Home Buying in 06370>Question Details

Jason, Home Buyer in Oakdale, CT

Is mold going to prevent me from getting a FHA loan?

Asked by Jason, Oakdale, CT Tue Jun 8, 2010

I want to know if mold is a big factor in the FHA appraisal process. My mortgage broker has told me he has never seen a loan denied because of mold, and my Realtor is pretty much saying the same thing. I'm interested in buying a foreclosed property where the living area is in beautiful condition but in the garage (which is attached below the house) has a single wall of drywall that is about 20 ft long that has mold creeping up about 3 feet. The drywall is just screwed into the wall. Main concern is that mold going to come up as a issue that needs to be fixed prior to closing? In reality, with a couple $100 and my time I could fix the problem myself. I just don't want sign the fannie mae purchase addendum, give them my down payment, do all the inspections knowing about the mold, and waiting to see if the appraiser or underwriter is going to let it slide. I don't want to throw my down payment and inspection fees away on a risk I could have prevented if i was well informed.

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0 votes Thank Flag Link Wed Feb 12, 2014
I was getting denied my regular FHA loan because of mold. Check out the FHA-203K streamline loan, it is just like FHA but will allow you to get the loan with mold as long as you fix the problem no later than 6 months after purchasing the property
0 votes Thank Flag Link Fri Jan 24, 2014
Yes. Along with other environmental concerns like lead paint, UFFI, radon, and asbestos, can affect whether or not you can get a FHA loan. When the appraiser does his/her inspection of the home's condition and his/her determination of value, he/she will state in the appraisal report given to the lender and the buyer the conditions that are unsatisfactory about the home. These conditions can address environmental issues as well as property conditions like an old roof or missing handrails.
0 votes Thank Flag Link Wed May 15, 2013
I have to disagree. My loan committment includes that the mold problem will need to be fixed prior to closing otherwise the loan is denied. the lender will not let me close with a mold problem. so I have no idea what lender you are working with.
0 votes Thank Flag Link Thu Aug 25, 2011
Yes, it will affect your FHA purchase. You can have the seller fix the problem before the appraisal is done. Like you stated, it will only cost you a couple hundred dollars. I think the seller will spend that amount of money
0 votes Thank Flag Link Tue Jun 8, 2010
Yes it will be a factor for FHA appraisals.

Appendix D: Valuation Protocol states -
"The physical condition of existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or inspections are necessary - essential to eliminate conditions threatening the continued physical security of the property.

Required repairs will be limited to necessary requirement to:
1 protect the health and safety of the occupants (Safety)
2 protect the security of the property (Security)
3 correct physical deficiences or conditions affecting structural integrity (Soundness)

A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated. Defective conditions include:
1 defective construction
2 other readily observable conditions that impair the safety, sanitation or structural soundness of the dwelling."

Mold is a potential health hazard. It can reoccur and spread if not removed completely and the cause of the mold is not corrected to prevent reoccurance. The appraiser would also be required to report evidence of dampness in the garage -
Appendix D -
"Evidence of Dampness - 1) Examine for dampness or readily observable evidence of water damage. Signs of past water damage may include efflorescence, mold, mildew or stains on walls or mechanical equiptment."
0 votes Thank Flag Link Tue Jun 8, 2010
They probably won't deny the loan, but the lender will probably request that the mold issue be addressed before approving the loan. They may even send out their own inspector to take a look at it.
0 votes Thank Flag Link Tue Jun 8, 2010
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