VA Loans Appraisals and Defective Conditions Involving Peeling Paint

VA loans require an appraisal for both new purchase home loans and cash-out refinancing loans. The appraisal helps establish the fair market value of the property, but also helps determine whether or not a home is suitable for a VA mortgage loan—the home is required to meet minimum safety standards and has acceptable workmanship

Some borrowers look at the home they wish to purchase with a VA loan and wonder if anything might interfere with the application—conditions that aren’t readily obvious or craftsmanship that seems acceptable at a glance but is not.

One unacceptable condition a potential buyer can spot right away for him or herself? Peeling paint. That may seem like a mere “cosmetic” problem, but the VA loan rulebook says depending on circumstances, peeling paint can actually be a major issue that requires correction as a condition of VA home loan approval or refinance loan approval.

“Lead-based paint constitutes an immediate hazard that must be corrected, unless testing shows that lead is not present in the paint at a level above that permitted by law.” VA fee appraisers are told specifically how look for conditions that involve peeling paint when they are examining a home. According to Chapter 12 of the VA Lender’s Handbook, appraisers are required to:
 
·  assume that a defective paint condition (involving cracking, scaling, chipping, peeling, or loose paint) on any interior or exterior surface of properties built prior to 1978 involves lead-based paint
·  clearly identify the location of such conditions, and
·  recommend correction.
 
Any defective paint condition identified must receive adequate treatment to prevent the ingestion of contaminated paint.  VA instructions to the fee appraiser state:
 
--the surface requiring treatment must be thoroughly washed, scraped, wirebrushed or
otherwise cleaned to remove all cracking, scaling, peeling, chipping and loose paint and then repainted with two coats of a suitable nonleaded paint

or

--the paint shall be completely removed or the surface covered with a suitable material such as gypsum wallboard, plywood or plaster before any painting is undertaken if the paint film integrity of the surface needing treatment cannot be maintained.”

If you see peeling paint in a home you want to purchase, consider the information given above before deciding on whether or not to move forward with the purchase of the property.

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