October 11, 2016
A reader asks, “If a person purchased a home with an FHA loan, and later found out that there were serious mold issues with the home that had been covered up with sheets of drywall and structural issues with a foundation which is collapsing and joists sagging due to not building to code.would there be any recourse for the owner of a home that now cant afford to do the necessary repairs to fix?”
These are serious issues, and unfortunately there is no one set answer-much depends on the circumstances involved. There are several questions which can affect the answer including whether or not the borrower paid for a home inspection in addition to the FHA appraisal.
The FHA official site warns borrowers in no uncertain terms that the FHA appraisal is not a stamp of approval on a home, nor a guarantee that a property is defect-free. The optional, but critical home inspection is a far more complete review of the property and is designed to help a borrower make a truly informed decision about purchasing a specific home.
That said, the reader’s question implies a degree of dishonesty at best, and possible real estate fraud at worst. What can be done in cases where there was a deliberate attempt to cover up issues or problems with a home for sale?
The first thing a borrower should do in such cases is to report the problem to the State District Attorney and/or a state Bureau of Real Estate where applicable. It’s also a good idea to try discussing the problem with the FHA directly by calling them at 1-800 CALL FHA. If fraud was involved and affected the appraisal process, it’s possible that the FHA may need to look into the situation to insure the appraisal process itself is not compromised somehow.
Unfortunately there may be nothing the FHA can do in terms of recourse except to advise a borrower to seek legal counsel with expertise in real estate law as it pertains to the problem at hand. And that’s our advice too. We aren’t lawyers and cannot give out legal advice except to say “get a lawyer”.
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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