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Thread: Completed Repairs
12-31-2009, 10:35 AM #1
I am doing a little research. This is for my own curiosity. When you write a report on an inspection that you have done, what happens on the following questions:
1. Does the bank or other lender require that the repairs be made before closing the loan?
2. Does the bank or other lender require that all repairs be made or just the life safety ones?
3. Does the bank or other lender require reinspections of repairs?
4. Does the bank or other lender even require an inspection as condition of the loan?
5. Do you have many inspections for buyers even if it is a cash only sale?
6. I know a lot of times, buyers use the inspection reports to renegotiate an offer of to even get out of it, do many of you find out later that they wished they had made the repairs in the first place?
Thanks for answering. May you all have a wonderful and prosperous New Year!!!
12-31-2009, 10:54 AM #2
Re: Completed Repairs
5. I would say that I have a dozen or so jobs a year that the client pays in cash. Most are self employed and understand...
6. Only when I'm hired to do an inspection on the home when they are selling it! I have found the same problems on homes that I have inspected two, three and even four times over the years.
Scott Patterson, ACI
Spring Hill, TN
12-31-2009, 11:03 AM #3
Re: Completed Repairs
1,2,3 - No, at least not that anyone ever tells me.
4 - I've heard some do and some don't. Don't think the lenders have an overall standard for HI to date.
5 - Sometimes, not a large percentage. Usually requests come from savvy investors or people who have had other buildings. 1st timers or newbies usually don't because 'we're going to rehab the place anyway'. Dumb
6 - People who have owned before or remember past problems, sometimes fix problems. Newbies tend to not because they go on a shopping spree, with the 'free money'. Overall I would say a higher percentage doesn't fix things they either got credit for or were in the report.
"The Code is not a ceiling to reach but a floor to work up from"
12-31-2009, 01:00 PM #4
Re: Completed Repairs
Part of the mortgage market seems to be reverting back a bit to the days when properties are actually considered for worthy-ness, and underwritten responsibly. Credit tightening, high foreclosure rates, high unemployment and higher underemployment, and falling property values with the pyramid type mortgage backed "securities" investing debacale, and the myriad of banks, brokers, issuers, poolers, security firms, who have gone poof when it came time to force a buy-back.
More recently habitability issues (among all the other responsible lender caveats) are delaying underwriting and closings on owner occupied first mortgages on some properties. Pooled or insured loans and when the funder is under scrutiny due to bail out money, funding/underwriting to meet neighborhood lending requirements, etc. If there are issues they want to write a (higher interest, higher down payment) Construction Loan or bridge loan - these require verifications for stage pay-outs. The days of "liars" loans (signature only, no independant legit appraisal, no income verification, etc.) 1st & 2nd mortgages at a puffed up "appraisal" 100% for a pusher that is never intended to be owner occupied, and flipped, or abandonded (the fraud game of a "front" borrower, for cash back at closing, payouts to mtg broker, RE agents, etc.) and a mortgage payment is never made) are hopefully soon to be completely behind us. Yes, I am an advocate to reinstitute REGULATION and to enforce what remained "on the books". The drive to sunset and deregulate the financial industry (and everything else) and Reganomics was ruinous and created this HOUSE OF CARDS ECONOMY, IMHO. Although, again MHO, it began with taking us OFF the gold standard. The fast & loose credit mortgage market, I believe is a major contributor to the debt we've incurred and the ruinious economy (besides others) we have - and expedentially worse than the S&L "crisis" resulting from the "bubble" caused by the practices in the late 70s and early 80s.
Dang, I had coffee this morning, sorry for the drift.
Back to your question:
These issues are usually cropping up during stricter analysis of real estate appraisal reports for the lender/underwriter, not a RE HI Inspection report for a purchaser (HUD/VA loans, etc.) Occasionaly a surveyor report caveat will trigger a stricter review. Sometimes the scrutiny is stricter when the smaller nat'l bank or CU is being selective in meeting the neighborhood lending requirement and % of loans they must retain/hold in their portfolio.
Rarely is it directly due to the private HI report. If the condition results in interesting negotiation of credits/cash back/escrow allocations on the statements prepared for closing - this may alert the lender to inquire further and nix the deal as structured, or require further documentation and review.
Follow-up inspections confirming work, or evidence (invoices, contracts, etc.) work has been performed and lien releases (for title insurance abstract, etc.) can be required prior to closing, but this would and should be independant - and from another source: a conflict would exist for the HI who should be working for the interests of the potential buyer of the home, and not the funder or underwriter.
Last edited by H.G. Watson, Sr.; 12-31-2009 at 01:14 PM.
12-31-2009, 02:47 PM #5
Re: Completed Repairs
1. Does the bank or other lender require that the repairs be made before closing the loan? Sometimes. Especially if it's an FHA loan. There was a program out there called "The American Dream" that was demanding a copy of the inspection report and requiring anything documented in the inspection report be repaired. Whether it was a faulty furnace, cracked storm window or a stain in the carpet.
2. Does the bank or other lender require that all repairs be made or just the life safety ones? Again sometimes. Especially if it's an FHA loan.
3. Does the bank or other lender require reinspections of repairs? Sometimes, it depends on the lender and the loan program.
4. Does the bank or other lender even require an inspection as condition of the loan? Again, sometimes, it depends on the lender and the loan program.
5. Do you have many inspections for buyers even if it is a cash only sale? Yes. I have several cash investors purchasing multiple homes whom I've done inspections for and will be doing more.
6. I know a lot of times, buyers use the inspection reports to renegotiate an offer of to even get out of it, do many of you find out later that they wished they had made the repairs in the first place? Not that I know of. They typically make a choice of lowering the price or demanding the repairs. It's probably 50/50 on what they do from what I've heard.