Pest Inspection Guidelines For Mortgage Loan Programs

I am asked fairly regularly by Realtors about Pest Inspection Guidelines For Mortgage Loan Programs.  The guidelines for pest inspection have not changed in several years, but Realtors, especially those who have been in the business for a long time still remember the days when pest inspections were required more often than they are today.

Conventional Loans are the most lenient when it comes to pest inspections.  If the Appraiser indicates evidence of wood-boring insects, dampness, or settlement, the Appraiser must comment on the effect it may have on the marketability and value of the property.  The Lender must also provide satisfactory evidence that the condition was corrected, or provide an inspection report by a licensed Pest Inspector stating the condition does not pose any threat of structural damage which requires correction.

For FHA and VA Loans the rules have changed over the years.  At one time both FHA and VA Loans required a Pest Inspection with every loan.  However, FHA no longer requires a Pest Inspection with every loan, and only requires one if the Appraiser indicates:

• There are signs of possible active infestation
• The property is ground level
• The property has wood touching the ground. 

At that point a Pest Inspection needs to be ordered, and it can be paid by anyone, as well as the treatment if treatment is required.

VA on the other hand still requires a Pest Inspection with every loan, whether the Appraiser identifies possible active infestation or not.  VA also has a different requirement for payment of the Pest Inspection than FHA.  VA Requires the Seller or someone other than the Buyer to pay for the Pest Inspection, BUT if treatment is required anyone can pay for it.

These Pest Inspection Guidelines for FHA, VA, and Conventional do not change from state to state, they apply for ALL states, however, Lending Guidelines may change from state to state, or even town to town, depending on Lender and Investor overlays which may be area or state specific.  Lender or Investor requirements can be more strigent than the Loan Program Guidelines, but they can not be more lenient than the Loan Program Guidelines.

For example if a particular area of the country is known to have a consistent issue with a particular wood-boring pest, Lenders in that area may automatically require a Pest Inspection Report be provided with every loan, even though the Loan Program does not automatically require one.  For this reason it is always wise to check with a Loan Originator in your area to see if there are additional requirements in your area to the Loan Program Guidelines.

Hope this quick and simple explanation helps to clarify the Pest Inspection Guidelines For Mortgage Loan Programs.  If a more detailed explanation is needed I am always available by cell phone and e-mail to provide a more in depth answer.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum,# Haddam,# East Haddam,# Chester,# Deep River, and# Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com