FHA Single Family Housing Policy Handbook 4000.1, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT > D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages > 3. Acceptable Reporting Forms and Protocols (04/10/2025) — o. Utility Services

ii. Required Analysis and Reporting The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the subject Property is an attached, detached, or manufactured Single Family dwelling and the utilities are not independent for each living unit. This does not apply to ADUs. The Appraiser must also notify the Mortgagee of the deficiency of MPR or MPS if utilities are not located on Easements that have been permanently dedicated to the local government or appropriate public utility body.

(A) Multiple Living Units Under Single Ownership A Property may contain multiple living units under a single Mortgage or ownership (two- to four-family Properties) that utilize common services, such as water, sewer, gas and electricity and is served by one meter in jurisdictions that allow single meter rental properties. In such cases, the Appraiser should note a deficiency of MPR or MPS if separate utility service shut-offs are not provided for each living unit. The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if utilities or services are not provided with independent shut-offs for each living unit, except common services such as laundry, storage space or heating, in two- to four-living unit buildings under a single Mortgage.

(B) Living Units Under Separate Ownership The Appraiser should not note the deficiency of MPR or MPS if the Property contains living units under separate ownership and part of a larger planned community, that utilize common utility services provided from the main to the building line when protected by an Easement or covenant and maintenance agreement, unless individual utilities serving a living unit pass over, under, or through another living unit without provision for repair and maintenance of utilities without trespass on adjoining properties, or legal provision for permanent right of access for maintenance and repair of utilities. If a single drain line in the building serves more than one unit, and the building drain clean-outs are not accessible from the exterior, the Appraiser must note the deficiency of MPR or MPS to the Mortgagee.

v. Individual Water Supply Systems

(A) Definition An Individual Water Supply System refers to a potable water source providing water to an individual Property.

(B) Standard When an Individual Water Supply System is present, water quality must meet the requirements of the health authority with jurisdiction. If there are no local (or state) water quality standards, then water quality must meet the standards set by the EPA, as presented in the National Primary Drinking Water regulations in 40 CFR §§ 141–142.

(C) Required Analysis and Reporting The Appraiser must report on the availability of connection to a public and/or Community Water System and any jurisdictional conditions requiring connection. When the Appraiser obtains evidence that any of the water quality requirements are not met, the Appraiser must notify the Mortgagee and provide an estimated cost to cure. The Appraiser must note the deficiency of MPR or MPS if the subject Property contains a well located within the foundation walls of an existing dwelling, unless there is evidence that: • the local jurisdiction recognizes and permits such a location; • it is common for the market area; and • it does not adversely affect marketability. A well located within the foundation walls of a dwelling is not acceptable for New Construction except in arctic or subarctic regions. The Appraiser must report when water to a Property is supplied by dug wells, cisterns, or holding tanks used in conjunction with water purchased and hauled to the site. The Appraiser must report whether such systems are readily accepted by local market participants. The Appraiser must note the deficiency of MPR or MPS if the subject Property has a water source that includes a mechanical chlorinator or is served by springs, lakes, rivers, sand-point wells, or artesian wells. A pressure tank with a minimum capacity of 42 gallons must be provided. However, pre-pressured tanks and other pressurizing devices are acceptable if delivery between pump cycles equal or exceed that of a 42-gallon tank. Tanks must be equipped with a clean-out plug at the lowest point and a suitable pressure relief valve. The Appraiser must note any readily observable deficiencies regarding the well and require test or inspection if any of the following apply: • the water supply relies upon a water purification system due to the presence of contaminates; • corrosion of pipes (plumbing); • areas of intensive agricultural uses within one quarter mile; • coal mining or gas drilling operations within one quarter mile; • a dump, junkyard, landfill, factory, gas station, or dry cleaning operation within one quarter mile; or • an unusually objectionable taste, smell, or appearance of well water. The Appraiser must also be familiar with the minimum distance requirements between private wells and sources of pollution and, if discernible, comment on them. The Appraiser is not required to sketch or note distances between the well, property lines, septic tanks, drain fields, or building Structures but may provide estimated distances where they are comfortable doing so. When available, the Appraiser should obtain from the homeowner or Mortgagee a copy of a survey or other documents attesting to the separation distances between the well and septic system or other sources of pollution.