FHA reverse mortgage repair requirements

[OSU Beavers]

We did an FHA appraisal on a vacant property at the edge of our service area last November and noted:

Earth to wood contact along several sections of the house perimeter and in the crawlspace.

Crawl space height inadequate for maintenance and repair. A minimum of 18" is required.

Some electrical switches and the back room electric heater do not function. Fix.

Exposed wiring. Provide switch and socket plate covers.

Add a diversion pipe to the water heater pressure relief valve to code.

Interior and exterior peeling paint on the house and accessory buildings. Remove all peeling paint from the property and repaint exposed wood.

Today the lender sent us a letter stating that all of the above work requirements are completed EXCEPT the curing the peeling paint and the earth to wood contact which "are bid on and will be done post closing." And they want a CIR for the completed items

Also they attached the most recent HUD guidelines refering to the crawlspace height requirement and insisted that the 18 inch rule is only a recommendation. And want an addendum from me indicating that I have evidence that the crawlspace clearance is acceptable :glare:

Finally they want an addendum to state that the house is now owner occupied. Apparently the borrower had not moved in yet when I did the appraisal as they had a relative show me through the vacant house back in November.

Going out there Monday. What say the HUD experts on all this?

 

[Mr Rex]

The 18 inch thing is a recommendation, not a hard rule. The key is adequate clearance for routine maintenance. How did the HVAC guy get the duct work under the house when its less than 18 inches if that's not adequate for maintenance? Of course if you have to carry an army shovel to get to the other side of the crawlspace....:Eyecrazy:

 

[OSU Beavers]

The subject is a one story home built in 1920. A gas stove and electric wall units provide heating for the house.

What I really want to know is if the peeling paint and the earth to wood contact can be fixed "post escrow"? I thought FHA stopped escrowing for things like roofs and paint years ago.

 

[Mr Rex]

Not your problem. You report it, the DEU decides how to handle it. Step away and don't let them make you play Solomon.

 

[OSU Beavers]

So on the CIR do I check box:

13 On-site improvements acceptably completed except items listed below, completion of which is delayed by condition beyond control of the builder (see IV B below)

Then list the incomplete items and turn it in? Usually lenders don't call for a CIR until everything is done.

 

[Dominic]

Sounds more like...

box 6 - corrections required by report dated _____ not acceptably completed.

you re-inspect, check box 6, add comments saying these items were corrected, these items were not.... let the underwriter sort it out from there.

not sure box 13 is the right thing here... "delayed by conditions beyond control of the builder"... what builder? was built in 1920, right?

I could very well be wrong, not a lot of experience with this, but had a similar situation recently...

called for repairs, they called said it was ready, went to re-inspect, found not all repairs done, did CIR with box 6 and commented what was done/not done... a few days later, they sent me back, and all was well, did 2nd CIR.

 

[JSmith43]

Just report what is done. Except for peeling paint and health and safety hazards, the DEU can waive just about anything now. They seem to vary quite a bit as to how they take on this new responsibility!

Are you current on all the mortgagee letters pertaining to repair conditions? I should download the pertinent ones to a folder since they are lost in a blizzard of new ones, every time I re-visit that part of the HUD site

 

[seattle98116]

I do a lot of Reverse Mortgage appraisals and here in Seattle, because of the long, rainy winters, I see a lot of 'escrow holdbacks' for the work and they fund the loan with the estimated cost to complete the repairs...this mostly pertains to peeling paint. I had one last week like this.

 

[dgappraisal]

Does peeling/chipping paint still require scraping and painting now that FHA appraisals are essentially "as-is", similar to conventional appraisals?

 

[Tawfik Ahdab]

Only for homes built before 1978.

Repair Requirements

As stated in Revised Appendix D, FHA now permits an "as-is" appraisal for
existing properties that serve as security for FHA-insured mortgages when
minor property deficiencies, which generally result from deferred maintenance
and normal wear and tear, do not affect the safety of the occupants or the
security and soundness of the property. FHA no longer requires repairs for
these types of minor cosmetic deficiencies to bring a property into
compliance with FHA Minimum Property Requirements. Specifically, the
guidance provided in Handbook 4150.2, CHG-1, Chapter 3, Paragraph 3-6,
A-7 referencing all-weather road surfaces; Paragraph 3-6, A-8 referencing
poor workmanship; Paragraph 3-6, A-11 referencing debris and trash in
crawl space; Paragraph 3-6, A-16 referencing steps without a handrail;
Paragraph 3-6, C referencing bare floors, badly soiled carpeting and cracked
plaster and sheetrock is no longer applicable. Additionally, the guidance
provided in Handbook 4905.1, REV-1, Chapter 2, Paragraph 2-7, A-2
referencing all weather road surfaces; Paragraph 2-8 referencing poor
workmanship and Paragraph 2-14, C referencing crawl spaces with debris
and trash is no longer applicable. Any reference to the Valuation Condition
form (form HUD-92564-VC) and protocol for its completion contained in
Handbook 4150.2 is no longer applicable as well. Examples of minor
property conditions that no longer require automatic repair for existing
properties include, but are not limited to:

* Missing handrails
* Cracked or damaged exit doors that are otherwise operable
* Cracked window glass
* Defective paint surfaces in homes constructed post 1978
* Minor plumbing leaks (such as leaky faucets)
* Defective floor finish or covering (worn through the finish, badly soiled
carpeting)
* Evidence of previous (non-active) Wood Destroying Insect/Organism
damage where there is no evidence of unrepaired structural damage
* Rotten or worn out counter tops
* Damaged plaster, sheetrock or other wall and ceiling materials in homes
constructed post- 1978
* Poor workmanship
* Trip hazards (cracked or partially heaving sidewalks, poorly installed
carpeting)
* Crawl space with debris and trash
* * Lack of an all weather driveway surface

http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=05-$[no]&op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./hudclips.cgi&p=1&r=3&f=G