AWACSMortgage compliance intelligence from Flightline

Newrez Correspondent · Announcement 2026-063 · Published

FHA Well Water Separation Flexibility for Existing Properties

Newrez communicated an FHA waiver permitting existing properties with private wells to comply with local separation distances rather than handbook standards. Underwriters may apply local municipal or health authority well distances provided satisfactory water test results are retained.

InformationalIn effect nowAll checks passedRead the announcement ↗ (opens in a new tab)

Loan impact

Summarized from the announcement · verified

Applies to: FHA-insured forward mortgages on existing properties served by individual water supply systems.

Addressed to
Newrez correspondent sellersFrom the publisher, not quoted from the text
Investor
NewrezFrom the publisher, not quoted from the text
Affected area
EligibilityGuide Section Handbook 4000.1
Affected documents
Water purity test results; local authority well permits or compliance documentation
Exceptions
new construction subject to minimum property standards
Applicability confidence
Verified: every row taken from the source text is supported by it; rows marked "from the publisher" are not quoted

Summary by AWACS. Newrez Correspondent's guide is proprietary, so AWACS does not reproduce its text. Read the official announcement ↗ (opens in a new tab)

What changed

Summarized from the announcement · Section Handbook 4000.1
RequirementPreviouslyNow
separation distance between private drinking wells and contamination sourcesRelaxedPreviously: Private wells had to meet standard agency clearance distances regardless of whether local codes permitted lesser distances.Existing homes may utilize local separation guidelines if local approvals exist and water test results are satisfactory.

What to do

AWACS interpretation · not source language

What to review: Review the guidance allowing existing properties with private wells to follow local separation guidelines rather than standard clearance distances when local approvals and acceptable water tests are documented.

QC implications

  • Verify that loans on existing properties using local well separation distances retain required local approvals and satisfactory water purity test results in the file.

Source and record

Version 1 · archived

Checks

  • Source verified: Passed

    The document ID, link and publication date match the official source.

  • Quotes match the source: Passed

    Every quoted passage appears word for word in the official document.

  • Requirements backed by the source: Passed

    Anything marked required is backed by the requirement language and dates in the source.

  • In scope: Passed

    The document is about residential mortgage lending.

  • Format and labels: Passed

    The record follows the AWACS format and uses its standard labels.