FHA Environmental Hazards & Site Conditions 2

Question 1

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

Accepted Answer

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

Answer

Document the mold but allow the loan to proceed since mold is common

Answer

Recommend the buyer address mold remediation after purchase closes

Answer

Ignore minor mold growth if it covers less than 10 square feet total

Question 2

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

Accepted Answer

100 feet

Answer

50 feet

Answer

75 feet

Answer

150 feet

Question 3

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

Accepted Answer

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

Answer

Note it only if law enforcement has confirmed active contamination at the time of inspection

Answer

Ignore it unless visible chemical staining is present during the inspection

Answer

Recommend a price reduction to compensate the buyer for the contamination risk

Question 4

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

Accepted Answer

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

Answer

The property is a commercial-to-residential conversion completed over 20 years ago

Answer

Any property built before 1970 in an industrial area

Answer

All properties within one mile of an active railroad line

Question 5

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?

Accepted Answer

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

Answer

Note it as a minor cosmetic defect with no impact on FHA eligibility

Answer

Recommend a closing cost credit to the buyer to offset future replacement

Answer

Ignore it if the home was built after 2010 since production ceased by then

Question 6

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

Accepted Answer

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

Answer

All flood zones, including moderate-risk Zone X

Answer

Only Zone V (coastal high hazard areas)

Answer

Only Zone AE and Zone VE

Question 7

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:

Accepted Answer

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

Answer

Note it as an aesthetic issue and apply a dollar adjustment in the sales comparison approach

Answer

Complete the appraisal without comment if the contamination appears to be old and inactive

Answer

Immediately reject the property as permanently ineligible for FHA insurance