How was this FHA loan even funded???? (recourse, requirements, properties)
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A Who's liable question. Friend of mine bought an old farm in Middle Georgia that has not been occupied in about 5 years. Closed with an FHA loan in April. He's a contractor and as such DID NOT get a home inspection as their where many repairs and remodeling going to be done and being FHA like his last one knew that the FHA inspector had to sign off on the majors including well and septic.. As far as the house goes, only a few minor wiring issues but outside it gets ugly.
Extreme drought going on in Georgia and about 2 months ago the well quit. Turned out it was a foot valve. Replaced that and worked good for a while. Then the well started pumping sand/silt. Yesterday well company comes out and ends up pumping 800# of slop out of the well. Lets it fill back up with water, Water runs clean and everything seems ok. Today he only gets 30PSI again so i assume it filled back in with sludge/sand. FYI Well did pass water quality test at the time of purchase.
Here's where it get's interesting though. Was talking to my wife who is a realtor and AT LEAST here in Wisconsin FHA only allows a point or drilled well. This well he has is a 50 year old dug well with a lid on it. A squirrel or rat could fall in and contaminate the well. Surface water could contaminate it too. This got by and FHA appraiser but how?
Today walking the 20 acres he goes over a hill and finds a nice green area about 300' from the house. (remember a drought is going on) Bushwacking into it he finds a corrugated black 4" pipe with turds and toilet paper around it. Flush the toilet in the house and a few minutes later out it comes 300' from the house.
He then starts looking under the house and finds that the toilet is on it's own pipe and the sinks, laundry and shower go out another pipe. He's still looking for this gray water outlet. Again, Missed by the FHA Appraiser!
The kicker is the guy who owned it was a big chief for the Georgia DNR. He died and that is why the house sat empty for years. Where does the responsibility fall here? The family that sold the house MAY OR MAY NOT have known about the septic but the FHA Appraiser SHOULD HAVE caught this IMHO. Somebody's in a heap of poop and i would think it falls squarely on the FHA inspector who signed off on the property but again i'm going by Wisconsin rules and regs. FHA loan rules defer to state or local laws/building code and i can't find a lot on Georgia.....
A Who's liable question. Friend of mine bought an old farm in Middle Georgia that has not been occupied in about 5 years. Closed with an FHA loan in April. He's a contractor and as such DID NOT get a home inspection as their where many repairs and remodeling going to be done and being FHA like his last one knew that the FHA inspector had to sign off on the majors including well and septic.. As far as the house goes, only a few minor wiring issues but outside it gets ugly.
Extreme drought going on in Georgia and about 2 months ago the well quit. Turned out it was a foot valve. Replaced that and worked good for a while. Then the well started pumping sand/silt. Yesterday well company comes out and ends up pumping 800# of slop out of the well. Lets it fill back up with water, Water runs clean and everything seems ok. Today he only gets 30PSI again so i assume it filled back in with sludge/sand. FYI Well did pass water quality test at the time of purchase.
Here's where it get's interesting though. Was talking to my wife who is a realtor and AT LEAST here in Wisconsin FHA only allows a point or drilled well. This well he has is a 50 year old dug well with a lid on it. A squirrel or rat could fall in and contaminate the well. Surface water could contaminate it too. This got by and FHA appraiser but how?
Today walking the 20 acres he goes over a hill and finds a nice green area about 300' from the house. (remember a drought is going on) Bushwacking into it he finds a corrugated black 4" pipe with turds and toilet paper around it. Flush the toilet in the house and a few minutes later out it comes 300' from the house.
He then starts looking under the house and finds that the toilet is on it's own pipe and the sinks, laundry and shower go out another pipe. He's still looking for this gray water outlet. Again, Missed by the FHA Appraiser!
The kicker is the guy who owned it was a big chief for the Georgia DNR. He died and that is why the house sat empty for years. Where does the responsibility fall here? The family that sold the house MAY OR MAY NOT have known about the septic but the FHA Appraiser SHOULD HAVE caught this IMHO. Somebody's in a heap of poop and i would think it falls squarely on the FHA inspector who signed off on the property but again i'm going by Wisconsin rules and regs. FHA loan rules defer to state or local laws/building code and i can't find a lot on Georgia.....
I would start by looking at the disclosures provided by the seller assuming those are required in GA. I am not sure the appraiser would be responsible for doing septic and well inspections. Who did those two items? The well may have tested fine at time of inspection so not much recourse there. The septic, thats another story.
If your friend did not get a separate well and septic inspection, then he was very much penny-wise and pound foolish. FHA doesn't actually inspect those systems, but you always want to ensure that those two items are up to standards. The fact that the well was a dug well, not a drilled one should have given him pause from the get-go, particularly during a drought. Sounds like your friend is *** out of luck.
If your friend did not get a separate well and septic inspection, then he was very much penny-wise and pound foolish. FHA doesn't actually inspect those systems, but you always want to ensure that those two items are up to standards. The fact that the well was a dug well, not a drilled one should have given him pause from the get-go, particularly during a drought. Sounds like your friend is *** out of luck.
FHA has minimum property requirements for loan though. My wife is a realtor and her office has had numerous sales nixed by the FHA appraiser after issues where found as the buyers couldn't get the loan. Basically what i'm getting at is the loan should have never been written on this property.
FHA Appraiser signed off on the loan . Right from the FHA website. "For existing properties, FHA requires that a domestic well be located a minimum of 100 feet from the septic tank's drain field and a minimum of 10 feet from any property line. Should state or local regulations require greater distances, those distances must be met."
How did the FHA appraiser confirm the distance between the well and septic? If he didn't which is obvious, is he liable??
This is where the appraiser fell short. Their is NO TANK and NO DRAIN FIELD and this should have been duly noted to fall within FHA guidelines. A home inspector would have noted the same thing but being FHA was required to note these items is the reason he didn't call the closest home inspector, (60 miles away) and pay for a report as 95% of what he would have paid $600 for he could find himself.
I have never known appraisers to independently check inspect either wells or septics. They may check records, and lenders may require testing reports, most do... but that info doesn't come from the FHA appraisal.
We have separate well and septic inspection addenda in our contracts that would ordinarily discover such a thing. However... Septic inspectors don't follow all the lines down to the tank either. They pump the tank and inspect the parts of it. They don't crawl under the house.
House inspectors crawl under the house.
Even if your friend didn't want a home inspection, he should have had a well and septic inspection.
I have never known appraisers to independently check inspect either wells or septics. They may check records, and lenders may require testing reports, most do... but that info doesn't come from the FHA appraisal.
We have separate well and septic inspection addenda in our contracts that would ordinarily discover such a thing. However... Septic inspectors don't follow all the lines down to the tank either. They pump the tank and inspect the parts of it. They don't crawl under the house.
House inspectors crawl under the house.
Even if your friend didn't want a home inspection, he should have had a well and septic inspection.
See bolded .. exactly .. last septic inspection on a deal last July. Septic pumper came out pumped the tank, licked his one remaining tooth and said “looks good from my house”. That was the extent of the septic inspection LOL.
I have never known appraisers to independently check inspect either wells or septics. They may check records, and lenders may require testing reports, most do... but that info doesn't come from the FHA appraisal.
We have separate well and septic inspection addenda in our contracts that would ordinarily discover such a thing. However... Septic inspectors don't follow all the lines down to the tank either. They pump the tank and inspect the parts of it. They don't crawl under the house.
House inspectors crawl under the house.
Even if your friend didn't want a home inspection, he should have had a well and septic inspection.
This is where the appraiser fell short. Their is NO TANK and NO DRAIN FIELD and this should have been duly noted to fall within FHA guidelines. A home inspector would have noted the same thing but being FHA was required to note these items is the reason he didn't call the closest home inspector, (60 miles away) and pay for a report as 95% of what he would have paid $600 for he could find himself.
An appraisal does not take the place of a home inspection, including well and septic. An appraiser looks for visual defects only. Your friend, as a contractor, is much more qualified to spot any defects. An appraiser only looks for health, safety and basic function.
Did anyone actually read the appraisal? There's a good chance the distances, if noted in the appraisal, were obtained from a survey. Beyond attempting to locate the area of well and septic, an appraiser is not qualified and will not guarantee the quality of either.
It was the buyer's failure to obtain needed inspections PRIOR to purchasing the property. I'll bet the appraisal has a disclaimer that it cannot be relied upon for condition and that appropriate inspections be completed by a licensed professional. If someone wishes to rely on a document, they should at least take the time to read it.
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