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My husband and I just bought a 1932 home using a USDA Home Loan. Once we got in here we noticed some problems and we are wondering if this house should have passed and been approved for a USDA Loan. We have 1932 knob and tube electrical that is outdated. We do not have grounded electrical in the bathrooms or kitchens, no ceiling vent in the bathroom to vent out the moisture. Our furnace is about 32 years old and the inspection noted a small crack and possible hazards in it. Water heater is 30 year old and also marked with possible problems. We have some leaks from pipes and corrosion. The roof is listed as needing replaced, but its in our contract that the seller pays for that so that IS being repaired. We had carpet that was not put down right, 30+ years old and not tight. Also very dirty and some possible mold that ended up on the wood floors under it. There is more I could list, but these are the major ones that seem to be on the USDA's list of requirements and we are wondering if this should not have been approved?
You signed documents that acknowledge that USDA did not guarantee the functionality of the home. USDA reviewed YOUR income documents, the Title work, and the appraisal.
The appraiser is not a home inspector. The appraiser makes a visual inspection and levies a valuation relative to similar home sales in the area.
Did you get a Home Inspection? Because, to be honest, this is on you, not USDA, not the Lender and not the appraiser.
Point - the appraisal is not a home inspection and a home inspection is not an appraisal.
The objective of the appraiser is estimating of market value of the home, reporting in the best interest of the loan.
A home inspector has an objective to report on the physical structure and systems of a home. Hired by a buyer the home inspector works in the best interest of the homebuyer.
No punn intended - now that the house is yours, this will be your new money pit.
Years ago as a loan officer remember one loan from hell - at first the borrowers said they were buying a "fix-me-upper". I didn't think in would turn into the odeal it ended up to be.
When the appraisal came back - pictures showed window plains (total windows) missing, holes in the walls and floor, pictures also showed the furnace and pipes leaking, and the pro-plain tank in the backyard had "major" rust on the fittings. All the time time wasted on trying to save the loan, it died due to the "Major" cost to cure.
Some appraisers can do a shoty job, when not taking into the account the condition of a home. Where some appraisers can go way over board. Again their job is to get the value based on simular homes in the neighborhood. The $400+ the home buyer has to pay for a home inspection before purchasing a home, can be money well spent. Unfortunately your situation can be an example for others to learn from.
Last edited by Modification Specialist; 02-24-2014 at 11:42 AM..
So, what exactly did the appraiser report as deficiencies during his/her site visit? Since USDA using the FHA inspection standards, what was reported?
I would love to read that appraisal report -- as was stated above, appraisers are not home inspectors but we do check for functionality of basic mechanical systems. I cannot imagine what a 1930s electrical panel from a knob & tube electrical system would even look like.
And lastly....
Why, oh why, was this loan approved on an 80+ year old home when, based upon the comments of the OP, it has almost no remaining economic life (per Marshall & Swift)?
Last edited by TexasDillo; 02-24-2014 at 01:01 PM..
Reason: Typo in last paragraph
My husband and I just bought a 1932 home using a USDA Home Loan. Once we got in here we noticed some problems and we are wondering if this house should have passed and been approved for a USDA Loan. We have 1932 knob and tube electrical that is outdated. We do not have grounded electrical in the bathrooms or kitchens, no ceiling vent in the bathroom to vent out the moisture. Our furnace is about 32 years old and the inspection noted a small crack and possible hazards in it. Water heater is 30 year old and also marked with possible problems. We have some leaks from pipes and corrosion. The roof is listed as needing replaced, but its in our contract that the seller pays for that so that IS being repaired. We had carpet that was not put down right, 30+ years old and not tight. Also very dirty and some possible mold that ended up on the wood floors under it. There is more I could list, but these are the major ones that seem to be on the USDA's list of requirements and we are wondering if this should not have been approved?
So you bought without seeing. Likely if it had included repair of that the appraisal would have been higher as well as the cost. probably would have been better to at least employed your own inspector. or at leaqst took a trip before final signing. You bought a fixer upper as they are called and common in 1932 homes. today.They approved the loan amount; not the home.
You should have gone into the idea of buying a house this old with the assumption that "a lot of things will need to be replaced/repaired" unless stated otherwise.
We're trying to buy a house built in 1910 right now (USDA loan as well) and one reason we liked this one more than many others we considered was the fact that the seller already updated quite a few things. (He installed brand new heat pumps, and it looks like all of the electrical in the home was gutted out and redone recently, probably as a requirement to even handle the power draw the heat pumps added to the system.)
The USDA loan claims it's only for use on a home in "move in" condition, not "fixer upper" ... but they're pretty lenient on that, from what I can tell. If you're missing the whole stair-rail for front porch steps, anyone driving by can see that in seconds, and they might demand it be fixed as a safety issue. But things like a really old water heater or furnace? Those items need occasional replacement anyway. (Hard water deposits alone, cause almost everyone where I live now to have to buy a new water heater every 5-6 years or so.)
I believe they'll take issue with a roof that actually leaks. But one that's just near "end of life" with old shingles starting to come loose or break off is your problem (again, as kind of a maintenance item they expect all homeowners eventually have to do).
Quote:
Originally Posted by Lorelai0422
My husband and I just bought a 1932 home using a USDA Home Loan. Once we got in here we noticed some problems and we are wondering if this house should have passed and been approved for a USDA Loan. We have 1932 knob and tube electrical that is outdated. We do not have grounded electrical in the bathrooms or kitchens, no ceiling vent in the bathroom to vent out the moisture. Our furnace is about 32 years old and the inspection noted a small crack and possible hazards in it. Water heater is 30 year old and also marked with possible problems. We have some leaks from pipes and corrosion. The roof is listed as needing replaced, but its in our contract that the seller pays for that so that IS being repaired. We had carpet that was not put down right, 30+ years old and not tight. Also very dirty and some possible mold that ended up on the wood floors under it. There is more I could list, but these are the major ones that seem to be on the USDA's list of requirements and we are wondering if this should not have been approved?
USDA will review the appraisal - which means, if it's not noted in the appraisal, via verbiage or photograph, it may well slip by.
Now if there were an Inspection, and subsequent Repair Addendum(s) that reference repairs as noted in the Inspection, a lender's underwriter would have asked for the entire Inspection report. At that point, for better or worse (depending on how you look at it), the can of worms is opened and the whole inspection is up for review.
Ok, I'm kind of in the same snag as the original post. How can the USDA program require buyers and sellers to jump through hoops trying to find a home that meets the standards, but not be required to abide by those standards? I recently moved into a home that looked beautiful, but over time keep finding very serious issues that were cosmetically hidden in a way that looked "nicely remodeled" to a layman's (meaning our) eyes. For example, the new tile in the bathroom started peeling and just today I ripped it up to find 2 more layers of old tile followed by 2 layers of used barn siding (coincidentally the same color as our house) used as floor boards. I pulled a section of that up to find stacks of 4x4s held up by irregular stacks of cinder blocks, mingled with some random railroad ties and boards not actually attached to anything! Now I'm no expert, but if this program is supposed to help people I shouldn't have to be. The rest of you may technically be right about who's responsibility the " inspection" is, I really don't know. But if this circumstance isn't illegal, it's definitely immoral, unethical, and deplorable.
Ok, I'm kind of in the same snag as the original post. How can the USDA program require buyers and sellers to jump through hoops trying to find a home that meets the standards, but not be required to abide by those standards? I recently moved into a home that looked beautiful, but over time keep finding very serious issues that were cosmetically hidden in a way that looked "nicely remodeled" to a layman's (meaning our) eyes. For example, the new tile in the bathroom started peeling and just today I ripped it up to find 2 more layers of old tile followed by 2 layers of used barn siding (coincidentally the same color as our house) used as floor boards. I pulled a section of that up to find stacks of 4x4s held up by irregular stacks of cinder blocks, mingled with some random railroad ties and boards not actually attached to anything! Now I'm no expert, but if this program is supposed to help people I shouldn't have to be. The rest of you may technically be right about who's responsibility the " inspection" is, I really don't know. But if this circumstance isn't illegal, it's definitely immoral, unethical, and deplorable.
Did you read the thread? Like the parts about appraisers not being inspectors? Did you get an inspection done before signing?
My point was that I shouldn't have had to. They put so many restrictions on what houses qualify that a normal person (again I'm not a real estate other mortgage professional) wouldn't think they need to spend even more money, asside from all the hidden closing costs, to hire an outside inspector for a home that supposed meets the "USDA standards". I mean, am I the only one who has a problem with the idea that I should have to protect myself from being scammed by an official government agency who's mission is supposedly to help people?
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