FHA Environmental Hazards & Site Conditions 3

Question 1

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

Accepted Answer

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

Answer

Acceptable provided water quality tests return satisfactory results

Answer

Acceptable if the neighboring property owner provides a written easement

Answer

Only problematic if the neighboring lot also relies on a private well

Question 2

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

Accepted Answer

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

Answer

FHA financing is available but requires a higher down payment of 10%

Answer

An elevation certificate and coastal hazard study are required but financing is available

Answer

CBRS designation only affects properties in Zone V flood zones

Question 3

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

Accepted Answer

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

Answer

The property is automatically ineligible for FHA financing due to the presence of UFFI

Answer

Require complete removal of all UFFI before loan closing

Answer

No action is required since UFFI was an approved insulation product when installed

Question 4

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

Accepted Answer

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

Answer

Automatically declare the property ineligible for FHA financing due to EMF health concerns

Answer

Ignore it since FHA has no specific guidance addressing power line proximity

Answer

Require the power company to conduct an electromagnetic field (EMF) study before the appraisal can be completed

Question 5

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

Accepted Answer

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

Answer

Is fully acceptable since the well has been inactive for decades

Answer

Has no bearing on FHA eligibility as only active wells are regulated

Answer

Only requires action if the abandoned well is within 50 feet of the active well or septic system

Question 6

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:

Accepted Answer

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

Answer

Is acceptable and requires no comment if the water does not enter the living space

Answer

Only requires attention if the property is in a designated flood zone

Answer

Should result in a cost-to-cure adjustment of $2,500 in the appraisal but no repair condition

Question 7

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

Accepted Answer

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

Answer

Automatically declare the property ineligible for FHA financing regardless of distance

Answer

Require a Phase II Environmental Site Assessment for all properties within 2 miles of any landfill

Answer

Ignore closed landfills since they no longer pose an environmental risk