OK, I read the relevant statement in 4000.1 HUD rules, here it is:
"The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department."
Who makes the determination of avail at a reasonable cost? If I were applying for an FHA loan, and I wanted a house, and that house had a well, and that property MAY be connected to a public system, it would be very easy for me to put a statement into the escrow that 'I have checked, and determined that the connection to the public water source is unreasonable, and that the water provided by the private well on the subject property produce sufficient, and clean clear water for human consumption'. If the FHA balks, then they have to show that connection to the public system will be 'reasonable'. What's reasonable mean to me? To them?
If the FHA rejected the load for that, I'd get a lawyer, and tell them to sort it out. Of course, the FHA has unlimited budget, so it's a fight one can never win, but maybe they'll back off. Who knows?
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