March 14, 2011
The FHA has standards for appraisers that mandate an “automatic inspection” if certain conditions are detected. In 2005, the FHA modified some of those policies for existing construction buildings to eliminate an “automatic inspection” requirement.
“In a continuing effort to reform and standardize its appraisal requirements, FHA has shifted from its historical emphasis on the repair of minor property deficiencies and now only requires repairs for those property conditions that rise above the level of cosmetic defects, minor defects or normal wear and tear.”
The FHA adds, “FHA Roster Appraisers are reminded to report all readily observable property deficiencies…” according to FHA Mortgagee Letter 05-ML-48.
Termite inspections, for example, are one area that changed under the new rules for existing construction housing being reviewed for an FHA mortgage loan. The FHA does not require an automatic inspection for termites or other wood-destroying pests.
According to the FHA, “inspection required only if evidence of active infestation, mandated by the state or local jurisdiction, if customary to area, or at lender
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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