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Fannie Mae, the Mistress of Deception....

By
Home Inspector with National Property Inspections of Southern New Jersey, LLC

I hope most Americans are aware of the financial troubles of Fannie Mae and the questionable practice of the Federal Government backing Fannie Mae losses with taxpayer dollars.  And I am sure that many Americans are aware that Fannie Mae owns thousands of recently foreclosed homes that have and are being placed on the real estate market for resale.  

Having performed home inspections in southern New Jersey on countless foreclosed homes, I am well educated in the typical condition of these properties.  In short, most foreclosures have serious defects.  

It is not unusual for a foreclosed property to have been vacant for a year or more with no heat or air conditioning, allowing moisture to accumulate in the home in addition to permitting water pipes to freeze and burst.  Due to the above, substantial mold growth is very common in these troubled properties.

The situation that has created the foreclosure is almost always lack of funds.  The lack of funds conduce a state of little or no maintenance for a long period prior to the abandonment or eviction from the home.  In addition, occasionally the prior homeowner is frustrated by the inevitable loss of the home and will sabotage it prior to leaving.  Sabotage often includes disconnecting a drain pipe under a sink and leaving the faucet operating.  I have witnessed other types of sabotage more extreme than water, but I will leave that to the reader's imagination.  

The above circumstances result in Fannie Mae acquiring foreclosed homes in a distressed condition.  That is not Fannie Mae's fault.  What happens next is.  Fannie Mae performs no credible home inspection to determine the condition of the home.  Fannie Mae will provide winterization in the colder parts of the country and will review the home for improvements to enhance marketability.  But most often these improvements are only cosmetic and nothing more than a calculated deception by Fannie Mae to masquerade the home's true condition.

For example, a Fannie Mae foreclosed home that I recently inspected showed new carpet, fresh paint and replacement toilet tank covers (that did not properly fit any of the toilets).  Further, new kitchen appliances were on-site waiting to be installed. To an inexperienced homebuyer the house appeared to be move-in ready. house for sale

Not so fast.  My inspection revealed a major mold problem, a suspected illegal addition, dangerous electrical wiring, a faulty furnace, plumbing problems and a severely rotted deck in addition to numerous other issues.  While this home inspection proved to be very valuable to the purchasers, they were taken by surprise by the number and severity of the issues.  

Unfortunately, not all buyers will insist on a home inspection and a small percentage of ethically-challenged real estate agents will discourage professional home inspections of Fannie Mae properties and similar homes.  They do so by making statements such as "the property is being sold as is" and "an inspection can be used for information purposes only".  While these statements can be accurate, the result often intended is to create an illusion to a homebuyer that paying for a home inspection is a waste of money.

Aside from performing essential repairs to a home's roof, structure or systems, I strongly recommend that Fannie Mae sell the foreclosed property "as acquired" with no cosmetic work performed.  In my opinion, this will help to curtail the dubious practices of Fannie Mae, the mistress of deception.  

Glen Fisher southjerseynpi@aol.com                                                                                                                   

"The South Jersey Home Inspector"

Brenda Busch
Morris Real Estate - Bridgewater, MA

The homes that are auctioned of by HUD online have a basic inspection report attached to them for your viewing but I'm not sure if these reports are filled out by an actual licensed home inspector.  I have never advised any buyer that I have worked with to forego a home inspection even on new construction.  In fact, if a client mentions not doing a home inspection due to the cost or some other reason, I strongly advise against it and tell them that the cost you pay now for the inspection could end up saving you thousands in the long run.  I don't think that a Realtor is working in the best interest of the buyer if they would even consider suggesting not to do a home inspection.  I don't know any Realtors in my area that would even suggest that.

Oct 04, 2010 02:01 AM
Ellen Crawford
Maximum One Executive REALTORS® - Alpharetta, GA
Alpharetta Real Estate Agents & Alpharetta REALTOR

Great post!  This should be a featured post because you are right on the money!  Thanks for posting it!

Oct 04, 2010 02:20 AM
Glen Fisher
National Property Inspections of Southern New Jersey, LLC - Oaklyn, NJ

Brenda:  I have never seen a HUD provided home inspection report.  Maybe the online report is done by an in-house appraiser.  You are professional regarding recommending home inspections for all sales.

Ellen:  Thank you for the kind words.     

Oct 04, 2010 07:48 AM
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

I've got to agree, it would almost seem that cosmetic repairs might be deceptive!

Oct 06, 2010 12:13 AM
Not a real person
San Diego, CA

In reading through the comments as well, I also have never seen a HUD-provided home inspection report.

Oct 20, 2010 07:03 AM