Seller further warrants that there is no material or other known defects or facts regarding Property, which would adversely affect the value of Property.NO JUDGMENTS: Seller warrants that there are no judgments threatening the equity in Property, and that there is no bankruptcy pending or contemplated by any titleholder.

It is a defect in your property that led to the expense.

@Bob Malecki  If the defect is bad enough, you'll need to file a superior court action to reform the previous deeds. 

@Marco Grier Quicken does still have some skin in this game....they originated it for fha, fha can make them buy it back if it is defective (not a first lien, which right now it is not).

Either you have a bad appraiser that is letting cosmetic defects of a couple units skew his appraisal or it truly is a bad deal at this price.

Home inspectors only find the most obvious of defects and only surface issues, and that's if you're extremely lucky.

I bought a HUD home to flip awhile back that was foreclosed on a deceased person.  My closing from HUD went fine and I was issued a policy.  I am now in the process of selling and the new Title Companies underwriters ...

As to your comments, you don't understand real estate basics, the why things are done the way they are.......or you may know and don't care to follow the rules of the game.The example you gave with termites is horsefeathers, in no state is a buyer required to follow through with latent defects, unless the contract is cash and sold "as is".

The house was a short sale so it didn’t have any major issues or defects, in fact, it was in such a presentable condition (except for the paint scheme which was otherworldly to say the least) that we could just turn around and sell it without lifting a finger.

If the foundation is exposed, or if you’ve got permission to go into the crawl space, you can look for significant cracks or defects in the foundation.