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Foreclosure Repair?

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Julia Young

Sophomore Member
Joined
Feb 23, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I do very few HUD or REO houses.
HUD foreclosure contracted to investor purchase. Conventional financing.
Plastic covers entire roof. Roof had been partially replaced down to decking, and there was also a partial old roof. There are no water spots or damage on ceiling, decking indicates no leaks prior to foreclosure but HUD came in and NAILED plastic all over the roof with wood strips, ruining the new portion, requiring the entire roof be replaced according to the roofing contractor. I have no reason to doubt the necessity of the roof replacement.
Question? Since it is a HUD "as is" to the investor, how does the appraiser handle this for the appraisal, so the loan can close prior to roof replacement? There is an estimate to replace by a licensed roofing contractor that will be used for the work. No one wants to replace a roof on a house he does not yet own. Otherwise the house appears to be in average condition.

I had similar questions before on repairs for HUD foreclosure homes. The agent removed the plastic for the photos in one case (also investor purchase)and the appraisal was conducted with recommendations in the comments section on a conventional loan. In one case repairs were done by the purchaser prior to closing. These were small repairs however not an entire roofing job. It was not an entirely comfortable handling of the situation.

Need recommendations asap as to how to proceed or resolve to allow the appraisal and the loan to close without expensive repairs prior to closing. Is there an escrow or stipulation possibility?
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Julia,

Call it as you see it. It is up to the lender to do a non-conforming type loan to get the property purchased, then they can do a conforming deal when repairs are made.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Julie,

Since an investor is buying it, it's not for FHA financing. You must report the condition at the time of inspection. Let the underwriter and loan officer work it out from there.

It's not your job to 'make the deal work'. Tell it like it is and let the chips fall where they are supposed to!!!!!!!!!
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Are you doing this subject to completion (hint - ask!) or "as is".

They (lender) get to pick escrowing for the repair, or not.

Either way it is not your problem.

If "as-is" ask yourself "What does my market do on homes with 100% need to replace roof?.

end of agony.

all other Excederin headaches belong to the lender and agents!
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
There are some products where there is a purchase loan and a 2nd for repairs, which is then all rolled into a conventional a year later. That's what this one needs.

Yes, just the facts. Let the loan brokers figure out how to do the deal.

Roger
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I'd call the lender and let them know of the situation, they may not want the loan. ;)
But always report it like you see it!!! It's their job to figure out what loan package is applicable.
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
Julia, keep in mind that the investor is purchasing the property "as is" from HUD and that the purchase price was "as is" not "subject to or as repaired". The purchase price should reflect the need for the roof replacement. If the investor knows what they are doing and not a refugee from the stock market they will know that they need repair money and a nonconforming purchase loan not conventional 30 year financing to purchase this house. Report what you see or you may get dragged into a legal action over a resale of the subject where the repairs are substandard and the property is sold six months later for twice the intial purchase price with charges of appraiser collusion in a FLIP scheme.
 
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