1004D and Foundation Certificate

[Mike Ault]

If you think that the foundation design is inadequate you can always reference this…

https://www.HUD.gov/sites/documents/49303GC5GUID.PDF

 

[Mark K]

I did contact the Engineering Firm that wrote the report to get clarification on the statement "...generally structurally sound.", they basically said it means the property is habitable but there is some work needed, otherwise they would not have recommended the piers.

IMO, it comes down to a decision on the threshold of the damage. You can find items that need addressed/repaired in any home. However, its up to the appraiser's decision whether or not the repairs exceed their individual threshold of making the report 'subject-to' or 'as-is'. I've seen foundation issues in older homes that may have needed repaired for 50 years. Old brick foundations, 150 yrs. old, that leak like a sieve into the nearby sump pump pit. Cracks in basement block foundations due to the hydrostatic water pressure that has bowed the walls inward are not uncommon in this area. Some people have them repaired, others live with it for many, many years. I've never called for inspections or repairs; other appraisers unfamiliar with the situation might call for repairs.

In a lot of these cases these deficiencies have been in place since shortly after construction and do not affect the habitability.

If this was my appraisal, I'd probably ding it for condition and include the Engineering report in the the appraisal and say something like..."per the engineering report provided by ABC Engineering, the structure is habitable but there is some work needed..". I'd quote their report word-for-word and send it on as-is. By the way, and engineering company is ALWAYS going to find something. The fact that they say that its habitable puts the liability directly on them; they are the experts.

To me its like saying the roof is 25 years old and doing its job. I wouldn't call for a new roof unless the existing one is leaking. Disclose what you know and move on.

 

[Andee]

Andee - was it for FHA or conforming?

Conforming

 

[Andee]

How did you determine that it needed "repairs"?

The homeowner told me while I was inspecting the property, plus there is a section on the second floor where you can feel the slope while walking across it, along with your typical drywall cracks on the interior.

 

[Andee]

This is from the Fannie Selling Guide:
"If the appraiser is not qualified to evaluate the alterations or repairs, the appraisal must note the deficiencies and be completed "subject to" a satisfactory inspection by a qualified professional. The lender must decide if the inspection(s) is required and whether the property meets eligibility requirements. If the property does not meet eligibility requirements, the lender must provide satisfactory evidence that the condition has been corrected or repaired prior to loan delivery. In this case, the appraiser is not required to review the professionally prepared report, re-inspect the property, or provide a Form 1004D. The lender must document the decision and rationale in the loan file. See B4-1.4-08, Environmental Hazards Appraisal Requirements, for properties affected by environmental hazards." (highlight added by me)

Thank you, I think this is exactly what I need.

 

[Andee]

I may need to clarify some things. This is a slab foundation that has already had 14 piers added to the back of the dwelling, I'm not sure when, to correct prior foundation issues. The homeowner/borrower is who advised of the new/current foundation issues when I was onsite and knew she needed to have more foundation work completed. She advised the bank of this when she was doing all the paperwork...so the bank already knew about it. BTW, this is the original homeowner, home was built in 2003, so she knows about all the work completed. I revised my report to "Foundation Certificate", which they do not have because the work is not done, and the foundation report was completed after my inspection. The report calls for 20 additional piers and making adjustments to the first 14 from the prior work. Also, I did make a condition adjustment for the foundation, which the property is very habitable at the present.

 

[Andee]

I don't remember which post this was from but, yes houses out here do sell with foundation issues...they sell to investors which will go in and repair and flip. Also, most homeowners don't realize they have foundation issues, they like to call it settlement out here, but many times it's not settlement but the actual foundation. I do know what to look for with these types of issues and look for comps that display those similar issues, which there are two in this report. So, value is not an issue.

 

[CGinMN]

You made a condition adjustment but made it subject to repairs?

 

[Andee]

What repairs are needed?

Are the repairs you claim needed to be done based on something you observed but that the foundation report is not requiring?
I dont' know anything more about foundations than very basics so Idk why the inspector recommended 20 piers, or what is going on there...but if the appraisal was made subject to a foundation certificate , (or can be revised to that ) , then attach it, say the certificate was completed, ( say see attached ) and be done.

Out here if you have a foundation certificate, that means the work has been completed and the foundation contractor is certifying that its complete.

 

[Andee]

You made a condition adjustment but made it subject to repairs?

The subject to was for the foundation, and the condition adjustment was for things like cracked drywall (in the area the piers need to be), and a cracked window.