Chapter
1 Appraisal & Property Requirements Page
1-23 A:
Requiring Reports and Treatment: Wood
destroying insects and other organisms can cause serious problems in the wood
structural components of a house and may go undetected for a long period of time.
FHA requires inspection only if there is evidence of active infestation, if mandated
by the state or local jurisdiction, if customary to the area, or at the lender's
discretion. Please see: Mortgagee
Letter 2005-48 for more information.
Based on maps published in the IRC (International Residential Code), CABO One
and Two Family Dwelling Code, and/or the US Department of Agriculture's Bulletin
64, the four HUD Homeownership Centers (HOCs) have identified areas of the country
were potential damage by termites is considered extremely high. These areas, are
called Termite Infestation Probability Zones, a.k.a. TIP Zones, are available
as a resource at the TIP zones website. (Please see
Mortgagee Letter
2001-04 for more information.) 1.
New Construction: The Department's policy concerning the requirement for a
builder's warranty against termite infestation in new homes is outlined in Mortgagee
Letter(s) 1999-03, 2001-04
and 2003-11.
The Department has determined that if the property meets requirements in the International
Residential Code (IRC) by the International Code Council (ICC) on protection against
subterranean termites, (specifically Sections R323 and R324) they will satisfy
the requirements of HUD's minimum property standards. Acceptable treatment methods
for protection include chemical soil treatment, pressure preservatively treated
wood, naturally termite resistant wood), bait systems, or any combination of these
methods.
New Construction is defined as properties processed as proposed construction,
under construction and existing less than 1 year old. In those geographic areas
favorable to damage from termite or other wood destroying insects, the builder
must complete the HUD-NPCA-99-A (or NPCA-99a) form and indicate that one of the
following accepted treatment methods was used: a.
HUD-NPCA-99-A - (Subterranean
Termite Builders Certification and Guarantee) Completed by the builder as indicated
in Mortgagee Letter
1999-03 and 2001-04,
providing a 1 year guarantee indicating one of the following treatments was used:
- Bait system, OR
- Wood (pressure preservative treated wood as
outlined in Mortgagee
Letter 2001-04) - Under "type of Treatment", check the box titled "wood" and
add statement "Complies with Mortgagee Letter 2001-04 for use of preservative
treated wood", OR
- Soil (Chemical Soil treatment) - HUD-NPCA-99-B (or NPCA-99b)
is to be used with form HUD-NPCA-99-A only if the property is treated with a soil
termiticide. (The licensed pest control company is responsible for completing
form HUD-NPCA-99-B, as appropriate, and providing it to the builder; who is responsible
for distribution. Please see: Mortgagee
Letter 1999-03.) OR
- Buildings using steel, masonry or concrete building
components (with only minor interior wood trim and roof sheathing.) - Under "Type
of Treatment" on form the Builder is to add in the space to the right of the box
titled "Soil" the statement "Masonry (steel, or concrete) construction, no treatment
needed. Complies with Mortgagee
Letter 2001-04."
b.
The use of post-construction soil treatment where a chemical termiticide is applied
only around the perimeter of the foundation is NOT acceptable. Note:
All chemical soil treatments, bait systems, and chemical wood treatment must be
approved by the Environmental Protection Agency (EPA) and applied in accordance
with the EPA label instructions. 2.
Existing (over 1 year old): (Please see: Mortgagee
Letter 2005-48) Appraisers are to indicate on the appraisal form if there
was evidence of infestation of wood boring insects in the house and/or other structures
within the legal boundaries of the property.
- Further inspection is required when any of the following apply:
- At Lender's discretion;
- When it is required by local and/or state
laws - FHA does not require the lender to submit evidence or documentation in
the case binder that the state or local jurisdiction does or does not require
a test or inspection;
- When it is customary to the area;
- There
is evidence of:
- Decay
- Pest infestation
- Suspicious damage
- When a clear inspection report is required
on an existing property seeking FHA mortgage insurance:
- The
National Pest Management Association form NPMA-33,
Wood Destroying Insect Inspection Report must be completed. Or if the property
is located in a State having a mandated wood infestation form, then the State
mandated form must be used. At this time the following States have their own mandated
form for wood destroying insect infestation and the use of the NPMA-33
is NOT required: Alabama, Arizona, California, Florida, Georgia, Hawaii, Louisiana,
Maryland, Mississippi, Nevada, North Carolina, Oklahoma, South Carolina and Texas.
- When
a clear report is required, all improvements within the property lines must be
inspected and be free of active infestation. The validity period is 90 days from
the initial date of inspection. (Please See Mortgagee
Letter 95-33. Form NPMA-33
replaced form NPCA-1 effective January 1, 2005).
(The use of a bait/monitoring
system is acceptable when used in conjunction with an applied liquid chemical
treatment.) 3.
Condominiums: A condominium is subject to the same inspection requirements
as stated in the section titled "Existing (over 1 year old)" The inspection is
to include the unit, attached and/or detached garage, and other structures that
are a part of the subject. - If an inspection reveals problems with sections
of the condo held in common with other owners a letter from the homeowners association
listing the date of scheduled repairs, name of the contractor awarded the work,
and acknowledgment that the funds necessary to pay for those repairs have already
been budgeted and/or collected should be in the insuring binder.
B:
Appraisers Observations: Appraisers
are to observe all areas of the house and other structures/areas within the legal
boundaries of the property that have potential for infestation by termites and
other wood destroying organisms. Appraisers are to record any condition that might
be active infestation. C:
Sectioned Reports and Condition Clearance: The
following are guidelines for clearance of termite report conditions in states
where section termite reports are provided. On these reports each finding/recommendation
will be noted in either Section I or Section II, or the equivalent. a.
Section I: contains items where there is evidence of active infestation, infection
or conditions that have resulted in or from infestation or infection. b.
Section II: items are conditions deemed likely to lead to infestation or
infection, but where no visible evidence of such was found. The Structural Pest
Control Board has advised that Section II items will probably be major items that
have not become infestations/infections, but possibly will become in the future.
Please
see: HOCs Procedures for Clearing Sectioned Pest
Reports. |