What action should a lender take when a property is known to have methamphetamine contamination?

If the mortgagee or the appraiser identifies a property as contaminated by the presence of methamphetamine (meth), either by its manufacture or by consumption, the property is ineligible due to this environmental hazard until the property is certified safe for habitation.  

If the effective date of the appraisal is prior to certification that the property (site and dwelling) is safe for habitation, the appraiser will complete the appraisal subject to certification that the property is safe for habitation.  
If the effective date of the appraisal is after certification that the property (site and dwelling) is safe for habitation, and the mortgagee has provided a copy of the certification by the certified hygienist, the appraiser must include a copy of the certification in the appraisal report.

The appraiser must analyze and report any long-term stigma caused by the property‚Äôs contamination by meth and the impact on value or marketability. 

For additional information see Handbook 4000.1 II.A.3.a.ii.(L); II.D.3.n.ii  available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04425