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Old 09-14-2009, 04:41 PM
StrugglingDaughter StrugglingDaughter is offline
Join Date: Sep 2009
State: New York
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Default Is our house "uninhabitable"?

I’m trying to help my elderly mother get a refinancing on her single-family home (we live with her). I have cancer, so my husband and I have had financial problems, and problems getting anything done. My health is better right now, so it’s time to try to get a fixed-rate mortgage while rates are low, and do some badly needed repairs.

The house is worth about $500,000 and my mother needs to borrow about $130,000. She wants a 30-year FRM. Most of the $130,000 would be to consolidate debt ($90,000 total, from a HELOC and credit cards) and the rest for repairs.

One broker has told us that an appraiser would almost certainly find the house “uninhabitable”, given the written description I gave him of its condition.

It isn’t a question of getting a low appraisal value (since there is so much equity in the house, that wouldn’t be a barrier to getting a FRM). Rather, it’s a question of getting what amounts to a “no” for the FRM based on the house’s not being in “livable” condition.

Another broker said we could have a broker find the best rate available, and the appraiser for that lender might point out just a few specific things that need to be repaired immediately - then we could fix them and pay a re-inspection fee.

I need some more opinions on this. I’d rather not go for an FHA 203(k) loan if we can avoid it (because it’s more expensive and the rate is higher than on a conventional loan).

Could you read my description of the house and tell me which broker you think is right?

All of the services are functional. (We don’t have gas – we have electricity and an oil burner. The heat is from hot water radiators.)

The first problem I want to describe is with the roof.

There are no holes in the walls, ceilings or floors, but there are squirrel entry points in the roof (at least two of which will be visible to the trained eye from the sidewalk).

I trapped four squirrels last winter in one section of the eaves where there is access through a low door in what is technically the attic (we use the attic as living space – it’s finished and has baseboard heaters, but it has a sloping ceiling). We use the eaves as storage space – picture a space that you can crouch or crawl in.

The squirrels had made at least three entry points in the roof - one at a peak and two at valleys (because the fascia boards and valleys are deteriorated). We could hear the squirrels both in the eaves and in the walls/ceiling. (I had to lure two squirrels that preferred the peak entrance onto a little roof over the side door and then in through the entry point in one of the valleys to trap them.)

There has been no squirrel activity since December, when I trapped the fourth one. Squirrels live in nests in tree branches in the summer, and in hollows in tree trunks (or in buildings, if they are “rogue squirrels”) in the winter.

I got the resident squirrels before they had young, so we won’t have the problem of younger ones looking to “move back home” for the winter. But any “rogue squirrels” in the area that are looking for a new winter home might happen upon empty “apartments”.

There is also a section of roof (maybe about 25 square feet) that has obviously loose shingles (and two shingles fell off at one point). There is some loose paint on the sloping ceiling of the stairwell leading to the “attic” because of these loose shingles, in a patch about 2 feet high x 1 foot wide.

I don’t know whether there is damage to the roof itself (the underlayment or rafters) in the area of the loose shingles. I’ve had several companies come to give us estimates on the roof and other repairs (the estimates for replacing the roof have ranged from $10,000 to $20,000), and none of them have said there is imminent danger of the roof collapsing or anything. But they didn’t pry up shingles to look underneath, or go into the eaves there. (I can’t remember right now whether the home inspector we hired in the spring went into the eaves in that place – his report just says that the asphalt shingles on the roof have reached the end of their useful life.)

There is a minor leak around an upstairs bathroom skylight, with a vertical drip mark on the paint.

There is a patch of fallen paint and plaster (about 3 feet high x 1 foot wide) above the fireplace, because the flashing around the chimney needs replacing and/or a cricket needs to be put in.

Please give your opinion on this, and if I get replies I’ll post more about other problems.

If you reply to this post, please tell me what experience you’re basing your opinion on – whether you’re an appraiser, a homeowner who has been through something similar, etc. Thanks SO much!
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Old 09-14-2009, 06:13 PM
Mark to market Mark to market is offline
Join Date: Nov 2004
State: New Mexico
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I would vote with the 2nd broker. Your description seems a far cry from uninhabitable.

Good luck.
Old 09-14-2009, 07:42 PM
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Paul Isolda Paul Isolda is offline
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Location: Stamford, CT
State: Connecticut
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That does not sound uninhabitable by any means. It's called deferred maintenance. There are a number of ways to handle that situation. If you can fix the major problems before the appraisal, do it. If not, the lender can escrow funds from the closing. You fix the problems after the closing then get it re-inspected and they release the rest of the funds.
Trying to win the war of attrition
Old 09-14-2009, 07:54 PM
CANative's Avatar
CANative CANative is online now
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It's not that your house is "uninhabitable." People can inhabit caves and do just fine (not that your house is like a cave.) But to get a regular, low fixed rate loan the house has to meet certain requirements.

The appraiser has to answer this question truthfully: Are there any conditions which adversely affect the livability, soundness or structural integrity of the property."

In your case the answer would have to be yes because holes in the roof allow squirrels and other things to get in and this would eventually adversely impact the structural integrity. Same with the leaks and fireplace problems.

Brokers don't lend money. They take your application and send it to a lender. If the loan closes the broker gets a commission. The lender lends the money but almost never keeps the loan for more than a few months. The lender sells your loan to an investor and in the majority of cases the loan is sold to Fannie Mae (who then sells a giant package of loans to other investors with large amounts of money)

The rules about property condition are those of Fannie Mae. So if everyone is being honest then your property will require repairs in order to get the type of loan you're hoping for.

There ARE loan programs that will help you get a loan to fix your house and give you some cash. Talk to the broker about this programs or ask for a referral.
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Old 09-14-2009, 08:06 PM
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Conservative in Virginia Conservative in Virginia is offline
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State: Virginia
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My two cents, get a handyman up there pronto and seal the areas of squirrel entry. Winter is comming and Rocky will be moving in! Most lenders will not fund on roofs that are near or at the end of their useful life. If you have no roof you have no house. There used to be 'loans' which would escrow funds for repair but that was the 'bad ole days' I suppose. Any 'good' conventional loan will NOT touch it with roof in this condition.

Maybe you can find someone who will repair and reshingle the roof on a promisary note from you.. or they can take a lien on the property if there is that much equity. Then when roof is fixed you can close this loan and pay them off. Are you a member of Church - your situation sounds very sad and maybe your church community could help you out.

Good luck to you my friend
Old 09-14-2009, 08:38 PM
Em Tee Em Tee is offline
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From what you've posted, your home doesn't sound uninhabitable to me. However, at the end of your post you said you'd post more about other problems. If you give a complete (but short and to-the-point) list of problems with your home, it would be more helpful.
Old 09-14-2009, 09:21 PM
TJSum TJSum is offline
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State: Maryland
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There might be some loans out there, where the appraiser can write the report "subject to" repairs being done. They will close the loan, but hold some funds in escrow until the work is complete. You can use the partial loan amount to make the repairs, then once they are done, they will give you the rest of the money to complete the deal.
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Old 09-14-2009, 10:36 PM
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Metamorphic Metamorphic is offline
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Does not sound uninhabitable based on your description. You need some roof and flashing repairs and some critter proofing.

Uninhabitable would be things like kitchen cant be used to prepare food, baths dont work, structurally unstable, contaminated, mold infestation, etc.

Are you sure the broker said "uninhabitable" not "unmarketable"? Depending on your market, the amount of deferred maintenance may make the house a very difficult sell.

You would be wise to avoid FHA financing. Your odds of getting a very through inspection on a FHA job are much higher, and the FHA appraiser is required to specifically point out issues that a can be left unmentioned in a regular appraisal.
Old 09-14-2009, 10:43 PM
StrugglingDaughter StrugglingDaughter is offline
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State: New York
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Thanks for the reply, Dex - but wait, there's more! Here’s my description of our basement problems:

I’ve been clearing wooden pallets with boxes stacked on them away from the oil burner in the (unfinished) basement. (How much clearance should I strive for around the oil burner?)

The basement tends to be damp. It got some standing water in June (but then, that was the wettest June on record). The rainwater pooled outside around one basement window – it does have a broken pane, but the water seemed to be mostly getting in under the window frame, where there is a gap. The whole window frame needs replacing, possibly with a window well.

I should clarify that the reason there were lots of pallets in the basement in the first place is that there was a branch and debris stuck in a downspout years ago, and my mother got pallets for free from some guy and piled things up on them (thinking that the problem was water coming through the foundation), but now that I have cleared the downspout, the water problem is much improved (with the exception of that rainy June, we haven’t had standing water in years).

Another basement window can’t be closed because the frame is so loose it might just fall in if you push on it (and it’s stiff, rusted in place).

If I get any replies I'll keep positng with more problems!
Old 09-15-2009, 10:41 AM
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Mike Kennedy Mike Kennedy is online now
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Where in New York ?
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