Pest Inspection Guidelines For Mortgage Loan Programs

Reblogger Paul McFadden
Industry Observer with Paratex

This is great information from my friend George. It hits close to home as I am in the pest business. Thanks George!

Original content by George Souto NMLS #65149

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.

 

******************************************************************************

 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

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Mortgage / Finance

Spam prevention
Show All Comments
Ambassador
3,210,386
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Good reblog.   In Maryland,, if WBI are found, our contract requires the seller to treat and correct up to 2% of the contract price.

.

Dec 20, 2015 10:55 PM #1
Ambassador
4,033,338
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Paul thank you for re-blogging my blog, and feeling it is worth sharing with your readers.

Dec 21, 2015 11:22 AM #2
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

George: Sure. No one likes a pest of any nature!

Margaret: Interesting. I work primarily with commercial accounts but we do a lot of inspections as well.

Dec 22, 2015 08:15 AM #3
Rainmaker
220,930
LuxurySoCalRealty Compass San Diego
Compass - La Jolla, CA
San Diego Partner - The Private Client Network

Hi Paul McFadden the worst I saw was 2,500 square foot home and $75,000 in damage with powder post beetles everywhere.  Didn't even know what those were.  Do not think owners had concerned with pest maintenance in 40 years.

Dec 31, 2015 10:44 AM #4
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

That's pretty bad. Bedbugs can really leave their mark too! Thanks for weighing in!

Jan 01, 2016 12:31 AM #5
Rainmaker
3,406,720
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Paul our friend George Souto  has a lot of wisdom and he is very generous in sharing with all. Interestingly the California Association of Realtors removed the Pest Control Addendum from the Purchase Agreement. Now it is strictly an "outside of Escrow" item....what are your thoughts? Endre

Jan 02, 2016 08:46 AM #6
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Endre: I don't know to be honest. We do mostly commercial pest control here. Perhaps California has a lot of pests (I know termites are a problem there) and it was hard getting deals closed and past inspection.

Jan 05, 2016 08:03 AM #7
Rainmaker
2,335,734
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Paul. George Souto did such a great job with this post, a really important topic.

Great choice for a re-blog.

Jan 07, 2016 06:42 PM #8
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Thanks Joe. I agree!

 

Jan 13, 2016 10:31 PM #9
Rainmaker
2,204,445
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good Morning Paul - It is certainly important for a buyer to get one even if the appraiser does not see the need.  Better safe.

Feb 09, 2016 11:47 PM #10
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Grant. Yes, in some cases a pest inspection may be worthwhile.

Feb 10, 2016 01:15 AM #11
Rainmaker
4,390,378
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Paul, great re-blog, and luckily in Colorado we do not have this problem, and do not require pest inspections.

Feb 19, 2016 10:22 PM #12
Ambassador
690,848
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Joan. That's good to hear!

Feb 22, 2016 02:30 AM #13
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
690,848

Paul McFadden

Pest Control, Seattle, WA.
Ask me a question
*
*
*
*

Additional Information