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How to Eliminate Re-Inspection (442) Requests

Posted by: In: Epic Appraisal News 01 Jan 2016 Comments: 0

An appraiser may be required to condition the appraisal report “subject to” the completion of a specific item; however, most of the time, the type of financing dictates this.  Here is a quick list of the 3 types of financing and the lender requirements for each.

 

Conventional Financing

Property conditions for conventional financing have the least amount of requirements.  With conventional financing, there are many ways to appraise the subject property in its current condition.  An appraiser can often do a “cost to cure” adjustment to account for deferred maintenance or needed repairs. This is often decided by the lender on how they want the appraisal completed.

 

VA Financing – Safety, Security, and Structural Soundness

Conditions which impair the Safety, Security, or Structural Soundness of the dwelling will cause the property to be unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated.  Some of these conditions include:

 

·   Defective paint on properties built prior to 1978

·   Access not available for attic or crawl space

·   Exposed wiring

·   Earth to wood contact on exterior of home

·   Defective construction

·   Evidence of continuing settlement

·   Leakage

·   Decay, and termites

·   Missing railings

·   Broken windows

·   Failure of the septic

·   Excessive dampness

 

Items such as smoke detectors, CO detectors, radon or radiation detectors, and hot water heater straps are NOT considered Minimum Property Requirements (MPR) items. These are considered to be code compliance issues.  VA states that they are not a code enforcement agency.

 

FHA/USDA Financing – Safety, Security, and Structural Soundness

Similar to VA Financing, conditions which impair the Safety, Security, or Structural Soundness of the dwelling will cause the property to be unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated.  Some of these conditions include:

 

·   Hot water heater not double strapped

·   Missing CO detectors outside of ALL sleeping areas

·   Earth to wood contact on exterior of home

·   Utilities not turned on

·   Appliances not functioning

·   Defective paint on properties built prior to 1978

·   Access not available for attic or crawl space

·   Evidence of continuing settlement

·   Defective construction

·   Leakage

·   Decay, and termites

·   Missing railings

·   Broken windows

·   Failure of the septic

·   Excessive dampness

·   Exposed wiring

 

 

If the appraiser cannot determine that the property meets FHA’s MPR, an inspection by a qualified individual or entity is required.

Conditions that an inspection by qualified individuals or Entities include:

  • Standing water against the foundation and/or excessively damp basements;
  • Hazardous materials on the site or within the improvements;
  • Faulty or defective mechanical systems (electrical, plumbing or heating/cooling);
  • Evidence of possible structural failure (e.g., settlement or bulging foundation wall, unsupported floor joists, cracked masonry walls or foundation);
  • Evidence of possible pest infestation;
  • Leaking or worn-out roofs; or
  • Any other condition that in the professional judgment of the Appraiser warrants inspection.

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