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June 2010

FHA Updates Lead Paint Disclosure Requirements

Appraisers must report all areas they observe as being affected by lead paint in homes built prior to 1978, according to a new Federal Housing Agency Mortgagee Letter. The appraiser must note these in the physical deficiencies or adverse conditions section of the appraisal report, according to ML 2010-17, released May 5.

I f the appraiser does not observe defective paint in a home that was built before 1978, an explanation is not required in the physical deficiencies or adverse conditions section of the appraisal report, the letter stated.

HUD said that it will only order lead-based paint evaluations for REO properties constructed before 1978 that were purchased with FHA-insured financing.

Mortgagee Letter 2010-17 , effective June 1, amends Appendix A in Handbook 4150.2, Valuation Analysis for Home Mortgage Insurance for Single Family One- to Four-Unit Dwellings. To view ML 2010-17 in its entirety, visit www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-17ml.pdf.


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