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Safety Concern, So When Does A Lender Know?

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Penelope X

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Certified Residential Appraiser
State
California
I have a (perhaps a few) question. It may seem like the answer is simple but, I'm finding that it's maybe not. Is the only way a lender finds out a home has a safety issue is through the appraisal? If so, what happens when a home inspection notes many safety issues that are not even mentioned in an appraisal such as, missing handrail on an interior stairwell with 9 stairs (walls on both sides but, no handrail)? Is it okay to send the lender a copy of the home inspection? I believe there is a disconnect between truth and lending here!
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
when did you get the home inspection report, before, during, or after your appraisal was completed? A bit confused on the question
 

Penelope X

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Certified Residential Appraiser
State
California
when did you get the home inspection report, before, during, or after your appraisal was completed? A bit confused on the question
Sorry about the confusion. The home inspection was completed the week prior to the appraisal. The appraiser never asked for any reports and the appraisal report was turned in on this $1M+ home in 24 hours. There are four "safety concerns" on the home Inspection Report the appraiser didn't address. I understand a couple of these, they might be called out for a "subject to" report for FHA but, this is conventional financing. The safety items are being requested in a repair request but, the seller's agent is waiting to find out if the appraiser noted these items in their report. The appraisal is not a home inspection so, how does a lender know that these things exist so that the buyer will have some protection in getting safety items taken care of before purchasing their home?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The lender won't know and the lenders are at fault for being too cheap to pay for a home inspection of their own. Still cant' figure out why they don't do it. It's up to a buyer to protect themselves with their own home inspection.
 

Penelope X

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Certified Residential Appraiser
State
California
The lender won't know and the lenders are at fault for being too cheap to pay for a home inspection of their own. Still cant' figure out why they don't do it. It's up to a buyer to protect themselves with their own home inspection.
Thanks, Grant!
But, my question is more directed at who is most accountable for not making the lender aware of the risk? The appraiser, or the loan originator? If a loan originator knows about the safety issues, would they be the most responsible? Should they let the AMC that hired the appraiser know and have the appraiser address the issues? Isn't this a disclosure issue? The buyer may be able to hold in their hands proof there are safety issues with their prospective home but, a seller doesn't have to fix those items according to the contract and the only mitigating factor is the lender in all of this, correct? If the appraisal doesn't disclose the safety items that the home inspection shows, and the appraiser never asked to see the home inspection report, the buyer has no recourse except to back out of the sale? That seems odd to me...the consumer loses all the way around (in the costs for the inspections, appraisal, and confidence in what disclosure should really mean?)!
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Did the disclosure statement of the seller include these safety items?
 

Penelope X

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Certified Residential Appraiser
State
California
Did the disclosure statement of the seller include these safety items?
No. I reviewed prior listings for the subject property and there are no photos showing the staircase but, when I look at other homes in this complex the handrails are there. The other items are things they probably didn't realize; garage door opener doesn't auto-reverse, no auto-closing mechanism on the passage door to the garage and a venting issue in their laundry room. They know about them now though.
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
An FHA or VA appraiser should/would have made the appraisal subject to repairs. On a conventional loan, if the appraiser does not call out for repairs, then it is up to the parties to the transaction to negotiate. The results of the home inspection report often lead to repairs made by the seller. Not sure the lender or underwriter are required to be involved in these matters, even though they involve safety items.
 

Amy Perkins

Senior Member
Joined
Jul 20, 2003
Professional Status
Certified Residential Appraiser
State
Tennessee
I have a (perhaps a few) question. It may seem like the answer is simple but, I'm finding that it's maybe not. Is the only way a lender finds out a home has a safety issue is through the appraisal? If so, what happens when a home inspection notes many safety issues that are not even mentioned in an appraisal such as, missing handrail on an interior stairwell with 9 stairs (walls on both sides but, no handrail)? Is it okay to send the lender a copy of the home inspection? I believe there is a disconnect between truth and lending here!

We are not there to replace a home inspection. Our job is to give an opinion about value. While many appraisers do state obvious safety issues, it is not OUR JOB. The fact is that the home inspections always on addendums and the lender doesn't want these. If they did, no one would ever get a loan. We are all professionals with specific jobs, how we got conned into making some basic safety observations I will never know. Home inspectors make $700 per house. That's the level of detail and they don't tell the owner what the value is either. They have their job and we have ours.
 

Penelope X

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Certified Residential Appraiser
State
California
An FHA or VA appraiser should/would have made the appraisal subject to repairs. On a conventional loan, if the appraiser does not call out for repairs, then it is up to the parties to the transaction to negotiate. The results of the home inspection report often lead to repairs made by the seller. Not sure the lender or underwriter are required to be involved in these matters, even though they involve safety items.
Hmmm, wouldn't anything that involves risk and the collateral's condition (health/safety/structural integrity) be reason for an underwriter to be involved? I guess that's what this questioning comes down to.
 
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