June 9, 2014
A reader asks, “My fiancé bought an FHA house. The foundation is cracked in several places. We just find the last wall of the basement has been leaking. The owners clearly knew the basement was leaking before the sold it. There are signs of it being covered up. Isn’t he protected from something like this in FHA loan policies?”
A home that is classified as new existing construction may or may not be covered in a builder’s warranty for certain structural issues, depending on the age of the property and the nature of the construction agreement–without knowing whether a warranty is in effect, it’s difficult to say whether a borrower has recourse but one thing is certain. All new purchase FHA loans require an appraisal, but a home that passes the appraisal is not guaranteed to be free from defects.
In fact FHA loan rules say as much and the FHA encourages borrowers to pay for a home inspection rather than hoping that the appraisal process will find any problems or defects with the home–that doesn’t always happen.
The buyer should always pay for a separate home inspection, which is a much closer look at the property.
In cases like these it’s always good to contact the FHA directly at 1-800 CALL FHA to see if there may be some assistance in a given situation, but if the borrower didn’t pay for a home inspection prior to purchasing the home, there may be nothing that can be done unless there’s a legally binding guarantee, warranty or other paperwork that might apply in this particular case.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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