April 3, 2015
A reader got in touch with us recently with a set of complaints about a home that was purchased using an FHA mortgage. The reader says, in part:
“Please note that we have a home that was approved by FHA & Hud that has turned out to be a disaster. We have been through two of the programs to show that this house cannot be repaired with out costing more to repair than replaced…The people that was looking after us just laughed in the back ground as we talked to them and always adding another 4 or 5 thousand balance to our loan.
In 2011 & 2012 We tried to repaid this house after being assured by FHA and Hud that it would be fine if just repaired in a normal manner and it turned out to be 25,000.00 spent on a card board house and this if not far from the truth.”
There are many issues raised by this reader comment that we cannot address–borrowers who feel an FHA loan was not handled properly or in a legal manner should contact the FHA directly by calling the FHA’s toll-free number 1 800 CALL FHA.
But there is one serious issue raised here that we MUST address–the prevailing misconception some borrowers have that the FHA or HUD would ever “approve” a home. Some borrowers mistakenly assume that because a home passes the appraisal process that it is free of defects.
This is NOT TRUE.
Borrowers should, according to the FHA official site document titled, “For Your Protection, Get A Home Inspection”, pay for a home inspection before agreeing to purchase a home (or add a clause to the purchase contract that makes the purchase of the home contingent on the home inspection paid for by the borrower).
According to the FHA official site:
“FHA does not guarantee the value or condition of your potential new home. If you find problems with your new home after closing, we can not give or lend you money for repairs, and we can not buy the home back. That’s why it’s so important for you, the buyer, to get an independent home inspection. Ask a qualified home inspector to inspect your potential new home and give you the information you need to make a wise decision.”
The FHA never “approves” a home or guarantees that it is defect-free. It is the responsibility of the borrower to pay for a home inspection to insure the purchase being made is a sound decision. The home inspection is paid for by the borrower, and is an optional but extremely important part of the home buying process.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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