July 2, 2015
A recent reader question that arrived in our comments section involves an FHA appraisal that required a vapor barrier on all exposed dirt.
The reader complained that the FHA appraiser didn’t explain how to correct the issue and asked us to define how it can be done. One objection to the FHA appraisal in this case was that the reader was under the impression that the FHA had removed the vapor barrier requirement from its list of minimum property requirements.
While we aren’t experts on vapor barriers or how they are to be carried out, we can address the issue of being required to carry out a correction or repair that is not specifically required by FHA minimum property standards.
It’s very important to know that FHA minimums are not the only guidelines that will affect the approval of your home for FHA loan purposes. A home must also meet federal, state, and local building code standards for loan approval. Just because a specific requirement listed in the FHA appraisal report is not found in the list of minimum property standards does not mean that requirement is any less valid.
That’s why it is very important to understand that a home not meeting state or local building code will be required to become in compliance before it can be approved for an FHA mortgage.
FHA appraisals are not just about establishing the fair market value of the home or insuring that the home is safe and habitable–the home must also have a “remaining economic life” for the duration of the mortgage so that it may be freely sold by the borrower at any time.
A borrower who purchases a property that becomes worthless or hard to sell later on down the line hasn’t made an investment, he or she has purchased a liability. FHA loan appraisal rules may not be set up expressly for the purpose of insuring the home can be sold later, but the property must have or be repaired to have “remaining economic life” in order to qualify for an FHA mortgage.
Do you have questions about FHA mortgages? Ask us in the comments section. All comments are reviewed before they are posted to the site.
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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