FHA with fire damage

[Brady O'Leary]

I did an FHA inspection today and upon looking in the attic I noticed the rafters were charred. I asked the homeowner and he said he bought the house after it had been in a fire and he remodeled the house when he bought it back in 1970. He said he had a home inspection at that time. My question is do I need to provide a cost to cure, or just require a home inspection? I will attach pics if I can. Any help would be great.

 

[CANative]

It's right in the revised Appendix D to 4150.2...

Attic – Enter the attic and observe the interior roofing for insulation, deficient materials, leaks or readily observable evidence of significant water damage, structural problems, previous fire damage, FRT sheathing, exposed and frayed wiring and adequate ventilation by vent, fan or window. If any of these deficiencies exist, condition the appraisal on their repair and prepare the appraisal “subject to repairs” and/or “subject to inspection”.

 

[Brady O'Leary]

Thanks Greg. I have read the 4150.2(more than once), and I am going to report this appraisal as "subject to inspection". My question is do I also have to provide a cost to cure. Not trying to be a smart ***, I am just asking if this is also required. Thank you.

 

[RSW]

How can you provide a cost to cure when you don't know how much damage is there? That's why you do the appraisal subject to an inspection.

 

[CANative]

Estimate the cost of repair/replacing the fire damaged components that could be observed.

In the performance of an FHA appraisal, the appraiser must denote any deficiency in the appropriate section(s) (site issues in the site section, improvement issues in the improvements section) of the appraisal report. The appraiser is to note those repairs necessary to make the property comply with FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) together with the estimated cost to cure. The lender will determine which repairs for existing properties must be made for the property to be eligible for FHA-insured financing.

 

[Mr Rex]

If a structural engineer determines that the charred wood is still structurally sound, the CTC = 0

 

[Webbed Feet]

Estimate the cost of repair/replacing the fire damaged components that could be observed.

In the performance of an FHA appraisal, the appraiser must denote any deficiency in the appropriate section(s) (site issues in the site section, improvement issues in the improvements section) of the appraisal report. The appraiser is to note those repairs necessary to make the property comply with FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) together with the estimated cost to cure. The lender will determine which repairs for existing properties must be made for the property to be eligible for FHA-insured financing.

Mr. Boyd,

For the time being, I dispute that this above section means what you indicated it means. I say it only calls for a C2C for repair items NOT falling under any "Subject To" condition set by the appraiser. The setting of any subject to condition either causes a HC or an EA to come into existence and at that point the property is unacceptable until the condition gets cleared. If it is unacceptable to FHA/HUD what is the point of the C2C?

Webbed.

P.S.. . Feel free to debate what I posted over here in number 18 http://appraisersforum.com/showthread.php?t=141828&page=2 ... Again, I feel that document is very confusing and taking parsed sections of it literally "per section" is most likely leading to false assumptions regarding the intention of the document for that section. But it is so poorly written I can't tell what was intended, to be honest with anyone, regarding a host of specific examples that could be asked about. And I can't see how anyone can tell what the hell was meant for a host of unforetold specific circumstances. I say the document contradicts itself and creates at least as many questions as it answers.

 

[CANative]

Why would HUD care about the C2C of something that doesn't need to be corrected in order to meet MPR? The condition is addressed in the sales comparison approach.

On the other hand, an underwriter needs to make a go/no go decision when there are conditions which require correction in order for the property to meet MPR. Perhaps they use the cost to cure in order to determine if the loan is feasible and if the borrower wants to proceed or to waive a condition that would not be worth the cost to fix.

 

[Terrel L. Shields]

Ah, market defective...whether it is curable or not....

Spray paint to keep the smell down. let next sucker have it. Do you think the insurance company would pay off it the roof collapsed?

 

[Webbed Feet]

Why would HUD care about the C2C of something that doesn't need to be corrected in order to meet MPR? The condition is addressed in the sales comparison approach.

On the other hand, an underwriter needs to make a go/no go decision when there are conditions which require correction in order for the property to meet MPR. Perhaps they use the cost to cure in order to determine if the loan is feasible and if the borrower wants to proceed or to waive a condition that would not be worth the cost to fix.

Mr Boyd,

Then I recommend FHA start requiring underwriters to obtain C2C numbers from qualified contractors and repair companies for that determination. Instead of asking a country full of real estate appraisers to do it when something on the order of 90% of them are not qualified to be doing so with 80% of those pulling the so-called C2C numbers out of their digestive systems and the remaining 20%, that have no construction background whatsoever, using dated repair manuals from Costco and Sears meant for home do-it-yourself people.

Or perhaps do something as simple as publish that when any C2C numbers are needed that 24 hour turn times, regardless of who demanded them, are void and when the appraiser tells the client they need a third party estimate the client is required to cooperate with that request or be banned from FHA/HUD financing.

Webbed.

P.S. Make that "90%" having no construction background whatsoever... +- 20%... but means the high end would be 110% LOL! Oh well, you get the idea.