Franklin TN Home Inspector

vs. FHA Underwriters

You may qualify for a home loan, but that doesn’t mean you’ll get it!

I have seen a lot of crazy things in the financial side of real estate purchases lately, but this one takes the cake.

FHA and financial underwriters are attempting to place the entire liability and responsibility of the home sale on the home inspector!
I recommend you read and heed…
This is long, but continued practices like this by the federal government and the bailed out lending institutions will be responsible for your demise!

I conducted a full-blown inspection (structural, electrical, plumbing, HVAC, infrared thermal imaging, radon etc.) in the $600 range.

After delivering the report I began getting numerous additional requests originating from an FHA underwriter.
The FHA appraiser wanted me to certify that no adverse conditions would develop due to damp soil conditions under a plastic vapor barrier. He also indicated he saw silt on top of the plastic vapor barrier. Since when does any of this have to do with the value of the property? Within the same paragraph the FHA appraiser disclaimed any responsibility or further evaluation for the can of worms he just opened up. For the record: this crawlspace was the driest crawlspace I’ve been in, in a long time!

I prepared the letter.

I was requested to remove two paragraphs from the letter, as to not elevate adverse situations.

I change the letter.

I received a request to certify the plumbing system which was not visible for inspection.

I wrote a letter describing the plumbing system, to exclude fixtures.

I get a letter to certify wood rot at the front entry door and windows.

I declined.

Last night I received this e-mail:

Is the hair on the back of your neck starting to rise?

My response:

A copy of all conversations and subsequent responses are available at:
http://www.midtninspections.com/FHA-requests-inspector-liability.htm

There are several formats copied that will not post here…

So the lenders underwriter wants a letter, and you somehow believe this a some requirement falling under FHA guidelines?

What led you to believe that?

It just sounds like some dumbass underwriter making stuff up to me.

Read the attached files.

This is not just one person making something up. Is coming from the entire financial side of the transaction. This is not the first time I have encountered this.

Everyone involved is blaming FHA requirements.
I don’t have a clue.
No one will give me all the paperwork. Just what I need to know.

Would you write the letter?

Probably not David, because I, like you, have learned that no good deed goes unpunished. :frowning:

But who knows, times are getting very strange indeed.

I had a client recently rejected that was purchasing a $400,000 house for $200,000. They had $100,000 to put down on the house. Both husband and wife had a job.

They were rejected because the wife was self-employed, even though she had 12 years worth of tax records to support her income potential!

Reason for declining…

Nothing to do with their financial ability.

Lenders just aren’t lending.

I inspected a house this week; $8.4 million. Cash sale. Why? Financing not available. Distressed property will not sell because finance not available.

I just see a trend going on here.

It really doesn’t matter, except when they are loading up liability on my E&O insurance.

I guess I don’t understand why you didn’t simply refer them to your state SOP and report, the first time they asked.

Perhaps you may want to also post this in members only.

I accept that it is the nature of the beast (banks, FHA, insurers, et al) that they will try to shift responsibility/blame/liability to anyone foolish enough to accept it.

My response to these sort of requests follows a pattern I learned years ago. SO far it has not kiled one deal. It hasn’t made me any money but it also hasn’t cost me hours explaining why I won’t do something.

I always agree that what they want is possible and available (at least so far) but since it clearly exceeds the agreed SOP for the performance of the home inspection the cost to re-inspect to the standard they are requesting will be at least $XXXX.XX ( this price has never been less then 5K and often more).

I send them this response along with the appropriate part of the SOP. So far no deal has been lost and I’ve never reinspected anything.

I’m confident that they understand that I understand they are looking for someone to screw for free.

One thing I won’t do is expend hours of unpaid work just to say NO. My time is way to valuable to me even if I spend it teasing the cat.

I did, verbally.

Agents were contacting me directly.
I called the client first at every request.
I was doing the client a favor (at first). But it didn’t go away. It only grew and got worse.

As you can read, they didn’t want my report brought up (reason for the first letter change).

In my final reply, I did just that.

I had been significantly reimbursed for my work and a little help to the client was in order. But as things piled up, I took your stance.

Once the door was opened, it just kept coming.

The reason I posted this is so you guys and gals will identify this potential course if it becomes the norm and can head it off as soon as possible.

I did not spend hours on this. I don’t want you to either.

Good heads up David, thanks for sharing.

A lot of it is coming from the bank underwriter and not the FHA.

I just performed an inspection on a home getting FHA-backed financing.

I’ll let you know how I make out.

I also had a personal friend that moved to East Tennessee and had major problems with the VA.

I’m not necessarily pointing a finger at the FHA, but most of the people involved were. Maybe just to save face.

Joe,

What your impression of the liability concern here?

I just went to David’s website and reviewed the comments from the FHA. Of the 4 items noted, I see NOTHING out of the ordinary, or which is not reasonable and prudent on the part of the FHA.

The FHA is asking for a qualified individual to perform a WDI inspection and provide a report. This is as a result of dempness in the crawlspace. Regardless, WDI inspections are routine. - This is reasonable and customary.

David identified electrical defficiencies, which FHA wants remedied by a licensed electrician. - This is reasonable and customary.

House was vacant for a while and has a septic system, which the FHA wants inspected by a qualified person. - This is reasonable and customary.

Apparently, David identified moisture in the crawlspace soil. If this is true, the FHA wants someone to investigate further to try and determine if an adverse condition exists. If he did not see moisture, David can choose to clarify his statement. - Again, this (though may be a slight stretch) is also reasonable.

As inspectors, we inspect and report. We flag things as observations, defficiencies, and concerns. We often call for further investigation.

David’s job ended when the report was delivered. Thisis an issue for the buyer and the homeowner, IMO.

David owes them NOTHING.

Have came to that conclusion to when it comes to dealing with banks lately. Some banks have just tighten up and have gotten silly with weird requests. Myself, I believe a lot of the government loan rurals are too relaxed, so the some banks try to compensate. Sad but true.

One correction Joe, FHA appraiser mentioned damp soil and they wanted me to address that. I already did that in my report.

They then wanted a statement from the original home inspector stating that "none of the remaining items noted on his initial inspection report pose a structural threat, health threat or safety threat to the owners. "

This may not sound like much to them, but I can no longer comment on the “current” conditions of a building from a previous inspection.

Due to the limited nature of a home inspection, I could never make a statement that there is nothing which poses a structural, health or safety threat.

You would have to see the inspection report.
There are still issues present which if not corrected could pose such a threat.
I can not assure that they will not, nor can I assure that anyone will take the corrective action required in the future.

I just spent considerable time with my insurance provider discussing this situation to obtain their viewpoint.

In short, you guys are correct in stating that providing additional documentation beyond the home inspection report should be avoided or prepared carefully as to not increase your liability. Let your inspection report stand as it is.

If additional documentation is to be generated to address “current” conditions which exist, after the initial home inspection, a reinspection is a requirement.

It was their opinion that the requests made on me would substantially increase my liability and responsibility for future conditions which may occur to the building.

They are aware of home inspectors that do provide this documentation as general practice, but do not condone that business decision.

Thanks to all for your input.

Be careful out there!