According to a recent October 2017 HUD publication, nearly 60,000 single-family mortgages totaling over $13 billion dollars were FHA endorsed in Alaska, Idaho, Oregon and Washington over the past year; I have yet to find out the number of FHA mortgages for San Juan and Skagit counties. I do know it is an attractive program, with significant benefits, that offers less stringent criteria for down payments and credit scores that can be very attractive to first-time and many other homebuyers.
Current FHA requirements are not as stringent as they once were. Things like a lack of a crawlspace vapor barrier or specific stair rail measurements are no longer a standard requirement for repair. MPRs (Minimum Property Requirements) still exist and the three primary categories that an appraiser looks at are safety, soundness, and security. Safety items relate to the health, sanitary condition and habitability of the property. Common types of problems include malfunctioning electrical service or even missing or failing hand rails on stairs and decks. Chipping or peeling paint can also be a safety concern because it can be ingested and is poisonous. This is especially important because lead based paint was commonly used on homes built prior in 1978 and prior. If you are interested in the exact requirements you can log on to the official HUD website at https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1
This short blog article is to provide some helpful tips to Realtors and sellers when their listings sell with this common form of financing. By making sure that the home is ready for the appraisal inspection, the entire loan process can run smoother and additional costly trips for repair inspections can be avoided if HUD requirements are met in advance.
- Electricity must be on for the appraiser to verify operation of the HVAC system, appliances, and the electrical system.
- Plumbing must be operational so the appraiser can look for leaks, flush toilets, and check water pressure. Make sure the water is ON before the appraiser inspects!
- Attic access (when present) must be readily accessible and provided to check for insulation, attic ventilation, and any damage.
- Crawlspace access (when applicable) must be provided; remember appraisers do not carry power tools and typically will not remove obstacles in the way of the access point. This is required to check for standing water, possible damage, and ventilation. Clear and open the access point in advance of the inspection.
- Windows must be able to be opened. This is important for safety reasons as access to the outside is necessary for egress safety. In addition, if security bars are present, which are very rare in San Juan and Skagit counties, they must have a quick release mechanism; if not present, they must be removed.
This is by no means a complete and comprehensive list but it includes items I have run into lately that have created delays in the closing process. If you have any questions regarding appraisal requirements for FHA financing, please do not hesitate to contact me at (360)317-5845 or liz@allislandsappraisal.com.
“In Federal fiscal year 2017 – October 1, 2016 through September 30, 2017 – the Federal Housing Administration endorsed 59,024 single-family mortgages in Alaska, Idaho, Oregon & Washington State – the seventh-highest total in the 80-plus year history of FHA – with a total dollar value of $13.1 billion. As of September 28th there were 299,916 active FHA-insured mortgages in those four states.” November 2017 NorthwestHUDLines epublications: https://www.hud.gov/states/shared/working/r10/newsletters/hudhighlights
