FHA Environmental Hazards & Site Conditions 1 â Questions and Answers
Question 1: Under FHA guidelines, when must an appraiser identify and flag defective paint in a pre-1978 home?
- Only if the paint is flaking on exterior surfaces
- Whenever paint is peeling, chipping, flaking, or otherwise defective on any surface (Correct answer)
- Only in rooms occupied by children under age six
- Only if the peeling area exceeds one square foot
Correct answer: Whenever paint is peeling, chipping, flaking, or otherwise defective on any surface
FHA Handbook 4000.1 requires appraisers to identify all defective paintâpeeling, chipping, flaking, or wornâon any interior or exterior surface of pre-1978 homes and require repair (paint stabilization) before loan closing.
Question 2: What is the minimum required distance between a private well and a septic tank under FHA Minimum Property Requirements (MPR)?
- 25 feet
- 50 feet (Correct answer)
- 75 feet
- 100 feet
Correct answer: 50 feet
FHA MPRs specify that a private well must be at least 50 feet from any septic tank to minimize the risk of contamination of the drinking water supply.
Question 3: A property is located in FEMA Flood Zone AE. What must an FHA appraiser note in the appraisal report?
- Nothing, as flood zones do not affect FHA loan eligibility
- That the property is in a Special Flood Hazard Area and NFIP flood insurance will be required as a condition of FHA financing (Correct answer)
- That the property is automatically ineligible for FHA financing
- Only the flood zone designation with no further comment required
Correct answer: That the property is in a Special Flood Hazard Area and NFIP flood insurance will be required as a condition of FHA financing
Zone AE is a Special Flood Hazard Area (SFHA); FHA requires the appraiser to note this and flag that NFIP flood insurance is a mandatory condition of the loan.
Question 4: When an FHA appraiser observes friable asbestos-containing materials (ACM) in a home, what is the appropriate course of action?
- Ignore it, as intact asbestos does not affect FHA eligibility regardless of condition
- Note the condition in the report and require remediation by a licensed professional before loan closing (Correct answer)
- Report it only if the ACM covers more than 10 square feet of surface area
- Recommend the buyer negotiate a lower purchase price to offset future remediation costs
Correct answer: Note the condition in the report and require remediation by a licensed professional before loan closing
Friable ACM is a health and safety hazard; FHA appraisers must note its presence and condition the appraisal on remediation by a qualified asbestos abatement contractor prior to loan closing.
Question 5: Which condition related to underground storage tanks (USTs) requires an FHA appraiser to flag a property for further environmental review?
- Any aboveground fuel tank over 250 gallons
- Observable evidence of a current or former UST on the subject property or within approximately 300 feet (Correct answer)
- USTs only if they are actively leaking at the time of inspection
- Any UST regardless of distance from the subject property
Correct answer: Observable evidence of a current or former UST on the subject property or within approximately 300 feet
FHA guidance directs appraisers to flag evidence of current or former USTs on the property or within the immediate vicinity (approximately 300 feet) as a potential environmental hazard requiring further investigation.
Question 6: What is the FHA appraiser's primary responsibility when a property is located in a high-radon-potential zone?
- Conduct personal radon air testing with a certified test kit
- Require a radon mitigation system be installed in all homes in the zone
- Note the high-radon-potential designation and recommend radon testing by a qualified specialist if appropriate (Correct answer)
- Automatically condition the appraisal on radon mitigation for all pre-1980 homes
Correct answer: Note the high-radon-potential designation and recommend radon testing by a qualified specialist if appropriate
Appraisers are not radon inspectors; their role is to note if the property is in a high-radon-potential area per EPA maps and recommend further testing by a qualified professional, not to test or require mitigation themselves.
Question 7: A pre-1978 home has lead-based paint that is intact, well-adhered, and shows no visible deterioration. Under FHA guidelines, what action is required?
- Require immediate removal of all lead-based paint regardless of condition
- Note the potential presence of LBP but require no repair action if the paint is not defective (Correct answer)
- Reject the property as ineligible for FHA financing due to the age of the home
- Require a full lead paint inspection by an EPA-certified inspector
Correct answer: Note the potential presence of LBP but require no repair action if the paint is not defective
FHA only requires repair of defective (peeling, chipping, flaking) lead-based paint; intact, well-adhered paint in pre-1978 homes does not trigger a repair requirement.
FHA Environmental Hazards & Site Conditions 1
Under FHA guidelines, when must an appraiser identify and flag defective paint in a pre-1978 home?