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Defective paint before & after 1978 for FHA loans

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It seems like most of us in the real estate community are on the same page that a property built before 1978 with a defective paint surface will require repairs for an FHA loan. We know lead-base paint was used in the United States before 1978, so there is a health and safety risk present when the paint surface is defective. This makes sense and it’s pretty much common knowledge.

What about after 1978? But what about a property built after 1978 that has a defective paint surface (chipping, peeling or flaking paint)? There is much confusion in the market on this point among lenders, real estate agents, home owners and even appraisers. Does FHA require repairs for a defective paint surface for a house built in 1979, 1993, 2005 or anytime after 1978? The answer is YES, but not because there a “health and safety” issue due to the potential for lead-base paint. The issue here is promoting economic longevity for the property since bare wood can lead to decay, which does not promote the longterm health of the property.

FHA’s latest Valuation FAQ on 2-28-12 (click here for PDF link) (unfortunately FHA removed this link, so I did too. Here is the text though still):

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

Page 6 of Appendix D in Handbook 4150.2 states, “For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint. For all FHA insured properties, correction is required to all defective paint surfaces in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35.” The appraiser is further instructed to provide a detailed description and identify the exact location of any deficiency under “physical deficiencies” affecting livability. The appraiser is required to condition the appraisal on the “repair” of any noted lead based paint deficiencies.

As noted in mortgagee letter 2005-48, defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected will require automatic repair.

Here is a video I did in 2010 on this very issue of pre-1978 vs post-1978. Watch below or here.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including not leaving paint chips on the ground when curing the defective paint surface and even potential options for handling the cost of the defective paint surface.

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Is a wobbly ceiling fan an FHA appraisal issue?

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Might this ceiling fan be a safety issue for an FHA loan? What do you say? No biggie or an issue that’ll require repair before the loan can close? Have a look at the brief video below (or here) and let me know what you think.

If you said yes for being a safety issue called out in an FHA appraisal report, you are correct. FHA is primarily concerned that everything in a house works properly, there are no health and safety issues and there is a sense of economic longevity for the house too. Had I continued the video for a bit longer, you would’ve seen the fan shake even harder. If you don’t think it’s a safety issue, would you put your child’s bed underneath a fan like this? Probably not.

While an issue like this needs to be corrected before an FHA loan can be guaranteed, it’s really not a big-ticket item. Either the fan needs to be repaired or replaced or a cheap light fixture can be purchased and installed in its place. This is an older property and ceiling fans didn’t even exist when the property was built, so a simple light fixture is entirely reasonable in this case. This is not just my opinion either, but the Santa Ana FHA Home Ownership Center said the same thing during a recent phone conversation.

NOTE: This does not mean all wobbly ceiling fans will need to be repaired or replaced. This is where the FHA appraiser is subjective and has to use good judgment according to FHA guidelines and/or the spirit of FHA.

Let me know if you have any questions or insight. I hope this was helpful. You can see more FHA appraisal articles here.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Is your doggy door an FHA problem?

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We all know pets often need a way to get from the Laundry Room to the garage, but installing a doggy door on a fire door is not a good move to secure an FHA loan. Why is that? A fire door is designed to reduce the spread of fire, but when a pet door is installed in the fire door, the firewall is compromised. If you’ve ever cared to look, there should be a difference between the door to the garage (fire door) and many of the other doors in your home. Whereas bedroom doors are often hollow on the inside, the fire door to the garage is solid because it is designed to stop fire. All things considered, this is a safety issue in the eyes of FHA, so the problem must be cured according to FHA minimum property standards. A small hole may not seem like a big deal, but fire doesn’t discriminate against size, does it?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.