Environmental screening is a firmly established practice in commercial real estate transactions but remains infrequent, at best, in single family residential transactions despite reoccurring issues for all parties involved. With the emergence of vapor intrusion, the threat of environmental contamination on residential properties has become even more of a concern.
A number of agencies have existing environmental due diligence requirements (listed below) for residential properties that are largely disregarded by the industry. By ignoring existing requirements, many parties, including GSE’s, lenders, brokers, sellers, appraisers and attorneys, are at risk and consumers are affected.
The Summit Report, available here, is a product of discussions initiated at the Land Contamination and Residential Properties Summit hosted by EDR. The Summit attendees included attorneys, appraisers, bankers and representatives from HUD, Freddie Mac and the EPA. This report provides detailed information on the nature and effects of environmental contamination on residential properties, potential liabilities for various stakeholders, and the agencies and organizations that require environmental screening, including:
- Union Standards of Professional Appraisal Practice (USPAP) and Appraisals
- Freddie Mac Single-family Seller/Servicer Guide
- Fannie Mae Single-family Selling Guide
- Housing and Urban Development (HUD) Multi-family Standards
- HUD Valuation Analysis for Single-family Dwellings
- HUD FHA HOC Reference Guide
- HUD Mortgage Letter
- 24 CFR 200.926
- FDIC Guidelines for an Environmental Risk Program
- OCC – Office of the Comptroller of the Currency – Environmental Risk Policy RE 213
- International Valuation Guidance Note No. 7
- Environmental Disclosure Reports