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This week, Congressman Howard “Buck” McKeon (R-CA 25) and Congressman Scott Peters (D- CA 52) introduced H.R. 1997, the Communities Achieving Sustainability Act (CASA). CASA Authorizes the Housing Urban Development (HUD) to make 203k loans to small investors for a 2-year period. This legislation will help revitalize communities (especially those hurt most by the recent foreclosure crisis), increase property values and create economic growth in the housing market.

I, personally think it’s time to bring the investor back. What is the likelihood the bill will pass into law?

According to Govtrack.us, more than 10,000 bills will be considered by each Congress. About 4% will become law. Congressmen and senators, their staff, and lobbyists all know what bills are important because they have the institutional knowledge of what makes a bill important. Only 11% of House bills made it past committee and only 3% were enacted in 2011–2013. [methodology]

This Bill’s Scorecard?

• 6% chance of getting past committee.
• 1% chance of being enacted.

Here’s the bill’s language as introduced. On 5/15/2013 it was referred to the House Committee on Financial Services.

 A BILL

To allow investor participation in the loan rehabilitation program authorized under section 203(k) of the National Housing Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Communities Achieving Sustainability Act’.

SEC. 2. INVESTOR PARTICIPATION IN FHA REHABILITATION PROGRAM.

(a) Investor Participation-

(1) IN GENERAL- The Secretary shall, upon application by a mortgagee and approval of such application by the Secretary, insure and make commitments to insure rehabilitation loans (including advances made during rehabilitation) which are eligible for insurance under section 203(k) of the National Housing Act (12 U.S.C. 1709) made by financial institutions in order to assist in the rehabilitation of 1- to 4-family structures used primarily for residential purposes.

(2) ELIGIBLE MORTGAGORS- Notwithstanding any other provision of law or regulation, such rehabilitation loans insured pursuant to this Act shall involve a mortgagor who is an investor.

(b) Terms and Conditions- Such commitments to insure and such insurance shall be made upon such terms and conditions which the Secretary may prescribe pursuant to this Act and which are consistent with the provisions of subsections (b), (c), (e), (i), (j), and (k) of section 203 of the National Housing Act (12 U.S.C. 1709 (b), (c), (e), (i), (j), and (k)), except as modified by the provisions of this Act.

(c) Maximum Loan Commitment- To be eligible for insurance under this Act, a mortgage shall not exceed 90 percent of the appraised value of the 1- to 4-family structure subject to such mortgage.

(d) Calendar Year Limitation- The Secretary may insure, or enter into a commitment to insure, up to four 1- to 4-family structures for an investor described in subsection (a)(2) during a calendar year.

(e) Mortgage Premium- The single premium payment required under section 203(k)(2)(A) of the National Housing Act (12 U.S.C. 1709(k)(2)(A)) shall be increased by 10 basis points for any mortgage insured pursuant to this Act.

(f) Definitions- In this Act:

(1) INVESTOR-

(A) IN GENERAL- The term `investor’ means a person who–

(i) obtains a rehabilitation loan for a structure described in subsection (a)(1) for the purpose of appreciation or production of income with respect to such structure; and

(ii) does not intend on occupying such structure.

(B) PERSON DEFINED- As used in this subparagraph, the term `person’ has the meaning given such term in section 551(2) of title 5, United States Code.

(2) MORTGAGEE; MORTGAGOR; MORTGAGE- The terms `mortgagee’, `mortgagor’, and `mortgage’ have the same meanings as given such terms in section 201 of the National Housing Act (12 U.S.C. 1707).

SEC. 3. SUNSET PROVISION.

The provisions of this Act shall terminate on the date that is 2 years following the date of the enactment of this Act and the Secretary shall not approve any application described in section 2(a)(1) submitted after the conclusion of such 2-year period.

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If you’re not very careful with how you handle your mobile device internet connections, your account numbers, loan and case numbers, real estate pass key codes and other sensitive data are at risk of being hacked and your information is at risk of being compromised.

Here’s what I do to assure you that when you hire me to help you and your client, your data is in secure hands.

• I use a secure web based email program, G-Mail, that uses an httpS connection. Once connected to their network, you can rest assure that Google’s email system keeps on using that httpS connection throughout my email session. Some services will use https for only your login, which is insufficient as your email conversations. Later in session they may “fall out” of https, reverting to unsecure http without warning. Facebook falls into this category. Facebook has a “require https” option, but apparently can fall out of https, particularly when various Facebook apps are used.
• If you use a desktop email program such as Outlook, Outlook Express, Windows Mail, Windows Live Mail, Thunderbird or others, (I don’t use them) make certain that it’s configured to use SSL/secure connections for sending and downloading email. It takes a few minutes to set this up, but worth the security.
• Open WiFi? Danger – Danger – Make sure that the “Firewall” is enabled on your system “before” connecting to an open WiFi hotspot. Various network-based threats could be present on an un-trusted connection, and it’s the firewall’s job to protect you. One of the safest options (the one I ALWAYS use) is the dedicated device called a MiFi.  It acts as my own personal “hotspot” and connects to my broadband network and includes a WPA/WPA2 password. 

I use a secure connection (httpS), I have a safe, password protected, Firewall set-up and when I’m mobile (Each and Every Day!) I connect to you through my own personal HotSpot that includes a WPA secured password connected to my broadband network.

SafeHome Inspections treats your data with the same care and concern as we do your home evaluation, assuring you that you’re data stays Safe, Sound and Secure.

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Streamlining Inspection and Warranty Requirements for Federal Housing Administration (FHA) Single-Family Mortgage Insurance: Removal of the FHA Inspector Roster and of the Ten-Year Protection Plan Requirements for High Loan-to-Value Ratio Mortgages

In February of this year HUD proposed this rule change:

If passed, HUD proposes to eliminate its national Inspector Roster (Roster). The Roster is a list of inspectors, approved by HUD, to perform inspections in the limited circumstances when either:

• (1) A local jurisdiction did not already perform its own inspections for new construction, and issue building permits and certificates of occupancy; or
• (2) when the inspection of a repair or renovation was not performed by a licensed professional as specified by regulation.

High LTV mortgages would now be governed solely by the inspection requirements proposed in this rule because the proposed inspection requirements would apply to all new construction, regardless of LTV ratio.

What will the lender’s new requirements be?

For all new construction as well as structural repairs and/or renovations of existing properties, to the extent that an inspection is required to determine if construction quality of a one-to four unit property is acceptable as security for an FHA-insured loan, the following requirements apply:

•  In areas where local jurisdictions provide building code enforcement and the requisite documentation, the lender shall provide a copy of:
  • The building permit, or its equivalent, and a copy of the certificate of occupancy, or its equivalent; or
  • A satisfactory inspection notice for work completed, or its equivalent.
    • The documentation provided shall be considered satisfactory evidence of completion of the work.
• In jurisdictions that do not provide building code enforcement and requisite documentation, three inspections are required for new construction. For existing construction, only one inspection and certification of work completed for repairs and renovations is required. For both new and existing construction, the lender shall, in order to ensure compliance with FHA requirements:
  • Select a Residential Combination Inspector – RCI – (or its successor designation) certified by the International Code Council (or its successor organization) who is licensed or certified as a home inspector in accordance with the applicable State and local requirements governing the licensing or certification of those jurisdictions that license or certify such inspectors in the respective jurisdiction. The lender shall provide a certification from such inspector that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code. 
  • In the absence of such Residential Combination Inspector, the lender shall obtain an inspection performed by a third party, who is a registered architect, a professional engineer, or a tradesman or contractor, and who has met the licensing and bonding requirements of the State in which the property is located. The lender shall provide a certification from such inspector that the inspector is licensed and bonded under applicable State law, and that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.

The learn more about becoming a Residential Combination Inspector – RCI visit this link: http://www.iccsafe.org/Accreditation/Documents/ComboCertificate.pdf

The learn more about this proposed rule change visit this link: https://federalregister.gov/a/2013-02668

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The most obvious time to change your roofing material is when it begins to leak…but, that’s not always true. I use this 4 stage method when performing a roof inspection.

Remember that the roof’s life span can be shortened by a number of factors, which includes poor attic ventilation, hail damage and poorly manufactured roofing material.

4 Stage Inspections

• Stage 1 :: Surface granules begin to wear away, leaving discolored, blotchy patches that are easy to see on a light-colored roof…check downspout outlets where piles of granules collect. Granule loss exposes the asphalt to direct sunlight making the tab sections brittle and more likely to break off. This is usually a good time to re-roof by simply covering the existing roof with a new layer. NOTE: Take care not to cover the roof with more than 2 layers.
• Stage 2 :: Bare spots increase in number and enlarge in size, and a few of the most exposed tabs may start to curl (you can see this happening on the edge of the tab)…you’ll need to re-roof sooner than later.
• Stage 3 :: The brittle tabs curl more and crack, and you’ll find chunks of shingles on the ground and in gutters…water can leak in through exposed nail heads at this stage. You can still re-roof (just barely) but only after replacing the broken and brittle tabs.
• Stage 4 :: More tabs have broken off and most of the shingles are curled and brittle, repair gives way to replacement. You have to start from scratch, strip the roof to the decking, come in with new felt and shingles.

Average Pricing 

Measure your “under roof area” (the square footage should include all porches and your garage) and multiply by 1.3 (use a slightly higher number for steeper roofs, over 8/12 pitch), and add 10% for waste. Divide that number by 100 for the number of squares. Then multiply that number by 140 to 160 for a tear off and replace. (lower number for a simple nail over). It won’t be exact, but you won’t miss it far. Example: 2500 sq ft x 1.3 = 3250 + 325 = 3575/100 = 35.75 Square of Roofing. Round to 36 square and multiply by your labor and material cost.

Contact me for more construction consulting advise and tips. The above tips are used to inspect standard 20 year, 3 tab asphalt shingles. Care should be taken before climbing on any roof surface. Contact a professional.

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A few weeks ago I shared that “Greening the MLS” can help disclose the addition of energy efficient elements in residential construction and how that might affect the liabilities of the MLS system.

Last week the Appraisal Institute introduced the Residential Green & Energy Efficiency Addendum, Version 2.0. Laura Stukel, an efficiency “insider,” is developing the Real Estate Transaction Standard Green MLS Implementation Guide for the National Association of Realtors and says:

The first version of the tool has been extremely well-received; it has worked magic to simplify how information is presented to or gathered by an appraiser, serving as a means to verify opinions of value for High Performance Homes and helping to identify competency requirements.  Version 2.0 is very consistent with the first release, simply clarifying some field names and some organization tweaks that make it easier to use. Perhaps the biggest change for the appraiser is that it spells out an answer to the question: Who should complete this addendum?

For years appraisers have been offered important data that included recent local sales stats, trends and cost information. So, how does the addendum affect the loan process or the AMC as they assign the appropriate appraiser to a specific property?

First, when a completed copy of the addendum is attached to purchase or refinance paperwork, it can serve as a trigger for competency, indicating the type of experience needed for the job, especially when an AMC is making the assignment.  Likewise, when a completed addendum is attached to the file, it is a consistent method for documenting the opinion of value. While the form itself is not specified in underwriting standards, consistency of its use will mean it’s less likely to trigger any red flags with the file.

Want more info? See the Appraisal Institute’s related resources of find a course, or other training on high performance homes.

Read More… 

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The Deep South Inspector Conference included Hollis Brown sharing the Do’s and Do Better’s of the home inspection business. He says, “you learn in two ways, by repetition and by shock”.

The key is to not be repeatedly shocked!

Hollis Brown came to the home inspection profession in 1997, a 25‐year veteran of the east coast home building and renovation industry. Hollis is a long‐time certified member of the American Society of Home Inspectors (ASHI) and holds the CRI designation from the National Association of Home Inspectors (NAHI). He proudly upholds the Standards of Practice and Codes of Ethics of both organizations.

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Yesterday’s inspection included a home with an open carport. The home’s attic access was located inside the carport in the plywood ceiling. Normally, you’d find a string hanging from the cover of the stairway. For outside locations that might present a bit of a security issue. A quick pad lock will help secure the hatch, unless there was NO string to pull!

Here’s a clever way to help prevent someone from easily opening the attic hatch door without padlocking the door. (I’m not suggesting that you replace your padlocked stairway door, but this certainly is a clever way to prevent quick access.)

The homeowner has installed a small eye-bolt on the face of the door conveniently using the hole left by removing the string. A small hook is screwed into the end of a wood dowel. Simply store the handle in a secure place.

This also works great to help prevent the unsightly string from dangling in your hallway, should you be unfortunate enough to have a folding stairway inside your home. Learn why I feel that a folding stairway should NOT be installed in your home without taking special precautions in this article: ATTIC STAIRS – You Could Have a Mind-Blowing Hole in Your Building Envelope

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As seen in the Clarion Ledger today:

A bill moving quietly through the state Legislature would give the real estate industry sole oversight over home inspectors in Mississippi.

This, home inspectors say, would be the fox guarding the henhouse. Those who are most interested in home sales going through would be regulating and licensing those who are supposed to warn consumers to walk away from a sale if they find major problems.

“Is this in the best interest of the citizens of this state … knowing there is a potential conflict of interest in the marketplace?” asked licensed home inspector Gary Smith.

But supporters of the measure say government regulation of Mississippi’s home-inspection industry is in such a shambles that something must be done promptly, and the move will probably be a temporary fix.

Meanwhile, consumer complaints about home inspections and purchases have stacked up, neglected. The Home Inspector Board, which is supposed to hear such complaints and regulate the industry, hasn’t met since 2010, and its members have quit. This is as demand for thorough home inspections rises. The American Society of Home Inspectors says 90 percent of home sales now involve inspections. People want independent assurance they’re making a good decision when they make what for most is the largest investment of their lives.

‘We have to do something’

Senate Bill 2698, which passed the Senate unanimously and is pending in the House, would abolish the state Home Inspectors Board that was created in 2001, and place licensing and regulation of home inspectors under the state Real Estate Commission.

“We have to do something,” said the bill’s author, Sen. Gary Jackson, R-French Camp, chairman of Senate Business and Financial Institutions. “It may not be the best solution, and I can see the fox-henhouse questions. But something had to be done, and we welcome input from home inspectors to come up with other solutions.”

Pre-purchase home inspections started becoming popular across the country in the 1970s and 1980s but didn’t become common in Mississippi until the mid- to late ’90s.

But the state didn’t regulate the industry — anyone could call themselves a home inspector. Real estate agents and homebuilders complained about shoddy inspections and untrained inspectors, called for regulations.

In 2001, the Mississippi Legislature created regulations and fees for licensing and the Home Inspector Board, with five members — licensed home inspectors — appointed by the governor.

The bill also created some of the most stringent requirements in the nation for home inspectors. Not only must they be licensed home contractors, they also must be “code certified” in at least one field – tougher requirements than those for the people building the homes. This has greatly limited the number of licensed home inspectors in Mississippi. The state has 185 licensed inspectors, with only 163 of those active. Many rural areas don’t have a licensed inspector.

The fee for licensure is $325 every two years, with that money going …

Read More Here

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We have a very messy smelly soup brewing. It relates to certain federal governmental agencies promoting the appraisal industry to perform property evaluations (AKA – Home Inspection).

ASHI, the association of which I am a proud member, and its Board are doing everything possible to resolve this issue sensibly.  However, ASHI will need your help. Since appraisers are not actively opposing these rules, it may fall upon inspectors to make enough noise to be heard.

With nearly 10,000 members, FREA is the largest professional organization for appraisers and home inspectors in the country. FREA provides Appraiser E&O insurance, Home Inspector E&O insurance, education, and other benefits to its members across the nation.

Brian Trotier,  Executive Vice President at FREA, says:

If it were up to me, I’d have appraisers stick to doing valuation work and have inspectors stick to doing property condition assessments, but the truth is the lending community (led by HUD, the FHA, Fannie Mae, and Freddie Mac) are driving the bus on all of this and like the overall market they are over-reacting today due to their failure to act responsibly in 2005-2007. The pendulum always swings past equilibrium once it is put in motion.

The E&O industry was totally unaware of this until I accidentally overheard former ASHI President Marv Goldstein describing the situation to several ASHI members. I wish the insurance carriers were willing to step up and speak up, but so far, like the appraisers, the insurers are sitting silently.

The desire by the lenders to know more about the physical condition of homes is admirable, but looking to appraisers to do the evaluation is risky. Ideally, ASHI’s Board will be able to convince lenders to use inspectors to do this work, but it is an uphill task. Stay tuned for more…

Is the answer a uniform inspection standard across the US? Since the appraiser is performing an inspection can’t I save the money … just not hire a home inspector? Are inspectors and appraisers qualified/prepared to answer the question? 

So…since my appraiser is performing the inspection, when my water doesn’t work after I move in, I’ll just call the appraiser, right? The problem: The appraiser’s E and O insurance doesn’t cover this scenario. 

Listen to this recent “Eye Opening” FREA Webinar ::  How to Navigate Regulatory Changes for Appraisers 

What can inspector’s do? Contact your local association (if you have one) and make your feelings known and contact ASHI.org.

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