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FHA Appraisal Question

To make a long story short, I bought my home approximately 10 years ago with an FHA loan. I ended up having an improperly abandoned underground oil tank on the property that I didn't figure out about until after I had bought the property. The FHA appraiser should have noted it in the report, as the vents for the tank were easily seen, but he didn't. I don't even think the loan should have been underwritten at all without that being fixed, but without the appraiser noting it on the appraisal, the lender says they had no knowledge of it. Do I have any recourse? FHA says they only insure the loan, so they have no liability, and my lender says they were just going off of the FHA appraisal, and could not have known about the tank. Thank you in advance for any advice! by mikelonggggggggg from Cambridge, Maryland. Jun 19th 2019 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Neither your lender or FHA is responsible for this.. The FHA appraisal is nothing like a "home inspection".. they are simply inspecting the home to determine its' value and to be sure that's it habitable.. if something is overly obvious (broken windows, chipping/pealing paint, exposed wires, etc) they have an obligation to call it out. But they will not check every outlet, climb in the attic or crawl space, or test every water fixture, etc.. so an FHA appraisal inspection does not take the place of a home inspection. Pipes coming out of the ground, could be anything.. septic system, holding tank for storm drainage, cistern, etc.. There's no way the appraiser would know what those pipes go to.. But the responsibility falls on YOU. You, as a buyer, must do your due diligence. Were you offered a "Sellers Property Disclosure Statement"? or anything like that.. Here in AZ, a seller fills out this 4 page doc that ask's about all the property characteristics.. something like this should have been listed on this report. Did you hire a home inspection? If so, they would have an obligation to tell you or at least warn you about those pipes.. Did your agent know anything about the pipes.. did the agent say anything to you.. It's possible the home inspector could be liable.. it's also possible that if you were given a sellers inspection notice, but the tank was not referenced, then the seller might be liable as well.. but 10 years later??? It's likely that any liability in relation to this has pass any statues of limitation.. so even if they were liable.. because you waited so long, it's possible there is no recourse.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

Jun 21st 2019
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