Atlanta Inspection News! Consumer information: December 2009

Within the next 10 years pre-fabricated modular homes are going to take over the housing industry. Wait, before you start yelling, let me offer at least a brief explanation.

A perfect storm of changes
The whole industry is in a slump, we all know that. But it will rebound, and when it does, there will be more demand for a higher quality product. As energy costs increase and the existing housing stock dwindles, the average potential home buyer will want a house that's well-built, energy-efficient, and affordable. The days of the big-box McMansion are coming to an end.

At the same time, more stringent energy codes will be here before you know it, forcing builders and developers of junk houses to put up or shut down. And the pool of experienced labor will continue to shrink as fast as the concept of a house as a complex of interdependent systems grows.

A glimpse at the future
And it's starting already, albeit in dribs and drabs. (The slowdown hasn't been much help to emerging companies.) People like Michelle Kaufmann/Blu Home, Resolution: 4, Rocio Romero and Bensonwood are just a quick sample of the people that are turning to a modern way of building. Why? It's faster, the quality control is better so the product is better, and it costs less. It's just what struggling builders and homeowners need.

"In the next five years, there will be a huge transition on building sites where cutting and shaping will be rapidly eliminated, being replaced by value-added construction components, products and systems that will have been off-site cut, shaped and/or prefabricated, leaving the building site for assembly and installation only. 

"I think this much is as inevitable as was the transition to off-site cabinets, windows, pre-hung doors and trusses. What is in question is the form that this pre-fabrication will take and what solutions will predominate. Answering that question is one of the biggest opportunities ever to come to the homebuilding industry."

The notion of building a house by hand on-site is, in a lot of ways, a romance whose flame has died. There will always be a place for skilled people to build shelter, but the time will come when most of us won't be able to afford to ignore a better house.

Congress has extended the $8,000 first time homebuyer tax credit through April 30, 2010. A new $6,500 tax credit program has been created for repeat or step up buyers who are purchasing a principal residence if they have been residing in their current residence for five consecutive years out of the past eight.

Home buyers must sign a purchase contract before May 1, 2010. Active military personnel have until June 30, 2010. Homes purchased must be under $800,000.

In order to claim the full tax benefits, the income of single taxpayers must be less than $125,000. For couples the income eligibility maximum is $225,000. Buyers can claim the tax credit on their 2009 or 2010 tax return.The tax credit does not have a repayment requirement, but homebuyers must use the acquired home for at least three years or face a recapture declaration of the credit amount.

The tax credit is a refund situation. Therefore, the homebuyer can claim the credit even if they owe little or no income tax. The home buyer would (potentially) receive a check.

Let us hope that this additional tool will serve to stimulate the housing market and generate more inspection transactions for all during the first part of 2010

Home Inspection Atlanta www.findmeaninspector.com

A modification to mechanical joints (Section 605.17.2) has been made to the 2009 International Plumbing Code (IPC). The code change will ensure that the correct combination of tubing and fittings will be installed together for crosslinked polyethylene plastic (PEX) systems.

A modification to prohibited installations, air admittance valves (Section 917.8) has also been made in the 2009 IPC. The prohibited locations of air admittance valves (AAVs) has been expanded to address sump vents. Installations using an AAV for a sump vent shall be in accordance with the engineered design criteria of Section 105.4.

The code change will ensure that the correct combination tubing and fitting will be installed together for cross linked polyetylene plastic (PEX ) systems.

605.17.2 Mechanical joints shall be installed to manufacture's instructions. Pex tubing shall be marked with appropriate standards for the fittings that the pex manufacturer specifies for use for the tubing.

There are four common systems of pex or PB pipping:
1) Pb with metal insert commpression fitting.
2) PB with a plastic gray Fitting made from acetal resin;
3) PB with manifolds (normally metal,but can be plastic);
4) PB with the manabloc manifold syetem.
The first two systems were installed between January 1, 1978 and
July 31, 1995, you as a purchaser rights Under the national class action lawsuit
was ended January 31,2009.

Congress recently extended and expanded the homebuyer tax credit program that was responsible for generating some new residential purchase activity this past year. This tax credit program, coupled with historically low mortgage rates, and an abundance of homes to choose from, helped push a difficult real estate market forward this past year.

Congress has extended the $8,000 first time homebuyer tax credit through April 30, 2010. A new $6,500 tax credit program has been created for repeat or step up buyers who are purchasing a principal residence if they have been residing in their current residence for five consecutive years out of the past eight.

Home buyers must sign a purchase contract before May 1, 2010. Active military personnel have until June 30, 2010. Homes purchased must be under $800,000.

In order to claim the full tax benefits, the income of single taxpayers must be less than $125,000. For couples the income eligibility maximum is $225,000. Buyers can claim the tax credit on their 2009 or 2010 tax return

The tax credit does not have a repayment requirement, but homebuyers must use the acquired home for at least three years or face a recapture declaration of the credit amount.

The tax credit is a refund situation. Therefore, the homebuyer can claim the credit even if they owe little or no income tax. The home buyer would (potentially) receive a check.

Let us hope that this additional tool will serve to stimulate the housing market and generate more inspection transactions for all during the first part of 2010.

By David Brauner, Editor
 

In a recent Working RE story, Appraiser: I'm No Home Inspector, appraiser Tony Bamert says he is asked to do work that he is not qualified for- namely that of a home inspector. Several home inspectors say they know how Bamert feels.

With 17 years experience, five as the head of his own firm, Bamert is fully familiar with standard procedures, and feels these requests are pushing him beyond that norm. "As an appraiser, my job is to go through the house, take notes and use comparables to come up with a value for that property," he explains. "That's completely different than the role of a home inspector. Now they are asking the appraiser to test some of the mechanical systems and give a statement if they are in working condition."

 Bamert says he's not comfortable with such requests, nor does he have the expertise to make such an evaluation. "On an FHA inspection, our job is not to make a determination on whether something is in good working condition or not." he notes. "When something doesn't look right, we advise to hire a home inspector to take a look."

Home inspector Chris Temple says he's been there but did something about it. "We California home inspectors were faced with a very similar circumstance several years ago. When homeowner's insurance companies started getting hit with mold claims, one of their reactions was to have the home inspector complete a one-page questionnaire about the property. The questionnaire did not fall within our home inspector standards of practice, and in fact was way outside of our scope."

Temple says he and other inspectors put an end to it. "The home inspection community was generally united in rejecting this pass-along liability. Most home inspectors simply refused to do it. I believe the reason we actually got away with not doing it is because of our professional associations (CREIA, ASHI) and a lack of government regulation. The real estate appraisal associations (and insurance providers) need to unite their membership in their opposition."

Inspector Jon Rudolph has experienced similar "cross over," when working for lenders. "I have seen a trend in the last six months or so where my (buying) client's lender and even the mortgage insurance company have asked for my professional opinion on the physical condition of a subject home, stemming from the appraiser's comments," said Rudolph.

"I have no problem doing this as it helps my client in the home purchase process," Rudolph said. "After all, I am in the service business. I obtain permission from my client to respond and discuss the home inspection with the lender or related parties on their behalf.  My statements are qualified, limiting my liability with no guarantee or warranty to the home's condition and they reference the initial inspection report, as the case should be. I understand why these questions are being asked of the inspector.  I also think it's a testament to the value and credibility of the home inspection industry and service today."

Here are some questions Rudolph raises:

* Fee: "Should inspectors charge clients extra for the time and added liability exposure for these services? If so, what is an appropriate fee?"

* Unintended Consequences: "So far the requests appear to have been based on the appraiser's stated observation(s), raising concerns with the underwriter who needs a better understanding of the apparent physical condition and risk- as it may affect the loan's collateral asset," Rudolph said.  "My home inspection observations are more comprehensive; the ‘expert' opinion. Apparently the underwriter knows the appraiser is not a qualified home inspector. Consequently, each case has come with the risk of opening a new can of worms for the buyer in obtaining the loan or obtaining the loan with the initial terms, as my observations may reveal bigger and unknown concerns for the underwriter that were not identified by the appraiser."

* Possible Conflict of Interest: "My client, the buyer/borrower, has a different objective and perspective than the lender/mortgage insurer," Rudolph said. "So, a home inspection for a buyer may inadvertently cause problems with the financing because of the more comprehensive assessment of the home's physical condition and the lender/mortgage insurer are now expanding the physical condition into the lending process.  Under some scenarios, I could see a buyer foregoing a home inspection if it would conflict with the loan.  If that's the case, would the lender ‘require' a home inspection?  What if the buyer doesn't want or approve the disclosure of the home inspection to the lender? What if the buyer, by a chosen option, pays for a home inspection only to have the inspection be the basis for denying the loan or modifying terms that won't work for the buyer? They could incur some considerable out-of-pocket expenses (home inspection and appraisal) for information benefiting the lender and not them."

Lets hear your comments on this issue.Is this good for the buying consumer?

FHA appaisser are handling all hud home inspections. I have aevidence that this is still going on leaving the buyer vunerable. All property, including HUD real estate-owned properties must have the utilities inspected. HUD's M&M contractor shall permit entry to the purchaser(s) during the contract period to activate the utilities for the purposes of conducting a home inspection. If the HUD REO appraisal was completed without the utilities being activated, the mortgage lender or purchaser(s) must complete the systems check while the utilities are activated.

·          When utilities (gas, water, electricity) are not turned on at the time of the appraisal, the appraiser is expected to condition the appraisal report for a certification stating that all utilities have been tested and that they appear to be in good working order.

OR

·          Permission to turn on the utilities must be obtained by the applicant and the real estate agent during the loan process, from the HUD vendor managing the property.  Generally, the vendor will require a request from the applicant, and will advise the real estate agent and applicant as to the procedures to follow. 

OR

·          When utilities have been turned on, an inspection can be ordered through Fulfillment or may be ordered by the real estate agent.  A certification as to the inspection findings is required.

OR

·          The certification, that all utilities have been tested and appear to be in good working order, must be done by a licensed home inspector, an inspector from the local building department, a FHA compliance inspector, a licensed professional in the specific field.

This is coming from an e-mail from VP of a Big Bank Mortgage department. Take a close look at who performed this inspection

Faye,

I did see where appraisal indicated that utilities were not active at time of inspection. But according to the guide:

When utilities (gas, water, electricity) are not turned on at the time of the appraisal, the appraiser is expected to condition the appraisal report for a certification stating that all utilities have been tested and that they appear to be in good working order.

Will the appraiser's comments on page 23 and 24 suffice?  It looks like all electrical and HVAC were tested with a generator and Plumbing was tested by being pressurized.

APPRAISER TO PROVIDE UTILITIES TO BE TURNED ON AND APPRAISER TO INSPECT AND CONFIRM ALL MECHANICALS ARE IN WORKING ORDER.

VP - Mortgage Loan Officer

 I was hired to check the water heating system,Hvac,and water supply. The property was winterized when I arrived. This was two days after the appraiser performed his inspection. He missed the termited damage throughout the house,and who knows what else. I wasn't hired to perfom the complete inspection.It was already done by a appraiser. The goverment isn't making Hud standdin complince. Look at this link from Hud below.

http://www.hud.gov/offices/adm/hudclips/forms/files/92564-cn.pdf

 i

By Michael Antoniak

Appraiser Tony Bamert, Bamert & Associates, Champaign, IL, feels he's been asked to assume some new and unwanted responsibilities on recent appraisal orders and wonders if his are isolated concerns or issues other appraisers are grappling with as well.

"Traditionally, with any conventional appraisal, I'm not asked to touch the mechanical systems in a home in any way," he explains. "But over the last year or so, since the market meltdown, I'm being asked to do things I'm not comfortable with as an appraiser."

Specifically, Bamert is referring to appraisal orders on foreclosed homes with guidelines requesting he "include commentary within the body of your appraisal report which indicates whether the utilities (water, electric, gas) were turned on and operational or turned off at the point of the appraisal inspection." Another's guidelines stipulate, "....Appraisers must state within the appraisal that all utilities including water are on and working..."

With 17 years experience, five as the head of his own firm, Bamert is fully familiar with standard procedures, and feels these requests are pushing him beyond that norm. "As an appraiser, my job is to go through the house, take notes and use comparables to come up with a value for that property," he explains. "That's completely different than the role of a home inspector. Now they are asking the appraiser to test some of the mechanical systems and give a statement if they are in working condition."

Bamert says he's not comfortable with such requests, nor does he have the expertise to make such an evaluation. "On an FHA inspection, our job is not to make a determination on whether something is in good working condition or not." he notes. "When something doesn't look right, we advise to hire a home inspector to take a look."

Bamert's core concern is the potential legal liability he could expose himself to by offering a professional judgment on matters beyond the scope of his experience and qualifications. He also wonders- were a worst case scenario to occur and a homeowner suffer financial loss or personal harm due to misplaced faith in his opinion on the "working condition" of a utility- whether he would be protected by his errors and omissions insurance.

Several contacts at mortgage companies and AMCs, who routinely request such judgment calls from appraisers, dismiss Bamert's worries as much ado about nothing. Speaking off the record, and requesting anonymity, one maintains, "FHA requests have asked appraisers to make sure the utilities are functioning for years. Due to the number of foreclosures and bank-owned properties, other lenders have glommed onto that." He says that nothing in an appraisal request is mandatory and appraisers are encouraged to raise any concerns as soon as an order is received. "If an appraiser feels a request is outside the scope of their knowledge and experience, they should refuse that order or advise when a home inspection is warranted."

Leslie Seller MAI, SRA, 2009 president-elect of the Appraisal Institute, advises appraisers to be aware of the concerns raised by Bamert and take proactive steps to protect themselves. "The bottom line is everyone is more concerned about their collateral these days, and they are just looking to get more out of their appraisals," he says. "Some want to save money, some want another set of eyes to look at the property and a few simply don't understand the difference between an appraiser and a home inspector."

His best advice: use language which limits exposure and potential liability. "To protect themselves, appraisers should state in their report the scope of their work. Include a qualifier which states ‘I am not an engineer, and I am not a home inspector.' Make it clear where you do not have expertise, what you did or did not do," said Seller.

That's a strategy Bamert arrived at on his own. When asked to evaluate the working order of household systems, he'll include statements like, "I turned on the light and the light came on," or that he turned on the faucet and water came out. "Beyond that, I don't know how to determine if a system is working properly," he reiterates. "I'm not trained for it, and it's something I don't like being asked to do."

Taken with permission from Working RE Magazine - Home Inspector's Edition (www.workingre.com). WRE is published by OREP (www.orep.org), specializing in E&O insurance for home inspectors, appraisers and other real estate professionals. OREP is one of TIJ's sponsors.

I am certified inspector who spent 350.00 and 7 days class room instructions on inspection procedure on the the 52580-A FHA Inspection process. After the training a test follows were you have to receivesa 78 or above in order to receive for your certification. Since January 2009 when this program has started the lending institution's are changing as they. They are going against all that was instructed for these procedures.

According to:

The Uniform Codes Act is codified at chapter 2 of title 8 of The Official Code of Georgia Annotated. O.C.G.A. Section 8-2-20(9)(B) identifies the ten "state minimum standard codes". Each of these separate codes typically consist of a base code (e.g. The International Building Code as published by the International Code Council) and a set of Georgia amendments to the base code. Georgia law further dictates that eight of these codes are "mandatory" (are applicable to all construction whether or not they are locally enforced.

1.) International Building Code
2.)One and Two Family Dwelling Code (International Residential Code for One- and Two-Family Dwellings
3.)International Fire Code
4.)International Plumbing Code
5.)International Mechanical Code
6.)Fuel Gas Code
7.)National Electrical Code
8.) Energy Conservation Code

As noted above, the building, one and two family dwelling, fire, plumbing, mechanical, gas, electrical and energy codes are mandatory codes, meaning that under Georgia law, any structure built in Georgia must comply with these codes, whether or not the local government chooses to locally enforce these codes. I certified that the residential structure meets all local code requirements and are in substantial conformity
with all UNIFORM CODES as published and enforced by the offical building code standards.

This is concerning to me on two levels. First the Uniform Code are applied for a reason. In the forms where a stove must be present states that the dwelling doesn't meet the FHA protocols and should be marked as Failed. You have only two ways to inspect. Is there a cook top present and functional {Pass}. If no cook top in dwelling mark failed.

The lending instutuions are breaking the rules once again with each lender after only money and no concern what so ever to the buyers. It makes sub-contractor inspector look foolish and unprofessional changing things letting only the FHA inspectors know these changes and hiding behind many shields of paper work and pass inspections . When third parties who have the same certification and take the job seriously and lookout for their customer, and were taught the same procedures.

I feel like this was wasted time and money to pay 350.00 and all the classes and testing if you are not going buy the procedures.

My personal Opinion