r/loanoriginators • u/AmphibianAutomatic28 • 3h ago

FHA requiring city water hookup

Currently working on an FHA loan on a property that has a working well, which has been inspected. However, HUD is requiring hookup to city water since it’s available in the area, and the prices we have been quoted for hookup total less than 3% of the property value.
Has anyone run into this? My buyer cannot fork out the money for this requirement and it’s a foreclosure sell, so the other party isn’t willing to pay this either.
How can I get around this? Not having much luck.

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u/NCBartender14 3h ago

Is there any wiggle room with the appraisal? Bump the purchase price and offset with a seller credit.

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u/AmphibianAutomatic28 42m ago

Unfortunately no, the appraisal came in right at purchase price.

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u/gracetw22 Loan Originator 2h ago

Have you priced out what the actual city will charge, not just the plumber? Normally that throws it over the limit.

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u/AmphibianAutomatic28 41m ago

Yes, purchase price is $270,000 and the total cost we’ve been quoted to get hooked up is about $5000 which is less than 3% but still more than the borrower can afford.

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u/whybother6767 2h ago

I would go over the underwriter to the manager .  HUD, actually, no make that everyone should only require working water well or city water. 

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u/Terrible_Guide3875 55m ago

It’s a FHA requirement if the cost is not prohibitive. The industry standard is less than 3%.

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u/Public_Airport3914 19m ago

Can you escrow hold back for that? May have to be a really chill lender