April 7, 2015
A reader asks, “We have signed a contract to sell our home to an FHA buyer. The Realtor said that he sees “no glaring” issues and we have disclosed that we have a seasonally damp basement. Will this be an issue?”
The answer to this question may depend on state or local building code, and whether or not the FHA appraiser will note the condition as something that needs to be corrected if possible.
HUD 4050.2 spells out some of the unacceptable conditions that could render a home unacceptable for an FHA mortgage loan unless those conditions are deemed repairable. HUD 4050.2 Chapter Three Section Six includes the following instructions:
“A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated. Defective conditions include:
–defective construction
–poor workmanship
–evidence of continuing settlement
–excessive dampness
–leakage
–decay
–termites
–other readily observable conditions that impair the safety, sanitation or structural soundness of the dwelling”
Note that leaks, excessive dampness and decay are all mentioned. A basement that is “seasonally damp” may or may not fall under this criteria depending on the severity of the problem.
Unfortunately the answer is fairly subjective here and the appraiser would handle this issue depending on his/her interpretation of the rules and how much dampness is present at appraisal time.
Do you have a question about FHA home loans? Ask us in comments section. All questions and comments are held for review before they are posted.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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