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There’s a not-so-common question about FHA loans and the appraisal process that raises an important issue: mold. Does the EPA or the FHA have the responsibility for setting spore count standards or other units of measurement for mold?

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FHA Appaisals And Mold Issues

FHA Appaisals And Mold Issues
There’s a not-so-common question about FHA loans and the appraisal process that raises an important issue: mold.

Who sets the mold requirements for an FHA appraisal? Does the EPA or the FHA have the responsibility for setting spore count standards or other units of measurement for mold?

A reading of the FHA single family home loan rule book, HUD 4000.1, reveals that FHA does not set or regulate health issues that may be raised or discovered through the appraisal process. Instead, the FHA defers to federal, state, or local authority where applicable. If an issue like the presence of mold comes up in the appraisal process, the local health authority and its rules would have an important say on what happens next.

And what about federal requirements? According to the Environmental Protection Agency’s  (EPA) official site, we learn the following about mold and the potential need for sampling:

“Is sampling for mold needed? In most cases, if visible mold growth is present, sampling is unnecessary. Since no EPA or other federal limits have been set for mold or mold spores, sampling cannot be used to check a building’s compliance with federal mold standards. Surface sampling may be useful to determine if an area has been adequately cleaned or remediated. Sampling for mold should be conducted by professionals who have specific experience in designing mold sampling protocols, sampling methods and interpreting results.”

That information can be found at the EPA official site page on mold testing: https://www.epa.gov/mold/mold-testing-or-sampling.

HUD 4000.1 contains up two references to mold, one specifically mentioning it as mold relates to an FHA appraisal:

“The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, and the structural soundness of the improvements. Environmental and safety hazards may include defective lead-based paint, mold, toxic chemicals, radioactive materials, other pollution, hazardous activities, and potential damage to the Structure from soil or other differential ground movements, subsidence, flood, and other hazards.”

If mold is present and detected by the FHA appraiser, it’s safe to assume that in such cases, the appraiser would consider recommending corrections/repairs to fix the problem.

However, FHA appraisers are not mold experts-if a home passes the appraisal, that is no guarantee that the property is free of mold or other issues. Borrowers should budget for an optional home inspection to determine whether or not a home has defects or other issues that could affect the borrower’s use of the property once the loan has closed. The appraisal is not to be considered a stamp of approval from the FHA that a home is free of defects or problems.

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