FHA Inspection Hell

FHA inspection Hell

When it came time to sell the house in Quinton, NJ so that John could be closer to work, we employed Roger, an acquaintance from work. He set about both listing our house and finding us one. The house he found was in Franklinville, NJ and was recently built and looking for its first owner. In fact, the builder owned seven or eight lots on a new street and this was the first one completed as a spec house. This was a three bedroom, 1 & ½ bathroom raised rancher with an unfinished downstairs listed for $36,000. 

Roger had listed our house for $21,500 and had found us two buyers, one of whom was offering $22,000. This was a couple who were first time buyers and the only problem was that they weren't married and the lenders needed that commitment to use their combined income. We almost accepted the lower offer, but the couple managed to qualify for an FHA loan by showing intent to marry. {I know this seems weird today, but this was 1976}. 

So we made an offer of $34,000 for the house in Franklinville and it was accepted, now we had to coordinate the sale and purchase of two houses. We were having some personal problems at the time and this compounded the process, but actually ended up playing a minor role in the business part of this story. 

Of course, the FHA sent out an inspector to make sure the house qualified for the buyer and within a week, we had a list of about 12 things to correct, all of which were reasonable and all of which were corrected in about a week. The inspector was called for a reinspection to verify that the work was done and he came and did the inspection. About a week later we got a report from the FHA with a new list of 8 more things to do. At this point, John began to wonder if the cycle of inspection-fix, inspection-fix would ever end and refused to do the work. 

Roger set up the two house closings for the same day, but of course they were in different places, the first in the morning was for the sale and the second would be for the purchase of the new place. 

Everything is going well at the sale of the house when the bank's representative mentioned that he didn't  have an inspection report from the FHA for the final inspection. John explained that since he fixed all they asked on first inspection and then they made up a new list, he could see no end in sight and refused to to the work until he could get a final list. Since no final list had been produced, he assumed there wasn't an end to the process. The banker agreed that it didn't seem reasonable to continue to get lists and called the FHA inspector for an explanation. He was told there would be no more lists once the things on second list were completed. 

The banker then said we couldn't complete settlement. I argued about the unfairness since we  had a new home to buy later that day. The banker then indicated he would release the funds, if we would escrow $2000 towards the repairs. John negotiated that to $1400. When asked when the repairs would be done, John told them in a couple of months. This was not acceptable and the new home owner said he would do the repairs on the list and bill us for time and materials. This was agreed to. 

We finished settlement and had no problems on the purchase of the new house. We moved that weekend and felt we had finished with the matter. 

About a month later, we received, by way of the bank, a bill for exactly $1400 for the repairs. The bill was completely non-itemized. Now, unknown to the bank and new home owner, John had fixed 3 things on the list, and the materials to fix 2 others were in the garage. Also the Harris' next door were good friends and had reported that the owner had done the minimum to fix the remaining 3 things. John notified the bank, that he wanted an itemized list of materials and time. Of course we are out the $1400, but it had not affected us, however, the bank was still waiting on the government money for the FHA loan and had their own money covering it, so they were anxious to get this behind them. 

We received the new bill within a couple of days and as suspected, were being charged for work already done and materials already on site. John called the bank rep again and relayed this information and told him we would consider $500 to the buyer as robbery, but would agree to it. 

A couple of days later, a check for $900 arrived in the mail with a form letter stating that the matter was closed as far as the bank was concerned. We also got a letter from the buyer expressing distress over the final settlement, but we knew they would never have taken $500 if they had truly done more. 

Davdan @ 2008-2018