Steps must have proper railings for FHA insurance
The Federal Housing Administration is the world's largest government insurance provider for mortgages. In an effort to protect the health and safety of borrowers, and the lender's interest, FHA requires all properies to undergo an inspection (appraisal) to determine the property's condition. "The property must be free of all known hazards and adverse conditions," according to FHA Handbook 4150.2. Steps without railings present a potential safety hazard to occupants.
Defective Conditions
"A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated," according to FHA Handbook 4150.2. Steps without a handrail were considered some of the "other health and safety deficiencies" FHA appraisers had to watch out for and report to the lender. Prior to a Mortgagee Letter issued by HUD in late 2005, an appraiser was required to note and make a repair request for handrails in the appraisal, and the work had to be completed before the loan could be insured by the FHA. Missing handrails are considered "minor cosmetic repairs," according to Mortgagee Letter 2005-48.
Appraiser Reporting
Although missing handrails no longer require automatic repair on existing properties, the appraiser may still use their own discretion to determine whether a missing handrail will pose a threat to the health and safety of the occupants or their security. The appraiser is only required to note the repairs necessary to make the property comply with FHA's minimum standards, according to the Mortgagee Letter. Missing handrails do not apply to the appraiser's scope of requirements.
Lender Responsibility
Lenders are ultimately responsible for determining whether handrails (or lack thereof) threaten the occupants, thereby approving, rejecting or making the loan subject to repair of the railings. "Lenders must review the appraisal to determine whether the appraiser has reported any property conditions that will affect the health and safety of the occupants or the security and the soundness of the property," says the Mortgagee Letter. Lenders may require handrail repairs that add to the borrower's acquisition costs, at their discretion, but appraisers may not.
Tags: health safety, Mortgagee Letter, 4150 Steps, 4150 Steps without, according Handbook, according Handbook 4150
