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FHA Changes Part II

By Kenneth Miller

Real Estate Appraiser with Miller Appraisals

January 23, 2008 12:23 AM

This may be old news for some people but not everyone is familiar with the changes made by FHA.

FHA's primary area of concern is in these three areas: Safety, Security, and Soundness. Properties with conditions that threaten or could threaten the health and safety of its occupants or the soundness of the property are still required by FHA to be repaired. MORTGAGEE LETTER 2005-ML-48 (effective as of January 1, 2006) lists these conditions as requiring an automatic repair:

* Inadequate access/egress from bedrooms to exterior of home
* Leaking or worn out roofs (if 3 or more layers of shingles on leaking or
worn out roof, all existing shingles must be removed before re-roofing)
* Evidence of structural problems (such as foundation damage caused by
excessive settlement)
* Defective paint surfaces in homes constructed pre-1978
* Defective exterior paint surfaces in home constructed post-1978 where the
finish is otherwise unprotected.

Appraisers are still required to document and report defects for the subject property regardless of the severity of the defect. Refer to my previous blog, FHA Changes Part I, for a list of what FHA considers minor cosmetic defects that no longer require automatic repair. It is now up to the lender to review the appraisal to determine if any of the defects reported affect the Safety, Security, and Soundness of the property and if they will require immediate repair.

Check back for Part III when I discuss what additional inspections are no longer mandated by FHA for existing properties.

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Dwayne West

Atlanta Real Estate - Canton, GA

Canton Georgia Real Estate

Good information you have provided here. I think we all could take something from this and use it.

Dwayne West

Solid Source Realty

Jan 23, 2008 12:51 AM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Rather than listing Inadequate access/egress from bedrooms to exterior of home, with a mandatory fix... wouldn't an appraiser just call that a 'bonus room'?

Jan 23, 2008 02:41 AM

Kenneth Miller

Miller Appraisals - Fremont, OH

NW Ohio FHA Appraiser

Not this appraiser...........I know what you're talking about though. There are quite a few homes in my area that were built pre 1900 when privacy was not something people thought about. I don't count those joined rooms as two bedrooms. People are going to use rooms however they need to regardless of how an appraiser labels a room on the sketch. I've had people ask me why I labeled their home office or the room they don't use with the forgotten boxes stacked dangerously high upon each other as a bedroom. I tell people all the time that its their house and they can sleep in the kitchen if they choose to. My sketch may not always reflect what they are currently using a room for.

Jan 23, 2008 04:31 AM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Kenneth - I was thinking more of basement window egress rather than a bedroom in a bedroom kind of egress... we only have a handful of those since our city is newer. I had heard 'room in rooms' (ie: huge room-size closets) were built because at the turn of the century a house was taxed per how many bedrooms it had and so those rooms, although called closets when the tax-man came around, were really used as bedrooms -

Jan 23, 2008 01:57 PM

Kenneth Miller

Miller Appraisals - Fremont, OH

NW Ohio FHA Appraiser

Sara.....I assume you are talking about older homes in which the owners finish the basement as building codes in your area probably require escape windows on newer construction. I didn't see anywhere in the handbook mentioning basements requiring egress on older homes. For as much as it would cost to put in and dig out an area for an egress window I bet most people would stop using the basement bedroom. Food for thought......If a bedroom is below grade is it really a bedroom? Kinda like if a tree falls in the forest and nobody is around does it make a sound?

Jan 23, 2008 10:10 PM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

We get it a lot around here, especially when 2 bedroom 800 square foot houses with basements become less affordable, finishing the basement is quite popular. You will find many with egress windows... although I have yet to get bids myself for this, I've heard it can be done for a couple thousand dollars which is worth the price tag on these smaller homes.

Although I don't care to spend much time subterranean, I love to finish basement spaces ... it's our solution to air conditioning (for those two weeks where AC is really necessary around here). I also love the idea of sticking your kids or roommates (if you got 'em) down there... you know, in nice finished basements rather than dank rat infested ones.

I often have to explain to home owners that just because you put a bed in it, does not constitute a bedroom -

(Not mine, but a rather cool space that I found on mls)

Jan 24, 2008 12:10 PM

James Evans

James Evans & Associates - Aliso Viejo, CA

Orange County Appraisers

Can you elaborate on the ingress and egress (ease of access to escape route), is this a form of functional obsolescence, or is it refering to windows and door count per room?. Which particular layout would be cause for concern, like a long corridor to front entrance with no back door access?

Jan 27, 2008 05:31 PM

Kenneth Miller

Miller Appraisals - Fremont, OH

NW Ohio FHA Appraiser

James,

I've searched the FHA website for details on ingress and egress and have found none so far. Basically from what I've been told in the past is that there must be access in and out of a bedroom either through a doorway or window and that doorway cannot lead to another room that is closed off. Basically meaning a bedroom that you have to walk through to get to the other bedroom. You also can't have a bedroom without windows for safety reasons. There must be escape latches on any windows that have bars covering them. If you finish a basement on newer homes you must have escape windows and enough area around the window to get out. I think that is more of a building code than FHA as I haven't seen or been told anything in regards to that. I haven't had any properties that conflicted with that situation so I haven't had a reason to research it either though.

As for the particular layout, any long corridor with no back door access would be a concern for me or if the windows or doors were nailed shut or had a deadbolt that required a key to open from the inside. I've been in many a home where the inhabitants put masterlocks or deadbolts on doors to keep others from opening them when they're not around. I haven't come across anything that says there must be X amount of windows or doors per room. Another example of ingress and egress would be blocked or unusable stairways leading from the top floor to the bottom. Think of it this way, if there is a fire would you be able to get out safely or would you have to find alternate escape routes because of blocked exits?

Jan 29, 2008 05:05 AM

Anonymous

Mary Thompson

Ken,

We have a contract on our home and the buyer wants an FHA loan. We have a 5 year old home with a finished basement. There is one bedroom with a walkin closet, bath and an egress window, put in as the house was built. It is a garden style window with built-in steps. We're worried that an appraiser won't count this as a bedroom. Is there any documentation that we can provide that shows that it meets requirements for a 4th bedroom? Any quotes from FHA or Hud handbooks? Thanks for any help you can give us.

Jan 25, 2011 07:25 AM

Anonymous

Gigi

WINDOWS FOR SLEEPING ROOMS

Escape or rescue windows shall have a minimum net clear openable area of 5.7 square feet. The minimum net clear openable height is 24" and width is 20". The maximum escape window sill height is 44".

Jun 25, 2011 06:51 AM

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