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Updated almost 8 years ago,
HUD--Inspection revealed major issues undisclosed in PUD
(Sorry for typo--PCR, not PUD.)
I am completely inexperienced in purchasing HUD homes, never even bid on one before now. The questions below concern a HUD-owned manufactured home in the Austin, TX area.
What inspections are required to be done by HUD on Homestore properties, and what reports must be made available to buyers before and after contract acceptance? The home was listed as FHA loan eligible with no repair escrow. I am an OO but bought it in the open bid period when an earlier contract fell through. Before I bid I reviewed the PCR, which indicated no issues whatsoever. I am 800 miles away so couldn't visit it in person. This past Friday I came down to see the house and have a professional inspection done. The PCR missed obvious major issues like a roof in need of extensive repair. After acceptance I got a report of termite inspection and treatment, but there is no evidence of termites where they said they treated them, nor is there a sticker indicating that treatment was performed, but there are active termites in another location. There is also extensive drywall damage (including some visible mold in one small area) due to roof leaks, some which my inspector feels are active leaks, and a septic water level warning light.
I was told by the management company that an OO doesn't have an inspection period (not true) and that HUD will never do any repairs (per their handbook they can repair major--roof, electrical, plumbing, structural, septic--issues at their discretion if previously undisclosed but uncovered by OO's professional inspector and reported to HUD within 15 days, don't know about in practice). I sent them an e-mail yesterday (Saturday) including the appropriate excerpts from the handbook as well as the management company's own literature, and asking for roof repair or a price reduction due to the inaccurate inspection report and termite report and presence of mold. Also because I would be unable to get an FHA loan as allowed in the contract. I am waiting to hear back. If past experience in this deal is any indication, they will tell me to take our current deal or leave it, but that they will neither do any repairs nor reduce the price. Maybe they will give me my escrow back.
- Are there any other reports that I can get? Appraisal? (We were told that HUD no longer does appraisals.)
- Don't they check on the property twice a month? Can I get a copy of those condition reports?
- Do I have any recourse whatsoever if they say they won't do anything?
- Are they allowed/are they likely to re-list it with all these issues still undisclosed?
- If they do disclose them and reduce the price significantly and I am outbid, do I have any recourse to get reimbursed all the money I spent getting utilities turned on, house inspected, etc. when it was grossly misrepresented?
- If it is re-listed as uninsurable or FHA 203(b), can I still get a conventional loan?
- If I stay under contract as it is currently, there is no way I can get an FHA loan without repair escrow, but I don't want all those added FHA fees. Can I get a conventional loan even with the issues? Will their appraiser look at the roof?
Our original plan was to sell our current house and buy this one plus an investment property or two, but I am not sure we will be able to do it if a big chunk of our funds earmarked for investment properties have to go into repairing this home. (HVAC and water heater are end of life, plus needs interior/exterior paint, flooring, and other significant but not major issues). We do not have the money to pay cash for this home.
Thanks very much in advance for reading my post and for any advice you may be able to give.