Tags: Housing | Property Inspection | Overhaul | Foreclosure

Housing Watchdog: Property Inspection Business Needs Major Overhaul

By    |   Wednesday, 26 March 2014 01:37 PM

The preforeclosure property inspection is loaded with poor quality reports, charges a housing industry watchdog.

In fact, the pervasiveness of low quality reports puts the usefulness of property inspections in question, says a report from the inspector general of the Federal Housing Finance Agency.

The underlying problem is the lack of oversight and quality standards, the watchdog asserts, blaming both Fannie Mae and Freddie Mac and mortgage servicers, who administer home loans.

The system should be reformed, it says, recommending that Fannie and Freddie implement standards and quality controls.

Without oversight, inspectors are free to manipulate their reports, according to the watchdog.

In some cases, inspection reports are so poor it's not clear if inspectors even visited the property.

The watchdog cited a long list of shortcomings.

Inspection reports often have inconsistent and inaccurate information, missing or blurry photographs, and fraudulent date and time stamps on photographs.

Some mortgage servicers do not require inspectors to pass criminal background checks.

Servicers don't always evaluate inspectors' performance or check if their reports are complete and accurate. For instance, some reports lack an inspector's signature. Sometimes the photo of the property doesn't match its description. Some inspectors completed unnecessary inspections that provide no useful information.

Fannie Mae and Freddie Mac lack good controls over inspectors and rely too much on servicers.

Banks pay property inspectors, a key part of the mortgage and housing industry, to check homes for safety and maintenance problems that could cost banks foreclosing on the property down the road. Inspectors also see if homes have been abandoned. Some states allow expedited foreclosures on homes that have been abandoned.

"The severity of risk in the property inspection business was recently highlighted by the conviction of a property preservation contractor whose company created and submitted fraudulent property inspection reports to servicers for reimbursement," the watchdog states.

Fannie Mae and Freddie Mac, which recently removed limits on reimbursements to servicers for inspections, could pay for inspections at are poor or worthless, the watchdog warns.

Some inspectors have been accused inspectors off illegally entering homes and stealing homeowners' possessions, according to the Huffington Post.

"I’ve walked into houses that someone else was supposed to take care of that were in horrible shape," Mimi Norris, owner of JR Services in Ohio, which inspects and repairs homes, told the Huffington Post. "I have gone to inspect properties reported as vacant that were still occupied. This happens too often."

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The preforeclosure property inspection is loaded with poor quality reports, charges a housing industry watchdog.
Housing,Property Inspection,Overhaul,Foreclosure
Wednesday, 26 March 2014 01:37 PM
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