August 10, 2011
Many of the most frequently asked questions about FHA home loans involve issues related to property requirements. Some borrowers are told by the lender or appraiser that a particular condition must be fixed before the loan can be approved.
The borrower sometimes wishes to dispute such requirements, asking where in the FHA rules it specifically states that “condition X” must be addressed in order for the loan to proceed.
But not every situation a borrower is likely to encounter is specifically addressed by a line in the FHA rulebook. What some don’t understand is that the FHA does not anticipate every housing issue with a rule addressing that condition. Instead, the FHA rules are designed to defer to local building codes, plus state or local laws where applicable.
That’s not to say that the FHA doesn’t address specific conditions. For example, a home to be purchased with an FHA insured mortgage which features burglar bars on the windows is regulated by an FHA rule which states the bars must allow the occupants safe exit in case of fire.
According to the FHA official site, “…security bars or burglar bars are acceptable if they comply with local fire codes. FHA requires that occupants of a bedroom must be able to get outside the home if there is a fire”
That rule is found in FHA Handbook 4150.2, Section 3-6B6.
Another such rule states that hot water heaters in the home must be permanent–rental heaters are not acceptable. These regulations address any number of concerns directly but they are not an exhaustive collection of guidelines for all scenarios. The FHA gives the appraiser flexibility in the appraisal process to address state and local code without the necessity of stating each requirement in the FHA rulebook.
Buyers are free to contest the findings of an FHA appraiser, and even request another appraisal in some circumstances. But the FHA has the final say over what is and is not allowed, when it comes to minimum property requirements, even if the condition is not directly addressed in FHA rules. Any condition that affects the safety, acceptable use or marketability of the property must be addressed where required–even if it’s simply to apply for a waiver from the FHA in that instance.
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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