Unless it is some type of off the wall purchase and loan then something is being lost in the translation/relay of details. Other than pre-qualifying for a dollar amount the banks are not involved until they have a purchase price set or actual offer accepted. That would obviously be after the Nephews “Option Period” if he chose to have one. During his option period there is nothing stopping him from hiring his own Inspector.
I have not heard of banks requiring inspections for normal loans and even many specialty loans. Unfortunately many buyers are under the impression that the Appraiser is performing a full property inspection which we know they are not. Of course we know where that misinformation gets propagated from.
What type of loan did he have? Since your Nephew is saying that the Inspector did not catch things then he must have received a copy of the report. Have you asked him for a copy to see who performed it and if they are a licensed Inspector? I suspect too that it was an Appraiser since they are now performing very limited, and many types inaccurate, property assessments. Can’t blame the Appraiser with all the new appraisal laws out there now.
They’re required only on new construction, an existing home undergoing major renovations/additions/changes, and on manufactured homes to the extent of the permanent foundation certification. Even on the new construction and existing home undergoing changes the VA has exemptions. But to state there is a blanket requirement on all VA loans is incorrect.