The story of this single mother’s harrowing experience with a defective home purchase and HUD’s negligent oversight exposes deep flaws in the FHA appraisal and loan review process. After sacrificing for years to rebuild her credit and earn the right to become a homeowner, this borrower found her dream home in the country – or so she thought. During the home inspection, several issues were flagged.
The seller, an investor who had purchased the home in an estate sale, was unaware of the septic system’s location. The seller agreed to have the tanks pumped so the location could be determined. By the time the AMC appraiser arrived, the septic tank had been located and left uncovered for the appraiser to observe.
Despite this, the AMC appraiser marked the home as having public water and sewer, failing to note the FHA’s minimum property requirements for the distance between the well and septic. The appraisal was approved, and the home closed.
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