Written By: Jane Harford
Now, the days are longer, spring is in the air and home sales are increasing due to lower interest rates, better housing prices and the fact that the homebuyer credit is going away at the end of this month, it is time to take a quick review at FHA’s well and septic guidelines, including Waivers on properties that do not meet the regulations.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
HUD does require that all properties are connected to public water and sewer whenever possible. The full regulations are published in Mortgagee Letter 2005-48. But it is always good to remember that individual water supply systems (wells) and septic systems are acceptable under HUD regulations if the cost of connecting to public or community water and sewer systems is excessive. (Generally over 3% of the cost of a home purchase is the bench Mark used by lenders).
If the costs exceed that benchmark, the DE underwriter has the option to not enforce the condition to hook up to public water/sewer systems. FHA will accept the state/local distance requirements for well/septic systems as long as they are not less than 75 feet between the well and septic tank drain field. The minimum from the well to a roadway or property line of anything other than a single family home can’t be less than 10 feet. These distances are regardless of the state and local requirements.
Please remember that the HUD standard requirement is 50 feet between well and septic, 100 feet from the drain field and 10 feet from the property line. Appraisers are no longer “required” to fully document the locations of well/septic systems. Each appraisal must be reviewed on it’s own merits, locations of the well/septic systems and ability to meet the local, state and health authority guidelines. If in doubt, the waiver from HUD is the safest way to ensure that the property will be insured after closing and not kicked back due to well/septic not meeting HUD’s guidelines.
CHECKLIST FOR WELL/SEPTIC WAIVERS
FHA CASE NUMBER:
1. Documentation from the local authority that the subject property is unable to connect to a public or community water/sewer system. If connection is available and the costs to the public or community systems are reasonable (3% or less of the property value), connection must be made.
2. Professional sketch (Surveyor) showing the location of the well, septic tank, and drainfield with relation to the subject property and property line. The sketch must specify the actual distances separating the well and septic system components: well to property line, well to septic, and well to drainfield. HUD distance requirements: Well to Property Line 10 Ft, Well to Septic Tank ? 50 Ft, and Well to drainfield 100 Ft.
3. Well test in accordance with Mortgagee Letter 95-34. This includes testing for Led, Nitrate (as Nitrogen), Nitrite (as Nitrogen), Total Nitrate/Nitrite, Total Coli forms, and Fecal Coli forms or E. coli. When coli form is present, how was the Coli form corrected?
4. Evidence of the Local Authority’s approval that the well and separation distances between the well, property line, septic tank, and drainfield are in compliance with the local codes for the subject property. If the subject property does not meet the Local Authority’s requirements, a waiver granted by the Local Authority must also be submitted. When applicable, evidence that a well in the foundation, is acceptable and common to the area.
5. Evidence that the system is working properly. And there is sufficient space for repair/maintenance.
6. Holds Harmless agreement, a signed letter from the borrower acknowledging that the property does not meet current FHA/HUD regulations, and a waiver must be granted to obtain FHA insurance.
7. Cover letter requesting waiver, FHA Case number, borrower's name, property address, reason for request; underwriter’s name, address, phone number, fax number, and email address.
Please be aware, the reviewer of your file may require additional documents to make a final determination.
**IF THE PROPERTY IS LOCATED IN THE STATE OF MICHIGAN, CIRCULAR LETTER PH-00-02 PERMITS A REDUCTION IN THE DISTANCE BETWEEN THE WELL AND DRAINFIELD FROM 100 FEET TO 50 FEET. (EXISTING CONSTRUCTION ONLY)
***ALSO, PLEASE REFER TO MORTGAGEE LETTER 2002-25 FOR FURTHER GUIDELINES FOR DISTANCES BETWEEN WELL FROM SEPTIC TANK DRAINFIELD AND WELL FROM PROPERTY LINE REDUCTIONS.
Please tab the documents in the above order, to assist with the processing. The mailing address is:
U.S. Dept of HUD
P&U Div - Technical Br
The Wanamaker Building
100 Penn Square East
Philadelphia, PA 19107-3389
You may contact Suzanne the same day your package is to arrive on 215-861-7511, to be assured it arrived to the office. It generally takes 1-2 days to be assigned to an underwriter. Once assigned, the underwriter has 2 weeks to process your request.
If you have additional questions you can submit them via email toinfo@fhaoutreach.com or contact us at 1-800-225-5342. Please do not respond to this email unless you need further clarification or wish to initiate a new service request.
FAQ : Are properties having a well acceptable for FHA financing?
Solution Details: Individual water supply systems (wells) may be acceptable when connection to a public or community water system is not available and there is assurance of a continuing adequate supply of safe potable water for domestic needs. A water test or inspection is required if it is mandated by the State or local jurisdiction;
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
As always-happy fraud free underwriting!
About The Author
Jane Harford - As an NAMP® staff writer, Jane brings 30+ years of mortgage business experience in FHA, VA, LAPP and is also an FHA DE Underwriter. If you would like to become a writer for NAMP® , please email us at: About The Author
Jane Harford - As an NAMP® staff writer, Jane brings 30+ years of mortgage business experience in FHA, VA, LAPP and is also an FHA DE Underwriter. If you would like to become a writer for NAMP® , please email us at: contact@mortgageprocessor.org.
