When FHA Appraisals Get Confused With Inspections

[hausdok]

Most "real" home inspectors will be able to relate to this. The family wants a home, they make an application under one of the federal programs in order to qualify for an FHA-backed loan, the federal agency requires an "inspection" and an appraiser is hired.

Months later, something goes bad with the home and the horrified new homeowner discovers that the home is uninhabitable and that the "inspection" they'd thought they had wasn't a real inspection at all but an appraisal.

They go back to the fed agency to complain and are told, "Oh, too bad. We're very sorry but you must not have read the fine print very closely in that two-foot high stack of documents we had you sign while you were still high from making your first home acquisition. Didn't you see the disclaimer in there that says that our "inspection" isn't really a home inspection at all, and where we encouraged you to hire an independent inspector?"

We inspectors have complained about this for years but the feds just don't get it.

[Marc]

Most "real" home inspectors will be able to relate to this. The family wants a home, they make an application under one of the federal programs in order to qualify for an FHA-backed loan, the federal agency requires an "inspection" and an appraiser is hired.

Months later, something goes bad with the home and the horrified new homeowner discovers that the home is uninhabitable and that the "inspection" they'd thought they had wasn't a real inspection at all but an appraisal.

They go back to the fed agency to complain and are told, "Oh, too bad. We're very sorry but you must not have read the fine print very closely in that two-foot high stack of documents we had you sign while you were still high from making your first home acquisition. Didn't you see the disclaimer in there that says that our "inspection" isn't really a home inspection at all, and where we encouraged you to hire an independent inspector?"

We inspectors have complained about this for years but the feds just don't get it.

Don't expect them to, ever. Misunderstandings among lenders, buyers and agents regarding FHA and USDA_RD programs have been going on eternally. Half of my fees for inspections of this type are for dealing with all the time it takes to get everyone on the same plane.

In 3 hours I have a home inspection for a client from this past Friday. The USDA_RD Repair & Rehab inspection done Friday was explained very carefully to her. She was absolutely certain that a USDA_RD inspection was what the lender told her to get, not a home inspection. Lender changed her requirement yesterday after seeing the report and told her that she needed a home inspection instead and I caught some of the heat for it. It never stops.

Marc

[hspinnler]

So true. I had a recent HUD PCR that stated they inspected the roof "from inside the attic" and no defects were noted. Judging by the randomness of the orientation of the loose shingles, the shingled over roof could have been done by Stevie Wonder's Roofing Co. It was a ranch on a slab and easily accessible. Why do they even bother with the property condition reports?

[Nolan Kienitz]

Another appraiser running amuck into the "inspection" arena.

I was told today that an appraiser made note of a crack/gap between a window frame and veneer and declared there was a foundation failure and that a PE was required.

I did the "inspection" of this property three weeks ago and I saw the same "gap" (with images in my files) and it was due to old caulk/sealant and needing replace/refresh.

This type of thing has been happening more and more this past year or so since the Feds got involved with new rules concerning appraisals.

There are many now that are making some blatant "inspection type" comments and causing serious headaches.

How the world turns ... !!!