Franklin TN Home Inspector

[David A. Andersen]

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:

According to Michael and the underwriter, the only other thing that is needed now is 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. "
According to Michael, the sooner we can get this statement from the inspector, the more likely we are to be able to close on friday, however it appears at this late notice, we may need to be prepared for a monday closing.
Alisa was on the conference call with Michael and I, and was going to advise Beth to contact the home inspector to have him get this letter written and emailed to Michael ASAP.

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

My response:

All right, you people are giving me more gray hair that I already have!

I have seen nothing like this in in my 56 years!
I am a home inspector, I know a little bit about a lot of stuff (most say I know a lot a bit about a lot of stuff). There are standards of practice in this industry and the Tennessee Department of Commerce and Insurance has laid down specific guidelines what my job entails. None of it addresses what I'm being asked for. Against my better judgment I have already provided a couple of letters that I've never had to write before. Now someone is asking me to make a statement in writing that there is nothing that will pose a structural threat, a health threat or a safety threat to the owners. I am not a structural engineer. I am not an environmental hygienist. I am not a medical doctor. I do not have a crystal ball. I am however in the most litigated profession in existence

Right now, this entire close of escrow is waning in the balance for me to write a letter stating that there is no catastrophic event will affect the buyer of this property? What happens if something does come up? Home Inspection is a limited, I repeat, "limited visual inspection". Yes, I have extended the "visual range" in this particular inspection into the infrared spectrum of light (beyond what you can see). I still cannot ensure anyone that I've covered all the bases. As a matter of fact, there was a hive of bees that prevented me from inspecting a potentially overheating electrical panel. So no, I am not going to write this letter off the cuff. If this letter is so important, then I must consult with my lawyers and insurance underwriters as well as the Department of Commerce and Insurance for the State of Tennessee.

I do not know what the plumber did, or what the electrician did, or what the homeowner did, or what my client intends to accept as something he may or may not repair when he takes ownership of the property. You just want me to address "the rest of the stuff" in my report. Well how can I say that the plumber and electrician and anyone else involved did not create a situation (since I was there to inspect) which may produce a hazardous condition to the buyer?

I received this e-mail that was generated at 4:01 PM, at 6:57 PM, 27 August 2009. I seriously doubt that I'm going to be able to get a response from all of my inquiries before you plan to close escrow, whether it be Friday or Monday.

I have spent several hours to satisfy your letter writing requests. At this point, the only recourse I can propose is that I must reinspected property. Who wants to pay for this? It certainly is not the responsibility of the buyer!?

As for scheduling; I go on vacation Monday as it is my birthday and wedding anniversary getaway.
Please advise immediately if you want this reinspection conducted this weekend at overtime rates. My next availability date is 14-16 August 2009. After that I will be out of pocket undergoing medical testing.

For any of you that do not know what a home inspector is;
http://tn.gov/sos/rules/0780/0780-05/0780-05-12.pdf
Start with page 12.


4. A statement that the report does not address environmental hazards, including:
(i) Lead-based paint;
(ii) Radon;
(iii) Asbestos;
(iv) Cockroaches;
(v) Rodents;
(vi) Pesticides;
(vii) Treated lumber;
(viii) Fungus;
(ix) Mercury;
(x) Carbon monoxide; or
(xi) Other similar environmental hazards.
5. A statement that the report does not address subterranean systems or system components (operational or nonoperational), including:
(i) Sewage disposal;
(ii) Water supply; or

(6) General Exclusions.
(a) Home inspectors are not required to report on:
1. Life expectancy of any component or system;
2. The cause(s) of the need for a repair;
3. The methods, materials, and costs of corrections;
4. The suitability of the property for any specialized use; 5. Compliance or non-compliance with adopted codes, ordinances, statutes, regulatory requirements or restrictions;
6. The market value of the property or its marketability;
7. The advisability or inadvisability of purchase of the property;
8. Any component or system that was not inspected;
9. The presence or absence of pests such as wood damaging organisms, rodents, or insects; or
10. Cosmetic damage, underground items, or items not permanently installed.
(b) Home inspectors are not required to:
1. Offer warranties or guarantees of any kind;
2. Calculate the strength, adequacy, or efficiency of any system or component;
3. Enter any area or perform any procedure that may damage the property or its components or be dangerous to or adversely affect the health or safety of the home inspector or other persons;
4. Operate any system or component that is shut down or otherwise inoperable;
5. Operate any system or component that does not respond to normal operating controls;
6. Move personal items, panels, furniture, equipment, plant life, soil, snow, ice, or debris that obstructs access or visibility;
7. Determine the effectiveness of any system installed to control or remove suspected hazardous substances;
8. Predict future condition, including but not limited to failure of components;
9. Project operating costs of components;
10. Evaluate acoustical characteristics of any system or component; or
11. Inspect special equipment or accessories that are not listed as components to be inspected in this rule.

Sincerly,

David A. Andersen

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

There are several formats copied that will not post here...

[Brian E. Kelly]

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.

[David A. Andersen]

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?

[Brian E. Kelly]

Originally Posted by dandersen

Read the attached files.

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.

But who knows, times are getting very strange indeed.

[David A. Andersen]

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.

[rmaday]

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.

[dbelmont]

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.

[David A. Andersen]

Originally Posted by rmaday

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

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.

One thing I won't do is expend hours of unpaid work just to say NO.

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.

[Brian E. Kelly]

Originally Posted by dandersen

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.

[Joe Farsetta]

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.

[David A. Andersen]

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?

[Joe Farsetta]

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.

[James E. Braun, CMI]

Originally Posted by jfarsetta

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.

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.

[David A. Andersen]

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.

[David A. Andersen]

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!