Environmental Hazards & Site Conditions Flashcards

A property has a private well located 8 feet from the property line. Under FHA Minimum Property Requirements, this situation is:

Answer: A deficiency, since FHA requires a minimum 10-foot setback from property lines for private wells

FHA MPRs specify a minimum 10-foot setback from a private well to the property line; 8 feet falls short of this requirement and must be noted as a deficiency requiring resolution.

What is the FHA policy regarding properties located in a designated Coastal Barrier Resources System (CBRS) area?

Answer: FHA mortgage insurance is generally not available for structures located in designated CBRS areas

The Coastal Barrier Resources Act restricts federal financial assistance, including FHA mortgage insurance, for new or substantially improved structures in designated CBRS areas to discourage development in environmentally sensitive coastal zones.

An FHA appraiser discovers urea-formaldehyde foam insulation (UFFI) installed in the walls of a 1978 home. What is the correct protocol?

Answer: Note the presence of UFFI in the report; while disclosure is important, UFFI does not automatically disqualify the property from FHA financing

FHA does not automatically disqualify properties with UFFI; the appraiser must note its presence so it can be disclosed, but mere presence of UFFI without evidence of active off-gassing or health hazard does not render the property ineligible.

When appraising a property that is in close proximity to high-voltage electrical transmission lines, an FHA appraiser should:

Answer: Note the proximity, assess any observable easement encroachments or safety hazards, and consider any adverse impact on marketability

Appraisers must note and analyze external adverse conditions including proximity to power lines; they should comment on any physical hazards (tower locations, easement encroachments), consider marketability impact, and apply adjustments if warranted.

A property has an abandoned well on the premises that has not been used for over 20 years. Under FHA guidelines, this condition:

Answer: Must be noted and the abandoned well must be properly sealed and abandoned in accordance with local requirements before FHA financing can proceed

FHA requires that abandoned wells be properly decommissioned and sealed per local health authority standards to prevent contamination of groundwater and eliminate safety hazards such as collapse or accidental entry.

A property has a low area adjacent to the foundation that retains standing water for several days after rain events. Under FHA Minimum Property Requirements, this condition:

Answer: Must be noted and correction of the drainage deficiency should be required if it affects the property's structural soundness or livability

FHA MPRs require adequate site drainage to prevent moisture intrusion that could compromise structural soundness; standing water near the foundation is a red flag that must be noted and remedied if it poses a risk to the structure or habitability.

When appraising a property located near an active or closed landfill or solid waste site, an FHA appraiser's primary obligation is to:

Answer: Note the proximity and evaluate whether the site creates adverse conditions affecting the health, safety, or marketability of the property

FHA requires appraisers to note all adverse site conditions, including proximity to landfills, and assess whether odors, methane gas migration, leachate, or visual blight create health, safety, or marketability issues that affect the property's value and FHA eligibility.