on the VC sheet, they will pull their business........another story.......

I suppose technically they are correct, didn't like the way it was served up, but to pacify (and I use that word with tounge in cheek) a client, where else can you put verbage to help CYA? A text addendum? On the Homebuyers Summary? Anyone have some legalease that they have come across??

Also, does the Homebuyer actually sign the Summary and where does that get filed. Also, does anyone know what a UW has to do to get a condition waived.............

As always, thanks for you help and input, and by the way, does anyone know what the jail time is for strangling a mortgage broker??? (just kidding.................)

Dorrie

 

[Judy Whitehead (Florida)]

Yes, we have been through this before, but it never hurts to hear more opinions. Septic systems are very common in this area. We also have extremely sandy soil in some areas and very clay based soil in others. In our office, we simply state on the VC sheet that connection to a sewer system is not available in the subject's neighborhood and that no problems were note upon inspection. (or state if you suspect a problem or if the home has been unoccupied, therefore a problem would not be noted.) There is an addendum in WinTotal and I have one that I got from someone here on the forum that essentially states that our inspection is visual only and not technically exhaustive, therefore, an inspection by a qualified person is recommended in those areas. Hope this helps.

 

[Wally Jones]

Dorrie,

If you're actually calling for a certification of the septic system, some sort of problem should have been noted during your inspection.

From the HOC Reference Guide:

"Certifications are only required if the appraiser suspects a problem with the system, or problems are customary in the area. In those instances, the appraiser is to condition for a certification by the local health authority, a licensed sanitarian or an individual determined to be qualified by the DE Underwriter."

As Judy pointed out, our area can have a variety of soil types and since I'm not an engineer (I only play one on T.V. ), I recommend an expert take a look (but it's ultimately up to the DE Underwriter).

Of course, you'd still mark "Yes" for VC4 if there is a septic system present. Hopefully, your UW wasn't asking you not to do that.

As far as where to put a statement such as Judy uses (I use something similar) about no sewer connection available, septic systems are common for the area, no problems noted upon inspection, etc. - we put it in the comment section on page one of the URAR in the "Site" description.

The Homebuyer's Summary is supposed to be provided to the buyer prior to closing and a signed copy placed in the closing paperwork file.

For an underwriter to overcome any condition they have a special little stick given to them when they complete underwriting school. That's where the term "Waive your magic wand" originated. :lol:

Jail time for strangling mortgage broker is minimal to non-existent as long as your jury is composed of homeowners.

Hope some of this helps.

 

[larryhaskell]

Dorrie,

A possible problem with the septic system is handled under VC-2 a. You have to believe there is a real problem if you check this box. Under VC-4 b you are required to check yes if the property is on a septic system. Secondly, you are to determine if hook-up to a public system is pratical. I believe pratical is defined by HUD as less than 3% of the sale price. If there is a public sewer line in the street in front of the house it could be likely that the HUD criteria could be met. If the sewer line is not there it would seem to be highly unlikely that it would be pratical.