When Exactly, Is FHA Involved In This Decision?

[PhiloFarnsworth]

I have been involved in a number of FHA appraisals lately that make me question when exactly, it is that FHA makes the decision to accept a property for collateral or not. One had to do the subject's location on the edge of a large sink hole where several dwellings had been condemned. As would be expected, when I saw the proximity to the hole (adjacent to it), I contacted the AMC, who, I would expect, then contacted the lender.
Anyway, within a few hours, I got an answer from the client, by way of the AMC. Their instruction was to proceed with the appraisal, doing it subject to an engineers report saying the subject was on solid ground, proof of sink hole insurance and a "hold harmless letter". After getting some good advice around here and thinking about it for a while, I said I would proceed by doing it subject to the first stipulation only as that was the only thing that had an effect on value.
But it also got me thinking about whether and when somebody at HUD makes a pronouncement on whether to proceed or what to require for the appraisal to be accepted. The requirements I got certainly sounded like they came from a lender, not the government. I have also had situations where an AMC questions whether I really need to call for an attic space access as the space looked small enough that "it may not really be an attic". Assuming that this guy probably felt he was acting as a spokesman for the lender, at what point would HUD step in and say, "hell yeah, its and attic!".
My general question is then; when is someone who gets a government paycheck actually involved in the chain of decisions?

 

[Meandering]

When it goes belly up and they need to point a finger.

 

[Noreen]

I have been involved in a number of FHA appraisals lately that make me question when exactly, it is that FHA makes the decision to accept a property for collateral or not. One had to do the subject's location on the edge of a large sink hole where several dwellings had been condemned. As would be expected, when I saw the proximity to the hole (adjacent to it), I contacted the AMC, who, I would expect, then contacted the lender.
Anyway, within a few hours, I got an answer from the client, by way of the AMC. Their instruction was to proceed with the appraisal, doing it subject to an engineers report saying the subject was on solid ground, proof of sink hole insurance and a "hold harmless letter". After getting some good advice around here and thinking about it for a while, I said I would proceed by doing it subject to the first stipulation only as that was the only thing that had an effect on value.
But it also got me thinking about whether and when somebody at HUD makes a pronouncement on whether to proceed or what to require for the appraisal to be accepted. The requirements I got certainly sounded like they came from a lender, not the government. I have also had situations where an AMC questions whether I really need to call for an attic space access as the space looked small enough that "it may not really be an attic". Assuming that this guy probably felt he was acting as a spokesman for the lender, at what point would HUD step in and say, "hell yeah, its and attic!".
My general question is then; when is someone who gets a government paycheck actually involved in the chain of decisions?

Phil, back in the 90's when I first started doing FHA's, it seemed like the requirements had a distance of 300' to a lot of "renders a property unqualified", I would get my own answer from HUD, in an email. I would personally not trust someones "words" ( words when spoken are just hot air) and it's too easy for those involved to throw us under the bus. Yes I am getting more & more skeptical about some of the "guidance" we get from people who do not understand "cause & effect". An email gives you proof you tried to seek out the correct answer on your own.

 

[CANative]

I have been involved in a number of FHA appraisals lately that make me question when exactly, it is that FHA makes the decision to accept a property for collateral or not. One had to do the subject's location on the edge of a large sink hole where several dwellings had been condemned. As would be expected, when I saw the proximity to the hole (adjacent to it), I contacted the AMC, who, I would expect, then contacted the lender.
Anyway, within a few hours, I got an answer from the client, by way of the AMC. Their instruction was to proceed with the appraisal, doing it subject to an engineers report saying the subject was on solid ground, proof of sink hole insurance and a "hold harmless letter". After getting some good advice around here and thinking about it for a while, I said I would proceed by doing it subject to the first stipulation only as that was the only thing that had an effect on value.
But it also got me thinking about whether and when somebody at HUD makes a pronouncement on whether to proceed or what to require for the appraisal to be accepted. The requirements I got certainly sounded like they came from a lender, not the government. I have also had situations where an AMC questions whether I really need to call for an attic space access as the space looked small enough that "it may not really be an attic". Assuming that this guy probably felt he was acting as a spokesman for the lender, at what point would HUD step in and say, "hell yeah, its and attic!".
My general question is then; when is someone who gets a government paycheck actually involved in the chain of decisions?

First off, why would you care what HUD/FHA does?

Anyway...

(F) Land Subsidence and Sinkholes

(1) Definition

Land Subsidence refers to the lowering of the land-surface elevation from changes that take place underground, including damage caused by sinkholes.

(2) Standard

Danger of Land Subsidence may be encountered where buildings are constructed on uncontrolled fill or unsuitable soil containing foreign matter such as a high percentage of organic material, areas of mining activity or extraction of subsurface minerals, or where the subsoil or subsurface is unstable and subject to slippage or expansion. Typical signs include fissures or cracks in the terrain, damaged foundations, sinkholes or settlement problems.

(3) Required Analysis and Reporting

The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if there is probable or imminent danger of Land Subsidence so that the Mortgagee can determine eligibility or the need to require the purchase of subsidence insurance.

The Appraiser must analyze and report any readily observable conditions of the surface of the land that indicate potential problems from subsidence or the potential for lack of support for the surface of the land or building foundations.

In mining areas, the Appraiser must analyze and report the depth or extent of mining operations and the site of operating or abandoned shafts or tunnels to determine if the danger is imminent, probable or negligible.

 

[Terrel L. Shields]

Can's cover the subsidence issue
from 4000.1

The Mortgagee must disclose all known information regarding any environmental hazard that is in or on the subject Property, or in the vicinity of the Property, whether obtained from the Borrower, the real estate broker, or any other party to the transaction...

The Mortgagee must require corrective work to mitigate potential adverse effects from any onsite hazards or nuisances reported by the Appraiser

The Mortgagee must confirm that the Property is free of all known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, and the structural soundness of the improvements.

The Appraiser must report the presence of all Onsite Hazards and Nuisances so that the Mortgagee can determine eligibility and any corrective work that may be necessary to mitigate potential adverse effects from the special conditions.

Onsite Hazards and Nuisances refer to conditions that may endanger the health and safety of the occupants or the structural integrity or marketability of the Property.
​

You need to disclose what you know to the Mortgagee, and report same in the report. The Mortgagee is supposed to notify FHA, not you. And such defects must be dealt with by the Mortgagee. Not your job to "repair" any of it or even make a cost to cure.

 

[CANative]

In the OPs case there is no C2C because it is an external issue.

 

[Meandering]

In the OPs case there is no C2C because it is an external issue.

Maybe not.

If the subject has severed it's mineral rights, the "sink hole" may be an indication that a mine is subsiding, that might run under the subject's surface.

You may want to consider Centralia PA, where, the township burned it's garbage against a hillside.

The burning garbage caught the below ground coal on fire.

The coal below Centralia has been burning since 1962.

The Government bought out most of the homes and bulldozed them, redirected the highway away from it.

But they can't put it out, and it's still burning. How far??? Maybe one day it'll burn through a good portion of the state.
http://www.offroaders.com/album/centralia/centralia.htm

http://www.centraliapa.org/

http://www.roadsideamerica.com/story/2196

.

 

[CANative]

Can the property owner fix a "nearby sinkhole?"

 

[Mike Garrett RAA]

Probably...but not most likely not.

 

[Meandering]

Can the property owner fix a "nearby sinkhole?"

Start with,

how do you fix a sink hole?

or better yet,

What causes a sink hole?

If you know what caused it, you might figure out if it can be fixed or not.

Not all sink holes are similar.