Mortgagee Letter 48 re: Termite Inspection

[Sbrainard]

I have been asked by a mortgage lender not to include a suggestion for a termite inspection in my report as long as I did not notice any signs of infestation. I will always call for a termite inspection based on letter 2005-48 stating that "...inspection required only if, ... customary to the area,...", which I think termites are customary to this area. Is there anywhere in HUD.gov that gives a better analysis of this opinion, and is there anywhere that HUD gives an analysis of being customary to the area? Thank you for the great help!

 

[CANative]

Mr. Rex will be along shortly to answer your question. He has the Appenix D engraved on his contact lenses.

 

[Mr Rex]

Here you go, left contact lens, sorry about the funky look of the fonts, it has to do with the curvature of the lens:

Wood Destroying Insects / Termites
1. Are termite reports for homes located in southern states still automatically required?
[FONT=Times New Roman,Times New Roman]FHA no longer mandates automatic inspections for wood destroying insects or organisms in [/FONT]existing [FONT=Times New Roman,Times New Roman]properties (over one year old). However, pest inspections are required if, there is evidence of active infestation, it is mandated by the state or local jurisdiction, it is customary to area, or at the lender’s discretion. Prudent underwriting would dictate an inspection in areas prone to wood destroying insects or organisms.
[/FONT]2. Many areas of the country are termite prone. Does the appraiser address it on a form or does the underwriter call it out on the conditional commitment?
[FONT=Times New Roman,Times New Roman]The appraiser is instructed report any evidence of infestation in the "improvements section" of the appraisal report under [/FONT]"foundation" [FONT=Times New Roman,Times New Roman]by simply marking the evidence of infestation box. The box is checked only if there is evidence of infestation which may include the appraiser noting a prior treatment. FHA requires a clear pest inspection report on Wood Destroying Insects/Organisms only if there is evidence of active infestation, it is mandated by the state or local jurisdiction, is customary to the area, or at the lender’s discretion.
[/FONT]3. Mortgagee Letter 2005-48 states that a termite inspection is no longer automatically required unless there is evidence of active infestation, it is mandated by the state or local jurisdiction, is customary to the area, or at the lender’s discretion. Can you provide more clarification of exactly how lenders should apply "customary to the area?"
[FONT=Times New Roman,Times New Roman]"Customary to the area" would be driven by local market practices such as incorporating provisions addressing termite or wood destroying organisms in the standard real estate sales contract in termite prone areas or where the potential of infestation exists, or local requirements such as states requiring the use of their own- wood destroying insects/organism form.
Lender discretion and prudent underwriting is key to properly evaluating the risk associated with a property’s condition including its geographic location. Lenders may refer to the TIPS (termite infestation probability) zone and use that information as one of the tools in their determination of whether or not to require a pest inspection.
The Termite Infestation Probability (TIP) Zones (available on-line at the following URL: http://www.npmapestworld.org/HUD.asp ) provide a valuable resource for lenders to have familiarity with the geographic areas in which they process and underwrite loans. The TIP zones are based on a copy of the International Residential Code map showing areas of termite infestation, prepared by the US Forest Service.
[/FONT]