Minimum Property Standards for Power Lines and Access to Property
HUD 4000.1 includes a variety of updates, changes, revisions, and restatements of FHA loan policy, and the FHA didn’t provide a comparison from the old rules (HUD 4155.1 and HUD 4155.2) and the new. The agency released statements saying it’s up to the end user--lenders and borrowers--to be aware of the new policies as printed in HUD 4000.1.
That’s one reason it’s important to examine critical areas of the new rulebook (such as FHA Minimum Property Requirements or MPRs). These guidelines cover the entire appraisal process and the new/restated requirements in HUD 4000.1 inform the appraiser’s work. Here are some basic, but important issues in the new rules:
According to HUD 4000.1 the lender must “ensure the subjects dwelling, garage, or other improvements do not encroach onto an adjacent Property, right-of-way, utility Easement, or building restriction line. The Mortgagee must also ensure a neighboring dwelling, garage, or other improvements do not encroach onto the subject Property. Encroachment by the subject or adjacent Property fences is acceptable provided such Encroachment does not affect the marketability of the subject Property.”
The Location of Overhead Power Lines
The rules for overhead power lines are specific--where they pass by or through the property can be a problem depending on the location of those lines. “The Mortgagee must confirm that any Overhead Electric Power Transmission Lines do not pass directly over any dwelling, Structure or related property improvement, including pools. The power line must be relocated for a Property to be eligible for FHA-insured financing.”
HUD 4000.1 also addresses electrical “drop lines”, which may not pass over any water-based feature of the property like a pool or outdoor hot tub. “If the dwelling or related property improvements are located within the Easement area, the Mortgagee must obtain a certification from the appropriate utility company or local regulatory agency stating that the relationship between the improvements and Local Distribution Lines conforms to local standards and is safe.”
FHA Loan Rules on “Access To Property”
“The Mortgagee must confirm that the Property is provided with a safe pedestrian access and Adequate Vehicular Access from a public or private street.” HUD 4000.1 says that streets must either be dedicated to public use and maintenance, or “retained as private streets protected by permanent recorded Easements.”
The rules also add the following on private streets, including shared driveways. These must be protected by “permanent recorded Easements, ownership interest, or be owned and maintained by an HOA. Shared driveways do not require a joint maintenance agreement.”
Remember that FHA loan rules never have the final say over state or local building code. In cases where there is an additional requirement by local or state law, those regulations must also be observed.
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