TOPIC: New FHA Climate?

In June I did an inspection for a client obtaining an FHA loan for their house purchase.  Nothing unusual there, I have done probably 800 or 1,000 such inspections.  I am NOT an "FHA Inspector" and never will be, but that is a different thing.  However...

Two days ago I got a call from the realtor telling me that FHA has taken my report and picked five things and was wondering why I am not requiring that they be corrected in that house.  Some were small - cracked window, tilting AC unit.  Others needed something - foundation crack which was cracking the exterior brick work, very old water heater and minimal electrical service of 125amps.  None of those things is unusual on a 41 year old house, vacant for nearly a year.  She said FHA is asking for a letter that explains why I am not "requiring" repairs.

I wrote a letter stating that my inspection observes and reports the condition of the house at the time of the inspection.  Also, that I do not require anything of the sellers, or in this case the bank, and my commentary is intended to inform the purchaser of existing condition only.  Sometimes I do have recommendations - like I mentioned in a previous post, things like insuring proper grading, covering gutters, etc., but they are recommendations only.

Yesterday I got a call from the loan officer requesting another letter.  Get this - FHA says they will not extend the loan without a letter from me stating that nothing on the house needs repair.  I laughed at him!  He had previously spoken to the realtor to have her call me to convince me that such a letter was needed.  She is a veteran and told him that there was no way I would write such a letter.  (Doing so is certainly NOT my purview...)  Then he says, "If you don't write the letter by tomorrow these poor people will be without a house."  Like that's going to work...  I said, "Then they will be without a house.  Get a conventional loan!  I can't write that letter and you know it.  Why are you calling me with 24 hours left?"  Silence!

Two minutes later the realtor calls asking the same thing.  I laughed again.  She said she had promised the loan officer she would give it a shot.  Then two minutes later the buyer calls and asks the same thing.  I laughed AGAIN and asked him if the house did need some repairs.  His answer, "Sure!  Lots of 'em!  And I intend to make them."  "Then why," I asked back, "would you expect me to write such a letter?"  Silence!

There seem to be new FHA rules, which apparently are changing daily.  Right now, the realtor says, they will not extend loans unless a house has an FHA appraiser and a home inspector's report.  I will bet they will start requiring inspectors to have FHA certs to do an inspection on such a loan.  Well, they won't get me to go along.  I am going to open myself up to the FHA?  Maybe when I come back as a worm, but not in this life.  AFTER extending government-backed millions of loans to people who could not afford one in the first place, because of Clinton's Community Reinvestment plan, (read "government-backed" as you and me!!!) and thus creating this current mess, suddenly, suddenly (!) they are getting tough?  BE STILL my heart!

Just a big head's up guys.  Remember the "City Inspector" post?  Is this where we are heading - socialism in the inspection industry?  Just as "green" means mo' money and mo' gubment control, so will these apparently-coming inspection regulations. 

Remember, remember Reagan's famous speech in which he said something close to, "Just like laws of physics, as government expands, liberty contracts."  Canada here I come!  Woohoo DeVries!!  It's meeeee!

Great post Jay. I can't believe they would think you would just go ahead and write a letter like that especially stating in your report on the problems that the house did have.

I love it when I can learn vicariously through you Jay!  I'm still at a lose for words on this one.  I thought the city inspections took the cake.  I think I would have gotten a little hot under the color on this one.  I would have asked for his supervisor and the supervisors supervisor!  lol

I feel like were heading to socialism with this bail out deal.  I see the need for it, but I'm upset we are in this position in the first place!  I love the free market system.  If they cant make good decisions, let em fold under!!!  Oh wait!  Maybe I can go get a couple billion since I own a business!!!

I pointed these problems out a couple years ago.  Said something to the fact that these lenders need to watch out how much they loan out.  And how much borrowers are borrowing!  You know how it goes, everyone must keep up with the Jone's and lenders want as much as they can get in these upswings.  Lets all worry about the ramifications later!

Oh goodness did that sound like the governments financial policy?  lol  I could keep going, but I want to have a good day today! 

Jay,
I had a similar thing happen Friday late afternoon.  CalVet is backing a loan for a military guy and I inspected his new home.  All repairs need to be made to all my findings before the loan will go through.  So the realtor is going to present an estimate for work (I'm asking a couple Chamber of Commerce businesses to help and probably score some work) to suffice the bank.  Unlike your situation, I'm not being asked to be unethical and write a letter--yet.  I won't do it either.  Good for you Jay.

v/r
Greg

Jay, good for you. There looking for a fall guy and they'll pin you if they can.
Keep it up a big WOOHOO to YOU, and come up anytime first beers on me brother