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  #1  
Old 12-09-2008, 08:38 AM
masmia masmia is offline
 
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Default FHA lender and "subject to roof inspection" appraisal

For the second time in a month I have completed an FHA appraisal subject to a roof inspection and the client has asked me to remove subject to because the lender will not lend on anything other than "as is". The client then proceeds to insist that I accept the inspection and clear the condition as opposed to the bank clearing the condition. Anyone else having this issue?

According to Mortgage Letter 2005-ML-48 put out by FHA "FHA Roster Appraisers are reminded to report all readliy observable property deficiencies, as well as any adverse conditions discovered performing the research involved in completing the appraisal, within the appraisal reporting form. Lenders should use professional judgment and rely upon prudent underwriting practices in determining when a property condition poses a threat to the safety of an occupant and/or jeopardizes the soundness and structural integrity of the property, such that additional inspections and/or repairs are necessary."

In addition, Appendix D of the FHA handbook 4150.2, page d-24, states that the appraiser appraiser should
-Note any evidence of deterioration of roofing materials (missing tiles, shingles, flashing). Deterioroated roofing materials include those that are worn, cupped, or curled.
-If the roof is otherwise unobservable, look for telltale signs of problems on the interior, such as damage or water stains to the ceiling of a room or closet.
-The appraiser must not in the appraisal that he/she could not adequately observe the entire roof area (state which area(s) were unobservable). Based on the information reported by the appraiser, the underwriter will determine whether or not a roofing inspection is recquired.

So, it seems by this that roofing conditions are to be reported and that it is up to the underwriter to call for an inspection. We are responsible for reporting the condition and that is all. No more "subject to inspection" appraisals. Intersting.
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Last edited by masmia : 12-09-2008 at 09:48 AM. Reason: clarification & update info
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  #2  
Old 12-09-2008, 08:56 AM
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Carnivore Carnivore is offline
 
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Of course we all have this issue and most of us ignore it! Its my appraisal and the DEU can clear the condition themselves if they want to. I just aint budging.

Smarten up folks! FHA appraisals with conditions is a fight you can win everytime if you follow the book.
  #3  
Old 12-09-2008, 09:34 AM
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incognito incognito is offline
 
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I believe FHA wants you to make the call. Does it or does it not have 2+ remaining years of physical life. If you have enough reason to call for an inspection, call for a new roof. The underwriter has the ability to then order an inspection if they desire, or to require a new roof. Either way, there is no hassles with the "subject to", and you are even safer than you would be by calling for an inspection. FHA wants you to put the burden of these things on the lender!
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  #4  
Old 12-09-2008, 09:49 AM
TJSum TJSum is offline
 
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Quote:
Originally Posted by incognito View Post
I believe FHA wants you to make the call. Does it or does it not have 2+ remaining years of physical life. If you have enough reason to call for an inspection, call for a new roof. The underwriter has the ability to then order an inspection if they desire, or to require a new roof. Either way, there is no hassles with the "subject to", and you are even safer than you would be by calling for an inspection. FHA wants you to put the burden of these things on the lender!
I disagree on this.

1-Never ever sign off on an inspection that you call for, that is the DEU job. If we don't have the expertise to make the call on the original report, why should we then have the expertise to sign off on any inspections or certifications. Your job is done when calling for an inspection, then it is all on the UW and experts.

2-If you see obivious leaks or damage, then fine, call for a new roof. But if it is a judgement call on the remaining life, with no apparent current damage, I would always call for an inspection, and let an expert decide. Remember, you could be sued for calling for a new roof when it is not warranted just as much as being sued for not calling for a new roof when one is needed. Let the experts decide.

Why doesn't FHA have a hot line to handle appraiser pressure especially from lenders who demand "as is" only reports on FHA assignments. If they followed up on things like this, it would clean up the process much better than eliminating licensed appraisers which is just a smoke screen.
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Old 12-09-2008, 09:56 AM
TJSum TJSum is offline
 
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I see you just edited the original post with guidelines. I still will call for an inpsection if I think it is warranted. Lets say, you just state the condition of the roof and leave it at that. Then the UW passes it through. Who do you think will be on the liability hook if the roof fails? The UW can pass the buck to the appraiser because they can just say the appraiser did not tell us just how bad it really was. I would call for the inspection and let the UW waive it if they feel one does not need completed, then it is on them, not the appraiser.
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Old 12-09-2008, 10:38 AM
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incognito incognito is offline
 
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Quote:
1-Never ever sign off on an inspection that you call for, that is the DEU job. If we don't have the expertise to make the call on the original report, why should we then have the expertise to sign off on any inspections or certifications. Your job is done when calling for an inspection, then it is all on the UW and experts.
I agree: If I suggested otherwise, forgive me. When I call for a new roof, and the UW decides it is not necessary, I am not signing off on ANYTHING!

I do not disagree with being careful, and I do not think calling for an inspection is necessarily wrong. However, regarding the issue:

from 2005-ML-48: (which, by the way, is a portion of my scope in all FHA assignments)

Quote:
If the appraiser reports a potential property deficiency that may pose a threat to the safety of the occupants or the security and soundness of the property, the lender will require an inspection of the condition to determine whether repairs are necessary to mitigate or resolve the problem.
Quote:
. FHA Roster Appraisers are reminded to report all readily observable property deficiencies, as well as any adverse conditions discovered performing the research involved in completing the appraisal, within the appraisal reporting form. Lenders should use professional judgment and rely upon prudent underwriting practices in determining when a property condition poses a threat to the safety of an occupant and/or jeopardizes the soundness and structural integrity of the property, such that additional inspections and/or repairs are necessary.

FHA 4905.1 Rev. 1:

Quote:
Life Expectancy: The appraiser must exercise sound judgment when evaluating roof condition. The roof should have a remaining physical life of at least two years. If the roof has less than two years remaining life, then the appraiser must report this condition in the appraisal report.

To me, this is pretty clear, and as a portion of my scope (and FHA's requirements), I feel comfortable calling for a new roof if I have any concerns. I have exercised my judgment, as FHA asks me to do. Try suing me for performing the scope of the appraisal as assigned BY MY CLIENT, FHA. Remember, the borrower is not the client.
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  #7  
Old 12-09-2008, 10:48 AM
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Mike Garrett, RAA Mike Garrett, RAA is offline
 
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I look at the roof. There are two layers, the singles are not curling or missing. The roof is 8 years old. How do I know if it has 1,2,3,4,or 5 years remaining life?

I look at the roof. It is 1 year old but we have just had a major hail storm. Some of the shingles are damaged. How do I know if it has 2 years life remaining?

I look at the roof. It appears to be original and is 20 years old. There are no broken, damaged, or missing shingles but they look pretty old. How do I know if there is 2 years remaining life?

Today I am looking at the roof. It is covered with snow and it's still coming down. I can't see the shingles. How do I know there is 2 years remaining life?

Get the point?
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  #8  
Old 12-09-2008, 11:00 AM
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incognito incognito is offline
 
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Quote:
Today I am looking at the roof. It is covered with snow and it's still coming down. I can't see the shingles. How do I know there is 2 years remaining life?
Though I don't deal with too many snow covered roofs here in Cocoa Beach, FL, I would still answer the same way. Go to the manual, and do what it says. Make it a part of your scope, and you are covered. Regarding snow covered roofs, the manual states:
Quote:
Snow Covered Roofs:
A. In areas where the snow is likely to lay for more than a few days:

1: The appraiser is required to make an extra thorough inspection of the attic and all visible roofing areas for signs of failing roofing materials.

2: If there is evidence of damage and/or leaks the appraiser is to condition for further inspection.

3: If there is no evidence of damage and/or water leaks. The borrower must be informed that the roof was snow covered at the time of the appraisal and that it is acceptable to the purchaser without any warranty or guarantees from HUD-FHA.

B. In areas where the snow is not likely to lay for more than a few days a clear roof inspection is to be obtained prior to closing.

1: The appraiser is required to make a thorough inspection of the attic and all visible roofing areas for signs of failing roofing materials and report all roofing deficiencies in the appraisal report.

2: If the Underwriter determines, due to unusual weather conditions, it is not possible to obtain the clear inspection prior to closing, then the purchaser and seller are to sign an acknowledgment that indicates:

i: The roof was covered with snow at the time of the appraisal inspection,

ii: The snow is likely to continue to cover the roof for several more days and that the roof cannot be inspected prior to loan closing

iii: HUD-FHA makes no guarantees or warranties as to the roof’s condition.

3: A clear roof inspection must then be obtained prior to submission for FHA Insurance or an escrow account equal to 1 ˝ times the cost of a new roof is to be established in the event repairs or a new roof is found to be needed when the inspection takes place. (Certification is to be in the insuring package.)
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  #9  
Old 12-09-2008, 11:04 AM
TJSum TJSum is offline
 
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Quote:
Originally Posted by Mike Garrett, RAA View Post
I look at the roof. There are two layers, the singles are not curling or missing. The roof is 8 years old. How do I know if it has 1,2,3,4,or 5 years remaining life?

I look at the roof. It is 1 year old but we have just had a major hail storm. Some of the shingles are damaged. How do I know if it has 2 years life remaining?

I look at the roof. It appears to be original and is 20 years old. There are no broken, damaged, or missing shingles but they look pretty old. How do I know if there is 2 years remaining life?

Today I am looking at the roof. It is covered with snow and it's still coming down. I can't see the shingles. How do I know there is 2 years remaining life?

Get the point?
Exactly, when there is a judgement call, let the expert make that judgement, it serves everyone best.

Suppose you call for a new roof, and when the roofer is up there installing the new roof you called for, he tells the seller (or homeowner for a refi) that the old roof could have lasted another 3 or 4 years or so. Their next call might be to a lawyer...
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Old 12-10-2008, 08:10 AM
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incognito incognito is offline
 
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In further support of NOT requiring inspections, in lieu of just making the call as I advocate, per 4150.2:

Quote:
Appraisers are reminded not to recommend inspections only as a means of limiting liability. The reason or indication of a particular problem must be given when requiring an inspection of any mechanical system, structural system, etc.
Quote:
FHA Appraisals
FHA appraisals are no guarantee that the property is free from defects. The appraisal only establishes the value of the property for mortgage insurance purposes. Buyers need to secure their own home inspections through the services of a qualified inspector and satisfy themselves about the condition of the property.

Everything I have posted previously above and here, from FHA guidelines and manuals, supports NOT calling for inspections, and just making the call, and letting the LENDER deal with it...

I agree, it would be nice to have a definitive answer, but we wont get one! Do what you think is best, but keep in mind the FHA manuals are relatively clear on the issue!
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