Is a property still eligible for FHA if it has an encroachment?

The Appraiser must identify any encroachments of the subject’s dwelling, garage, or other improvement onto an adjacent property, right-of-way, utility easement, or building restriction line. The Appraiser must also identify any encroachments of a neighboring dwelling, garage, other physical structure or improvements onto the subject property. The Appraiser must notify the Mortgagee if, upon observation, it appears that an encroachment affects the subject property. 

The Mortgagee must ensure the subject’s dwelling, garage, or other improvements do not encroach onto an adjacent property, right-of-way, utility easement, or building restriction line. The Mortgagee must also ensure a neighboring dwelling, garage, or other improvements do not encroach onto the subject property.

Encroachment by the subject or adjacent property fences is acceptable provided such encroachment does not affect the marketability of the subject property. 

For additional information see Handbook 4000.1 II.A.3.a.ii(A) and II.D.3.c.ii(D)  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-05074