With a big increase in HUD REOs being sold these days, we are seeing FHA appraisers requiring “Lead-Based Paint Repairs” to be completed prior to closing.
According to HUD, the only reason this would be a requirement is when a HUD REO property, constructed before 1978, is being purchased using FHA-insured financing.
Since the EPA has some jurisdiction over the lead-based paint removal, here are the EPA’s requirements:
- Contractors making repairs must be “certified” (8 hours of training)
- If repairs are done by a contractor, underwriter will require a copy of EPA or the State’s Lead Based Paint Training Certificate.
- If purchasing non-owner occupied REO, investor can make repairs but must have 8 hours training and same certification as contractor.
- If purchasing owner-occupied home and borrower makes repair, must sign certification that they met EPA requirements and provide receipts as supporting evidence.
- Final inspection done by FHA appraiser—but they will only certify that repairs have been completed, but they will NOT certify compliance with EPA requirements.