Thread: Mortage Companies and our reports 2 things

This week I had 3 mortage companies ask for a re-inspect on homes, and tell me they needed them done asap so the loans can close

** One wants me to confirm broken tiles were corrected, and provide photos.
I asked the girl that called why can't they use a pd invoice stating the work was done by a Lic contractor with photos, She emailed me back and said the lender will not accept that.
I then asked her who was going to pay for this. Per her the lender will at closing.

*** One wants documentation that a pool barrier was provided and a reference for the city requirements.

*** The 3rd one wants me to provide documenation that everything on my report was completed. I did a re-inspect for this buyer a couple days ago and know for a fact she did not ask for everything.
This one I emailed back and informed the lender that the buyer provided me a list of what she wanted done and I confirmend if the items were or were not completed with the buyer, and she had the list of what was done or not done.

2nd thing.. In the last month 2 mortage companies required me to list them on the report.
One ordered the inspection and is paying for the inspection

The other one required me to add them on the report after I did the inspection. This one I got approval in writing from my customer, and had the mortage company sign an inspection agreement.

What are you doing, or what would you do with these requests?

If there are any E@O providers reading this , where do we stand on this, as it's starting to look like this is starting to be a common thing?


I mentioned this to an an agent this PM. He stated that he went thru the same thing a couple weeks ago with a termite inspection that disclosed termites.
The seller had a termite warranty with another company, per him the Mtg company would not accept treatment by the company that had the warranty, the seller or buyer had to pay the company that found the evidence $350.00 for treatment before they could close.

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I will re-inspect anything for a fee. If that fee is to be paid by a bank or mortgage company it will be paid in advance of the inspection. Re-inspection prerequisites are that I have in hand a list of all items supposedly repaired and copies of repair contractor materials lists and invoices for each repair. Homeowner DIY repairs will not be re-inspected.

I got a call last week from a bank rep asking me to just reword some issues in my report so they don't sound like they need immediate repair. Otherwise, the bank is going to need the safety items addressed and repaired prior to closing.

Sure, I'll just rerwrite my report which I already spend 2-3 hours on and open myself up to a new level of liability. Jackwagons!

If asked, I recommend to my clients NOT to share the inspection report with the mortgage company. It just muddies the water and is none of their business. The banks have an appraiser protecting their interests, I work only for my client (usually the buyer).

That said, I get paid at the time of inspection or re-inspection. The mortgage company is not my client.

A great number of these request/demands go back to the type of loan the person is getting. If the loan has any federal or state money (FHA, USDA, Grants, etc) the chances are very high that the underwriter is going to require all of the items listed in the report as needing correction.

I look at it as an extension of my service to help my client. If it is not done then the loan will not be issued and my client will not get the home. The only downfall is the last man in scenario that could happen down the road, but then that is with any reinspection.

I will do the reinspections as long as they have the receipts from the professional that did the repairs (no receipt, no inspection) and they pay my fee. I charge my hourly rate for any inspection like this. With a few lenders I have a very good working relationship so I do not mind them sending the check later. If they are new or I have never dealt with them, I require a check before I do anything. It is amazing how fast they can FedEx a check to you when it needs to be done!

Originally Posted by Nick Ostrowski

I got a call last week from a bank rep asking me to just reword some issues in my report so they don't sound like they need immediate repair. Otherwise, the bank is going to need the safety items addressed and repaired prior to closing.

Sure, I'll just rerwrite my report which I already spend 2-3 hours on and open myself up to a new level of liability. Jackwagons!

Interesting. . I recommended installing a pool safety barrier in the report, and they wanted me to include the requirements for that city in the report.
I did copy and paste the requirements on the email to them.

On the phone call I did offer to google the information and send it to her. She said that was not enough , it needed to be included in the report


This is an email I got yesterday

" it was nice to speak with you this morning. Our loan officer is asking that an addition be made to show on the inspection report for section 15.10. We would like you to please add an “or” to this report that would include what the state minimum standards are for the pool. Whatever your findings are, we would like those plugged into the report directly. Thanks again for this help as we are eager to get this loan closed. "

THIS IS My RESPONSE:
I thought maybe I was being a jerk, [ maybe I still am but figured why do they have a right to expect me to take my time to change the report ..

""" Tracy..
The current requirements are listed below. I do not have any idea if and when the City of Maricopa adopted the pool code below.

As far as me reporting no child protection around the pool , as an AZ Lic home inspector I am required to recommend any safety concerns on the property, and do not care if it's code or not ..

As far as changing my report , I don't understand why the mortage company has a right to request me to change my report..
The inspection report is a legal documement between me and the clinets. I completed the report for Mr & Mrs xxxxx . They are my clients and are the ones that signed my inspection agreement /contract and paid me for the inspection.

If the mortage company wants me to include items in my report , and report on items beyond our current state home inspection requirements they will need hire me ,[ with the clinets written approval,] sign an Inspection agreement between me and the Mtg company, and pay me for the additional services.

Either way, I am not a code inspector, and do not report on, or enforce building codes..



Dan Harris

Inspect AZ

Effective Jan 1, here in Colorado; the buyer must forward the Inspection Resolution to the lender. Getting loans done here, just got tougher. Now underwriters will be judging if they like what the seller and buyer agreed on regarding requested repairs.

Originally Posted by Lon Henderson

. Now underwriters will be judging if they like what the seller and buyer agreed on regarding requested repairs.

If you listen to a lot of stuff re the O health care, this sounds a like that

The buyer bought and paid for the report , as far as I'm concerned the buyer owns the report, I don't have a problem with them giving it to the lender if thats what they need to get a loan,

Re: My post above. The lender sent me an email back asking how much would it cost to change the report.
I'm trying to figure out where I stand if I change the report per their request, and what do I need to do to protect myself, if I do change the report and sent it per the Mtg co request.

Originally Posted by Dan Harris

I'm trying to figure out where I stand if I change the report per their request, and what do I need to do to protect myself, if I do change the report and sent it per the Mtg co request.

I have gotten similar requests over the years. I've always given them something that I was comfortable doing and felt was defensible. I call it a supplemental clarification in the header and treat it that way. I basically embellish my earlier comments without reversing any earlier opinions or commentary.

Once in awhile, I'll get a request to "soften" a comment, and I don't do that.

I do not let anybody dictate how I write or word my reports. Here is my report and this is how I write it. End of story.

In the past, I tried to be helpful when a realtor called me and asked if I could write a letter to satisfy the bank regarding some issue even though the issue was covered in the report. Then the banks started treating me like I was their employee and stating the letter has to be worded in a certain way and has to contain specific verbiage and they need to be able to read my signature and other stupid crap. No more. I wrote my report after the inspection and that is what I stand by.

I had a loan officer call and state that they were closing this afternoon and he needed me to take the words "appears" and "or" out of several sentences along with a re inspection of several items and he needed it NOW. I listened patiently and then told him "You do know that I don't sell homes and really don't care whether this one sells today or not. You are not my client, did not pay me or sign a contract with me and are not in a position tell me you need anything. Appraisers protect the bank and I protect the buyer. I don't change what I write. Thank you for calling.
Later that evening I sent an email to the client asking if she closed and she said yes.
This stuff is getting out of hand but I don't know how to fix it.

Originally Posted by Rick Vernon

Appraisers protect the bank and I protect the seller. I don't change what I write. Thank you for calling.
Later that evening I sent an email to the client asking if she closed and she said yes.
This stuff is getting out of hand but I don't know how to fix it.

Interesting, I don't think I've ever done an inspection for a seller. But your approach is the correct one for fixing it.

I've had some crazy requests from lenders lately as well. In general, I'll do anything I can to help out my buyers... within ethical boundaries, of course.

IMO, the crazy requests from the lenders are in reaction to the money lost in the recent crisis. Basically, there are a bunch of suits sitting in cubicles trying to learn the housing business "on the fly". They don't want their boss to yell at them so they look over the HI reports and spit out some off the wall request they think will cover their butt.

As someone else mentioned I also discourage turning over the report to the lender but sometimes they insist.

Thinking back, the craziest things have come from some small/local credit unions who I'm sure don't know a lot about housing.

Conceding to requests from those other than the client has me baffled. Trying to please the client, agent, attorney, mortgage Co., lender and Uncle Tom gets too complicated for me. If there are to be requests that pertain to the report then I'll let the client make them. If there will be an additional fee then I'll let the client pay them.

I had two of my clients contact me last week about similar situations. Have the mortgage company sign a pre-inspection agreement and pay you a fee if they want to have their name on the report. And make sure you have a clause in your contract stating there is NO THIRD PARTY reliance on your inspection report.

Originally Posted by Ben Garrison

I had two of my clients contact me last week about similar situations. Have the mortgage company sign a pre-inspection agreement and pay you a fee if they want to have their name on the report. And make sure you have a clause in your contract stating there is NO THIRD PARTY reliance on your inspection report.

Thanks Ben.. Question. If we are having them pay us a fee, sign an inspection agreement , aren't we then making them a third party to the report?

I must say. Any payment I get is from the client. Any addendum to the report or just an email stating I reinspected x and all appears well goes to the buyer and never just to a Realtor or Mortgage Company.

I only inspect, reinspect and or get paid from my client unless the client is from out of state paid the Realtor and the Realtor comes and delivers payment to me at the inspection/re inspection. I do allow payment by mail from out of state folks or direct deposit into my account (which I do as much as possible now aday). Direct deposit that is.

Email, phone number is all someone needs today to direct deposit money. No need to pass account #s anymore.

Originally Posted by Ted Menelly

I must say. Any payment I get is from the client. Any addendum to the report or just an email stating I reinspected x and all appears well goes to the buyer and never just to a Realtor or Mortgage Company.
.

I just got another request for a re-inspection today.
The customer and agent both stated, per FHA requirment's because the home is a flip, the lender has to order the re-inspection, and the re-inspect information has to be sent directly to the lender.

Like Scott mentioned, it's another source of income. I just want to make sure I'm not sticking my neck out for additional liability down the road.

Why are mortgage companies seeing your reports? If mortgage companies want a home inspection report, they should hire their own home inspector as they do an apparaiser.
I counsel my clients to NEVER give the home inspection report to the lender if they want a loan.

Originally Posted by Benjamin Thompson

Why are mortgage companies seeing your reports? If mortgage companies want a home inspection report, they should hire their own home inspector as they do an apparaiser.
I counsel my clients to NEVER give the home inspection report to the lender if they want a loan.

I'm assuming the lender is telling them, if they want a loan , and had an inspection, hand the report over, then the lender is calling the inspector to add their name to the report.

I had two that the lender ordered and pd me for the origional inspection then collected the fee from the buyer.
I'm starting to think it's the flip homes that are raising the flags.

I've had this happen several times in the past years, but none in the last year. It always baffled me why they needed wording in the report changed. The lender has already seen the report and knows about it. So the last couple times it happened I called the person requesting the change and spoke directly to them. In a round-a-bout way I let them know that what they were asking for was unethical and fraudulent and that I should probably consult with the State's Attorney General's office prior to changing the report at their request. Both times I was told that wouldn't be necessary and the clients received the loans.

Originally Posted by Benjamin Thompson

Why are mortgage companies seeing your reports? If mortgage companies want a home inspection report, they should hire their own home inspector as they do an apparaiser.
I counsel my clients to NEVER give the home inspection report to the lender if they want a loan.

To me, having the mortgage company / lender see the report makes good sense. Too many people have enough finances for a purchase but when the property in in need of substantial repairs things can get dicey. Telling your client to never give the report to a lender would seem to me to be verging on legal advice.

Originally Posted by Ben Garrison

And make sure you have a clause in your contract stating there is NO THIRD PARTY reliance on your inspection report.

That would seem to exclude the client's attorney or agent from using the report information to negotiate with the seller.

I encourage my clients to pass the report on to everyone who is involved with the transaction. This way everyone is going off the same information and there is less chance of mis-interpretation. Too often when information is passed on it's rewritten or done verbally and the end result is different from what is on the report. A few years ago I was asked to go out and meet with the contractor who could not find the CO problem I reported on. The reason was simple - he was told it was at the water heater - I wrote that is was at the furnace.

Originally Posted by Eric Barker

That would seem to exclude the client's attorney or agent from using the report information to negotiate with the seller.

I encourage my clients to pass the report on to everyone who is involved with the transaction. This way everyone is going off the same information and there is less chance of mis-interpretation. Too often when information is passed on it's rewritten or done verbally and the end result is different from what is on the report. A few years ago I was asked to go out and meet with the contractor who could not find the CO problem I reported on. The reason was simple - he was told it was at the water heater - I wrote that is was at the furnace.

Let's say, for example, you do an inspection for a buyer and give them, along with both agents involved, a copy of the inspection report. For whatever reason, the deal falls through but the sellers agent still has a copy of your inspection report and gives it to a prospective new buyer on the property you inspected 2 months ago. That new buyer should have their own inspection done and NOT rely on your inspection report. When I say, "no third party reliance," that is what I'm referring to. I've seen instances where the new buyer wants to hold the inspector responsible for things he missed when he never had any contractual obligation to the new buyer.

Can anyone think of situations where the bank/lender might be able to/want to sue the inspector down the road?

Originally Posted by Eric Barker

That would seem to exclude the client's attorney or agent from using the report information to negotiate with the seller.

I encourage my clients to pass the report on to everyone who is involved with the transaction. This way everyone is going off the same information and there is less chance of mis-interpretation. Too often when information is passed on it's rewritten or done verbally and the end result is different from what is on the report. A few years ago I was asked to go out and meet with the contractor who could not find the CO problem I reported on. The reason was simple - he was told it was at the water heater - I wrote that is was at the furnace.

The attorney or realtor are acting as an agent on behalf of my client so that point is moot.

I agree that having everyone involved in the inspection process having a copy of the report and I distribute that to their realtor at the client's discretion. However, I draw the line at the mortgage company having a copy. The mortgage company is not looking out for the clients best interest, they are making a loan and any insistence on repairs is to protect themselves, not the client. It is a rare instance indeed that a bank is worried about the client. My personal experience is that the paper pusher just wants to cover themselves no matter what it costs the buyer.

My recommendation is to keep the report to yourself and not to share the details with their lender. The appraisal will cover everything the bank needs to know about the property. The more power given to the bank, the more the individual loses, IMHO.

I typically recommend that the buyer contact their lender and insurance provider to find out before the inspection even takes place if there are any requirements on their end as a condition of a loan or coverage. Lenders around here have a way of telling the buyers at the 11th hour they need a termite certification and then the buyers have to scramble at the last minute to get one scheduled and completed.

Originally Posted by Eric Barker

To me, having the mortgage company / lender see the report makes good sense. Too many people have enough finances for a purchase but when the property in in need of substantial repairs things can get dicey. Telling your client to never give the report to a lender would seem to me to be verging on legal advice.

Well, I haven't had anybody threaten to sue me over giving them legal advice, I guess it could happen. I have had some clients not get their loan because they gave the inspection report to the lender. Essentially, lenders do not understand home inspections.