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The return of the FHA loans


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Have you ever experienced underwriters getting a hold of your report and then requiring everything even the little stuff to be corrected per the report like which I generally experience where my clients have HUD backed financing?

Don't they understand that the report is designed to educate the client about the condition of the home and it's not a valuation report?

Jim K. told me to write the report as if the seller didn't exist and I imagine that includes the bank. But Jim also recommend that I give some contrast to the report for the sake of the client but still thats not intended to parse the findings for the bank.

Whats your opinion on this practice by the banks to mis-use an HI report?

Chris, Oregon

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One of things I tell my client; never give my report to the bank, the mortgage broker or the insurance company.

Believe me, I do too! and most of the time the realtors are savy to this problem and do everything to write their repair addendums without any reference to an HI report but sometimes the underwriters either accidentally or purposefully sniff out the existence of an HI report.

I imagine that none of the bretheren alter or parse reports in anticipation of an underwriter requiring everything they recommended to be repaired corrected or anyone else for that matter.

I wanted to confirm that assumption.

Chris, Oregon

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One of things I tell my client; never give my report to the bank, the mortgage broker or the insurance company.

Ditto, the report is for the client and their benefit, not the bank.

The bank wants everything fixed to ensure their equity position, not for the clients benefit.

I don't always remember to warn the client, but if I ever catch wind of the report being shared with the bank, I send up the warning flags.

Jim

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Originally posted by Chris Bernhardt

Have you ever experienced underwriters getting a hold of your report and then requiring everything even the little stuff to be corrected per the report like which I generally experience where my clients have HUD backed financing?. . .

I've been tempted to inspect the bank's building, give them a report that lists 50 or 60 defects, then advise them STFU till they've cleaned up their own act.

- Jim Katen, Oregon

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I get called periodically. I've had insurance companies & banks freak out about all manner of stuff, and require various repairs & upgrades before they'll write a policy or mortgage.

This isn't about defects; this is about corporate policy, actuarial statisticians, and the accepting or denying of paper issuance within quantifiable guidelines. They might have had an email that day that said "Restrict lending", so they look for stuff to can a deal.

There are periods where State Farm is growing too fast, so they will erect barriers to entry so they can control growth; likewise, if policies are slim, they might open the doors to balance accounts. (This is what a regional VP told me once.)

Any real banker or insurance agent worth their slobbering commission hunt is going to write a policy on anything; they could care less. This is about policy.

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