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"Everyone has a fair turn to be as great as he/she pleases. ~ Jeremy Collier
When taking a listing or when buying a rural (or formally rural home) it is good to know if it is hooked up to city sewer and water. If it is not you may have some hurdles to overcome; especially if you are using a FHA loan.
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 4% 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
___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 (4% 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. (good to have a survey)
___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.
Have a fantastic week and remember we are here for you. Merry Christmas & Happy Hanukkah: be with you next week!
The Valeo-Croy Team - Call today
Todd Croy - NMLS #91428 NC, SC (704) 488-7763
Deanna Valeo - NMLS #91421 NC, SC, VA (704)488-1421
Accessible | Program Expertise | On-Time Closings
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http://www.mortgagenewsdaily.com/mortgage_rates/
**Please note the rates quoted are at the absolute best loan amount, the highest credit score and lowest LTVs allowed with a 1% origination fee and indicate the absolute lowest rate possible. You should use this list as a guideline and trend indicator and get a specific quote for your project (often it may be slightly higher).
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The Valeo-Croy Team and New American Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for New American Mortgage to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply. Date: 12/20/2011
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