USDA Home Loan Environmental Requirements

usda home loansWe’ve recently run into a series of people purchasing homes in NC with Underground Oil Tanks.  If you are applying for a USDA Home Loan (or any other Government Mortgage Program, frankly) this can be a problem.

The USDA Home Loan Handbook has this to say about Environment Requirements and Petroleum Tanks:

The Agency must consider the management of hazardous substances, including hazardous wastes and petroleum products, from two perspectives: liability under hazardous substance and hazardous waste laws, and the economic risks posed by the presence of hazardous substances.

Then…  it get’s really technical when it comes to figuring out what to DO about the underground Oil Tank:

The requirements of subpart G of part 1940 of this chapter apply to loan guarantees made under this subpart.  Lenders and applicants must cooperate with RHCDS in the completion of these requirements.  Lenders must become familiar with these requirements so that they can advise applicants and reduce the probability of unacceptable applications being submitted to RHCDS.  RHCDS may require that Lenders and/or applicants obtain information for completing environmental assessments when necessary.  The RHCDS approval official will utilize adequate, reliable information in completion of the environmental review.  Sources of information include, but are not limited to, the State Natural Resource Management Guide (available in any RHCDS office) and, as necessary, the technical expertise available within the Agency as well as other agencies and organizations to assist in the completion of the environmental review.

Here’s our take on it.  Don’t buy a house with an underground tank.  If it’s a known issue – and the appraiser notes it on the appraisal, then the SECOND problem is knowing if it ever leaked.  The soil survey’s etc., involved can be a NIGHTMARE!

USDA Home Loans are only made to Owner Occupants, in qualifying areas.  Geographic Footprint:  USDA Home Loan underwriters must insure that the house you are buying is in one of the “geographically qualifying areas in North Carolina which is designated as Rural for USDA Loans.”  (This will be changing later – maybe by Oct 1, 2012) You might be surprised at what they consider rural!  Many “typical” subdivisions outside of cities like Charlotte, Raleigh and Greensboro qualify.  In fact, every county in NC has at least some part of it that qualifies for the program (Durham County is probably the toughest area to find a home).

If you have questions about qualifying for one of the  no money down home loan programs – please call Steve and Eleanor Thorne, NC Mortgage Experts 919 649 5058.  We love helping folks buy their dream home!

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