November 29, 2017
What are the FHA loan standards for appraising the foundation and basement of a home to be purchased with an FHA mortgage?
The FHA appraisal process is designed to insure that specific standards in this area are met. When problems are detected in an appraisal, they are noted for correction or other appropriate action.
The appraisal process covers everything from the electrical system to the roof-the home and its various systems must be within a certain range of good repair and sustainability.
For example, there can’t be exposed wiring in the home that would pose a hazard to the future occupants. The roof must not leak or otherwise allow moisture to enter the house.
When it comes to the standards for foundations and basements, the FHA has a clear set of guidelines. To begin with, the foundation must be constructed to properly support the home.
HUD 4000.1, the FHA single family loan handbook, states, “The Mortgagee must confirm that all foundations will be serviceable for the life of the Mortgage and adequate to withstand all normal loads imposed.”
Instructions to the appraiser in HUD 4000.1 include a set of defective conditions that specifically mention foundation issues:
“…evidence of possible structural failure (e.g., settlement or bulging foundation wall, unsupported floor joists, cracked masonry walls or foundation)” These conditions would be noted and corrections would be recommended where feasible. If corrections are not possible the home would not qualify for an FHA mortgage.
Foundations and basements must be serviceable for the entire lifetime of the mortgage, or be repaired or modified to become so. According to HUD 4000.1, “The Appraiser must perform a visual observation of the foundation and Structure of the improvements and report those results. If the Appraiser notes any structural issues, the Appraiser must address the nature of the deficiency in the appraisal where physical deficiencies or adverse conditions are reported and require inspection.”
Basement issues may include sump pump systems that are either not in basic compliance with FHA minimum standards (the pump must be of sufficient capacity to properly serve the size of the home it is installed in, for example), or are in bad repair.
In such cases corrections would be required to insure the system is brought into compliance.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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