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FHA Appraisal Articles

Does chipping paint have to be cured for FHA to guarentee a loan?

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I get questions all the time from Realtors, loan officers, and prospective home owners about chipping paint. Does a defective paint surface need to be cured for FHA to guarentee a loan? Does FHA have different standards for properties built before and after 1978 (when lead-base paint was discontinued for residential use)? Watch the video below to find out. 

I hope this video was helpful and served to begin to shed some light on HUD’s standard for a defective paint surface. Keep me posted if you have any questions. Feel free to email, call 916.595.3735 or comment below.

Trivia Time: chipping paint, FHA, and properties built before and after 1978

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If you’re a buyer, real estate agent or loan officer, you’re probably deeply aware that if a property built before 1978 has chipping paint, that’s a situation that needs to be cured if you are doing an FHA loan.  

Why is that? Before 1978 lead-base paint was used, so if there is a defective paint surface on a house (chipping, flaking or peeling paint), then little Johnny shouldn’t be able to pull away pieces of paint for a quick snack. That smells like a health and safety issue to me (and HUD).

What about properties built after 1978? If a house has flaking paint, but was built in 1993, does the paint surface have to be cured? Obviously there shouldn’t be lead-base paint because the house was built post-1978, so it should be okay, right?

I asked this question last week at a presentation I gave at the Sacramento Association of Realtors and I think there was some confusion in the room on this point. Here’s the deal. The defective paint surface DOES have to be cured because FHA is not okay with bare wood which could lead to wood decay and not support the longevity of the property. The rule of thumb then is that if there is a defective paint surface, regardless of the age, the surface must be properly cured.

I hope this was helpful. Keep me posted if you have any questions. Call me at 916.595.3735, email ryan@LundquistCompany.com and catch me on Facebook.

Do you have FHA condominium questions for the Sacramento area? An Update from HUD

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Here is some helpful information on condominiums for FHA/HUD, whether you are in the Sacramento area or elsewhere. I wrote previously about FHA condo issues here. This is straight from HUD:

Effective on Monday, June 14, 2010, all condominium inquiries, telephone and email, must be submitted to the FHA Resource Center at: (800)225-5342 or by email at info@fhaoutreach.com. The FHA Resource Center will provide responses to general inquiries received from consumers and industry partners. Responses requiring technical knowledge will be escalated to the jurisdictional Homeownership Center for review and response.

Before contacting the FHA Resource Center, it is recommended that you use
the following resources to search for answer(s) to your question(s).

1. Check to see if your question is already included in the Condo FAQs currently posted on the web here (pdf).

2. To determine if a project is on the FHA Approved List or to obtain the FHA concentration please visit this web page and input the condominium project name or the Condo ID. It is recommended that only the first few letters be entered to return a complete list. If the project is not listed it will require FHA approval.

3. FHA provides the FHA Concentration percentage information on the Condo List Screen. If the percentage is not identified or incorrect, provide documentation to the jurisdictional Homeownership Center so that the system can be updated. This information would include the first two pages of the appraisal or a letter from the HOA providing the number of units in the project.

4. What is the process for obtaining project approval? For documentation and processing requirements, please refer to ML 2009-46B and ML 2009-46A, which can be found on this website (or directly as a PDF here and here).

Good luck everyone. I hope you find what you’re looking for. Make sure to read all the information from the above links. Keep me posted if there is ever anything I can do.

Put on your FHA Goggles: What does it take for a Sacramento area property to meet FHA standards?

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FHA loans have dominated the local market in the Sacramento area lately, haven’t they? This is why many buyers and sellers are paying careful attention to FHA guidelines. I get calls all the time from concerned sellers, prospective buyers, and real estate agents about FHA compliance issues. The question is usually, “will _________ be an issue for an FHA loan?”

FHA has a very specific set of minimum requirements. If you are planning to sell your house and you think the most likely buyer is going to be using an FHA loan, then strap on your “FHA goggles” to view your property like HUD does. Or if you are purchasing a house, it’s important to be aware of condition issues that may impact qualification for an FHA loan.

What does it take for a property to meet FHA minimum guidelines? FHA is primarily concerned that everything in a house functions properly and that there are no health and safety issues. FHA continually says, “Soundness, Safety & Security” as their motto. It’s okay if there is some deferred maintenance, but if there is any issue that may pose a threat to health, safety, soundness or security, then it needs to be solved. Examples might include chipping paint, mold, missing appliances, an inoperable HVAC, a broken water heater, dangling wires, trip hazards, etc… You can see a more detailed list of specific requirements in a previous post.

Quiz Time: Now that you have just a bit of information about FHA compliance, take a look at the image below. What do you see that might pose a safety risk and be unacceptable to FHA? Comment below.

Keep me in the loop if you have any questions or if you need to hire my “FHA goggles” to help you make a decision when selling or buying a house. And don’t worry, I don’t actually wear goggles like this on inspections. 🙂 You can reach me at 916.595.3735, on Facebook, or ryan@LundquistCompany.com.

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