1004D Scrape and Paint. FHA Reverse Mortgage

[Trihard]

I completed a 1004 FHA for a reverse mortgage. Subject was built in the 1950's needs some scrape and paint on the interior of the property and GFI outlets. GFI outlets have been installed, however the scrape and paint has not been completed according to the home owner, estimated cost to cure was $300. AMC is telling me to go to the subject take photos and mark "NO" on the 1004D that the repairs have not been completed. They also want me to comment in the 1004D that the repairs will be completed after closing, with no escrow. Anyone have this situation before?

 

[glenn walker]

NO and how do you know the repair is ever going to be done ? The property only meets FHA Minimum Property Requirements when the paint issue has been mitigated. In 30 years of FHA I have never done a 442 or 1004D saying what is going to be done after the close of escrow. The worst part is the only reason Pre-1978 homes are required to have no peeling paint is because of possible lead based paint. The repair is based on a potential Health & Safety Issue and HUD'S policy is H & S Issues are never waived-period. Tell them you called your HOC and were told you cannot do a 1004-D based on being told a future event is going to take place. Hell if I was the lender I would send out a painter and throw his invoice into the ecsrow and be done .

 

[Mr Rex]

FHA doesn't require retrofit of GFCIs. Let's start there. The check "No" is correct if the repairs have not been completed. Period. Stop there unless you have a crystal ball and psychic powers. Cost to Cure $ is irrelevant.

 

[glenn walker]

Agree FHA does not require GFCIs BUT on reverse mortgages some lenders have additional overlays and ask for them because I guess they are afraid the old people are going to electrocute themselves. In CA we live in a Nanny State and we have many things that are not in the 4000.1 handbook, Smoke detectors, Carbon Monoxide Detectors, Hot Water Tanks must be Double Strapped and other things. Some appraisers consider GFCI'S as a health & safety issue and so they call for them. As far as the Cost To Cure FHA wants the appraiser to estimate the C to C. As far as 1004-D the work is either completed or its not. There is no Hypothetical or Extraordinary Assumptions ever made on H & S issues and the lenders FHA DE-Underwriter should know better. It's stupid you send out the appraiser to say the work is not done and then fund the loan because the Appraiser swears on his mothers grave and certifies its not done but the lender says it's going to be. Even if it was a escrow hold back it would be done and invoiced into the escrow.

 

[Mr Rex]

Why doesn't the Mortgage Borker pull $300 out of his or her commission to help the poor old folks get their loan? Or perhaps the lending behemoth that is making an exorbitant fee at the beck and call of the US gubmint?

 

[glenn walker]

Why doesn't the Mortgage Borker pull $300 out of his or her commission to help the poor old folks get their loan? Or perhaps the lending behemoth that is making an exorbitant fee at the beck and call of the US gubmint?

Why doesn't the Mortgage Borker pull $300 out of his or her commission to help the poor old folks get their loan? Or perhaps the lending behemoth that is making an exorbitant fee at the beck and call of the US gubmint?

Agree-Spend $300 bucks to make a $5,000 commission

 

[CANative]

(d) Lead-based paint poisoning prevention. If the appraiser of a dwelling constructed prior to 1978 finds defective paint surfaces, 24 CFR 200.810(d) shall apply unless the borrower certifies that no child who is less than six years of age resides or is expected to reside in the dwelling, except that any reference to “mortgagor” in 24 CFR 200.810(d) shall mean “borrower” for purposes of this paragraph.

The DEU can waive the repair in some cases.

Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Program

This final rule codifies several significant changes to FHA's Home Equity Conversion Mortgage program that were previously issued under the authority granted to HUD in the Housing and Economic Recovery Act of 2008 and the Reverse Mortgage Stabilization Act of 2013, and makes additional regulatory...

www.federalregister.gov

 

[CANative]

So type this in the 1004D comment section:

"Repairs not completed. The Lender/Client said they also want me to comment in the 1004D that the repairs will be completed after closing, with no escrow. "

 

[Mr Rex]

Open parentheses, it does not involve me or my opinion of value. Close " . Loan issue, not appraisal issue. Why get involved? I understand on the surface its innocuous. I wonder what your E&O provider would say? Borrower says they are using loan funds to redo the kitchen and baths. Would you ever include that in an appraisal that is not a rehab loan?

 

[bnmappraisal]

AMC is telling me to go to the subject take photos and mark "NO" on the 1004D that the repairs have not been completed.

I take no issues with that and would also mark "NO" box - since the paint was not completed as part of the initial report

They also want me to comment in the 1004D that the repairs will be completed after closing, with no escrow.

Great, you can "state that" per the AMC, but I don't know why you would want to take on the liability, but that's a business decision