This may be old news for some people but not everyone is familiar with the changes made by FHA.
FHA Changes Part II FHA Changes Part I
Excerpts from MORTGAGEE LETTER 2005-ML-48 This Mortgagee Letter is effective for all appraisals performed on or after January 1, 2006.
FHA no longer mandates automatic inspections for the following items and/or conditions in existing properties:
Wood Destroying Insects/Organisms: inspection required only if evidence of active infestation, mandated by the state or local jurisdiction, if customary to area, or at lender's discretion
Well (individual water system): test or inspection required if mandated by
state or local jurisdiction; if there is knowledge that well water may be
contaminated; when the water supply relies upon a water purification system
due to presence of contaminants; or when there is evidence of:
Corrosion of pipes (plumbing)
Areas of intensive agriculture within 1/4 mile
Coal mining or gas drilling operations within 1/4 mile
Dump, junkyard, landfill, factory, gas station, or dry cleaner within 1/4 mile
Unusually objectionable taste, smell or appearance of well water
(superseding the guidance in Mortgagee Letter 95-34 that requires well
water testing in the absence of local or state regulations)
Septic: test or inspection required only if evidence of system failure, if
mandated by state or local jurisdiction, if customary to the area, or at
lender's discretion
Flat and/or unobservable roof
Examples of conditions that will continue to require automatic inspections include, but are not limited to:
1. Standing water against the foundation and/or excessively damp basements
2. Hazardous materials on the site or within the improvements
3. Faulty or defective mechanical systems (electrical, plumbing, or heating)
4. Evidence of possible structural failure (e.g., settlement or bulging
foundation wall)
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