May 8, 2017
What are the FHA appraisal rules for properties served by water purification systems? A reader asked us a question about that recently:
“Im interested in a property that has a UV purification system. Does that qualify under an FHA loan?”
A quick look FHA appraisal rules in this area reveals no references that specifically, at the time of this writing, mention UV purification. Instead, they address water purification in general, requiring that any such systems meet basic standards.
What are those standards? From HUD 4000.1 we learn that the lender has a responsibility to the borrower in such cases”
“If a Property does not have access to a continuous supply of safe and potable water without the use of a water purification system, the Mortgagee must ensure that the Property has an individual residential water purification system as well as a service contract for the ongoing maintenance of the Property, a plan approved by the local or state health authority, and an escrow account.”
For the system itself, FHA appraisal rules are quite clear:
“Water purification equipment must be approved by a nationally recognized testing laboratory acceptable to the local or state health authority. The Mortgagee must obtain a certification from a local or state health authority which certifies that:
– A point-of-entry or point-of-use water purification system is on the Property. If the system employs point-of use equipment, the purification system must be employed on each water supply source (faucet) serving the Property. Where point-of-entry systems are used, separate water supply systems carrying untreated water for flushing toilets may be constructed.
– The system is sufficient to ensure an uninterrupted supply of safe and potable water adequate to meet household needs.
– The water supply, when treated by the equipment, meets the requirements of the local or state health authority, and has been determined to meet local or state quality standards for drinking water. If neither state nor local standards are applicable, then quality must be determined in accordance with standards set by the Environmental Protection Agency (EPA) pursuant to the Safe Drinking Water Act in 40 CFR Parts 141 and 142.
– A plan exists that provides for the monitoring, servicing, maintenance, and replacement of the water equipment, and the plan meets the service contract requirements.”
As you can see from the above, much is left to EPA/state/local agency regulation. Borrowers will need to check with the local authority for more information on what is acceptable in their state or local area. FHA loan rules do not include comprehensive health code guidelines or other such information, since federal/state/local laws cover these and vary greatly depending on the region.
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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