FHA 203k Standard Loan and Lead Based Paint

[Andrew Griffin]

I'm buying an old duplex built well before 1978. It's not a HUD Home. My financing is FHA 203k Standard Rehab loan. The plan is to do rehab throughout the property. It has chipping paint around the exterior of windows and possibly other areas in the home that the appraiser called out as possible lead-based paint. The lender is inexperienced with this type of loan and has asked me to jump through additional hoops along the way. Now they believe that I am required by FHA to get a lead-based paint inspection and they only just told me this right before closing. I called around this seems to be an odd request even for an old home that is getting an FHA or FHA backed loan. The house is old and surely has old lead paint somewhere. I have a feeling that if I pay for an inspection that they will only confirm this fact then it will hold up the process more and I'll have to get a follow-up risk assessment, then abatement ect. My seller wants to back out the deal but I'm trying to put together a gameplan to save it.

What should I do? I read that for HUD Homes, HUD automatically inspects and pays up to $4k or $5k for lead-based paint "stabilization" in homes older than 1978 that use FHA loans. Will HUD have my FHA-financed home inspected and treated even though it is not a HUD Home? Or is it my responsibility?

Please Help!

[Daniella Sanchez]

The first house I purchased was built in 1955 and I was the second owner so I knew LBP would be found and require correction before closing (I also had an FHA loan). To keep things moving along I asked the sellers if I could paint the property myself prior to inspection to avoid any road bumps. They said yes and when the inspector/appraiser came nothing about LBP was noted.

I understand this is a risk and I could have been out of pocket about $80 but I was sincere with the sellers and we worked together to get the deal closed even though I was purchasing AS IS. 

Also, it's important to know that LBP is not recognized if a coat of fresh or newer paint is applied over it. If it's covered there's not much to worry about.