Environmental Hazards & Site Conditions Flashcards

An FHA appraiser notices visible mold on interior walls and ceilings of a property. What is the required course of action?

Answer: Note the condition and require professional mold remediation prior to loan closing

Visible mold is a health and safety hazard under FHA MPRs; the appraiser must note it and condition the appraisal on professional remediation and correction of the underlying moisture source before the loan can close.

What is the minimum required separation between a private well and a septic system drain field/leach field under FHA Minimum Property Requirements?

Answer: 100 feet

FHA MPRs require a minimum 100-foot separation between a private well and the septic drain/leach field—a greater distance than the 50-foot requirement for the septic tank itself—to prevent groundwater contamination.

A property has documented evidence of prior use as a methamphetamine lab. What is the FHA appraiser's obligation?

Answer: Note the condition as a significant health and safety concern and require certified decontamination before FHA financing

Meth lab contamination leaves toxic residues that pose serious health risks; FHA requires the appraiser to flag the property and condition financing on certified decontamination and clearance testing by a qualified specialist.

Which of the following situations would most likely trigger a requirement for an environmental site assessment (ESA) on an FHA-financed property?

Answer: Observable evidence of contamination on the property or its location near a known hazardous waste site

FHA directs appraisers to flag properties when there is observable evidence of environmental contamination (staining, odors, distressed vegetation) or known proximity to hazardous waste sites, which may trigger a Phase I or Phase II ESA.

An FHA appraiser identifies Chinese drywall (imported drywall that emits sulfur compounds and causes corrosion and health concerns) in a home. What is the appropriate appraisal requirement?

Answer: Require complete replacement of all affected drywall before FHA financing can proceed

Chinese drywall is a known health and safety hazard that causes corrosion of electrical systems and HVAC components and health issues for occupants; FHA requires remediation (replacement) before the loan can close.

For which FEMA flood zones does FHA require mandatory flood insurance as a condition of financing?

Answer: Special Flood Hazard Areas, including all Zone A and Zone V designations and their sub-designations

FHA mandates NFIP flood insurance for all properties in Special Flood Hazard Areas, which include all Zone A designations (A, AE, AH, AO, AR, A99) and Zone V designations (V, VE)—not just individual sub-zones.

During an inspection, an FHA appraiser observes obvious oil staining on soil near the foundation and detects a petroleum odor on the property. The correct course of action is to:

Answer: Note the condition in the report and require further investigation by a qualified environmental specialist before FHA financing can proceed

Observable signs of soil contamination are a red flag requiring the appraiser to document the condition and condition FHA financing on investigation and clearance by a qualified environmental professional—not to self-adjudicate eligibility.