The infamous "Termite Letter", more formally known as the WDO / Wood Destroying Organisms Inspection Report. Is it still required by the Lender? What about FHA? What about VA? Who pays for the Inspection? What are the Guidelines? Loan Originator and Mortgage Expert George Souto answers your questions about Inspection Guidelines in the following Blog:
A question I regularly get from Realtors, and asked again yesterday is What Are The Pest Inspection Guidelines For Mortgage Loan Programs? Because of the number of times I am asked this question, I felt it would be good to post a blog about this topic from time to time.
Conventional Loans are the most lenient on this issue. If the Appraiser indicates evidence of wood-boring insects, dampness, or settlement, the Appraiser must comment on the effect it may have on the marketability and value of the property. The Lender must also provide satisfactory evidence that the condition was corrected, or provide an inspection report by a licensed Pest Inspector stating the condition does not pose any threat of structural damage which requires correction.
For FHA and VA Loans the rules have changed over the years. At one time both FHA and VA Loans had to have a Pest Inspection with every loan. However, FHA no longer requires a Pest Inspection with every loan, and only requires one if the Appraiser indicates:
- There are signs of possible active infestation
- The property is ground level
- The property has wood touching the ground.
At that point a Pest Inspection needs to be ordered, and it can be paid by anyone, as well as the treatment if treatment is required.
VA on the other hand still requires a Pest Inspection with every loan, whether the Appraiser identifies possible active infestation or not. VA also has a different requirement for payment of the Pest Inspection than FHA. VA Requires the Seller to pay for the Pest Inspection, BUT if treatment is required anyone can pay for it.
These are the Pest Inspection Guidelines for FHA, VA, and Conventional, and they do not change from state to state, however, Lending Guidelines may change from state to state, or even town to town, depending on Lender and Investors overlays which may be area or state specific.
For example if a particular area of the country is known to have a consistent issue with a particular wood-boring pest, Lenders in that area may automatically require a Pest Inspection Report be provided with every loan, even though the Loan Program does not automatically require one. For this reason it is always wise to check with a Loan Originator in your area to see if there are additional requirements in your area to the Program Guidelines.
Hope this quick and simple explanation helps to clarify What Are The Pest Inspection Guidelines For Mortgage Loan Programs? If a more detailed explanation is needed I am always available by cell phone and e-mail to provide a more in depth answer.
Info about the author:
George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum,# Haddam,# East Haddam,# Chester,# Deep River, and# Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org
Disclaimer: Nothing in this blog article is to be construed as legal advice, tax advice, or financial advice. For legal advice see an attorney. For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.
Frederick Griffin, Licensed Real Estate Broker Tallahassee, Florida