Updated Colorado Inspection Resolution Changes

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Mortgage and Lending with Home Loans by Sean Young - FirstCal Mortgage NMLS: 191647

Inspection Resolution - Sean Young 

 

Updated changes (effective 2/1/13)

 

Colorado Contract / Inspection Resolution 

 

The Inspection Objection Resolution can result in three different outcomes:

 

 ·         Buyer presents form to Seller with a list of repair requirements that they want done and seller can agree to some or all, which then leads to the completion of the Inspection Resolution form and the Inspection Resolution form becomes part of the contract and is presented to the lender and appraiser.

 

·          Buyer presents form to Seller and Seller does not agree to ANY repairs, then the Buyer has the option of cancelling the contract or executing #2 on the form by signing and dating expressing their wish to proceed with contract, there will not be any Inspection Resolution form adding to the contract, and we don’t believe that the Lender needs to get a copy of this signed form for their records.

 

·         The Buyer doesn’t have any repair request so the Inspection Objection form is never exercised, whereas both forms, Inspection Objection and the Inspection Resolution will not exist. 

 

If the Inspection Resolution is executed, does it need to go to the appraiser?:

 

·         Yes, at initial appraisal order along with a copy of the contract.

 

If the appraiser has the Inspection Resolution form, must (s)he condition for repair/final inspection based on the completion of all of the items. 

 

·      No – however the appraiser may have their own interpretation of the contract and their            responsibilities.  Also, the appraiser may still require additional items at their discretion. This has always been the case though.

 

Inspection Objection, should it be provided to us as the lender or to the appraiser?:

 

 ·         No, the Inspection Objection is not a part of the contract.  Please do not include as part of the contract – if we do receive it, we will specifically remove it from the contract and loan documents.

 

 

 

       Escrow Holdbacks should not increase as a function of the new forms and language.  The fundamentals      of the contract really haven’t changed. Although if needed we do offer an escrow holdback program.

 

       As expected this has changed a bit within it's first month. Happy to know it's not as bad as originally thought. However DORA is finally addressing the topic this week and I'm sure it will shed some light. 

 


 

 

 

Colorado Contract / Inspection Resolution (effective 1/1/13)

One of the most discussed topics from Realtors this year is on the new inspection resolution and how will lenders view it.

The Inspection Resolution form is now a part of the contract unless it is waived on the Inspection Objection form.  Either the Resolution or the waiver on the Inspection Objection form must be received prior to ordering the appraisal for any contract written 1/1/13 or later.

The Resolution or waiver on the Objection form must be received prior to ordering the appraisal – no exceptions.  The Resolution is now a part of the contract and we only have a fully executed contract once we are in receipt of the form.

Below are some questions and answers I have been asked in the last week.

* Is the Inspection Resolution ALWAYS required?:

NO – It is required unless the borrower withdraws the Inspection Objection by executing Item #2 on the Inspection Objection form.


* Does the Inspection Resolution need to go to the appraiser?:

YES – Unless the borrower withdraws the Inspection Objection by executing Item #2 on the Inspection Objection form.

 

* When does the Inspection Resolution form need to be provided to the appraiser?:

At the initial appraisal order, NO exceptions.

 

* If the appraiser has the Inspection Resolution form, must (s)he condition for repair/final inspection based on the completion of all of the items listed?:

NO – however the appraiser may have their own interpretation of the contract and their responsibilities.  Also, the appraiser may still require additional items at their discretion.

 

* Allowable Scenarios:

* Borrower withdraws Inspection Objection by executing Item #2 on the Inspection Objection form, copy received, can proceed with appraisal order.

 

* Borrower withdraws Inspection Objection by executing Item #2 on the Inspection Objection form; copy received along with Amend/Extend stating seller agrees to contribute a monetary amount towards borrower’s closing costs/prepaid.  Can proceed with appraisal order.  The A/E may not read “in lieu of repair of inspection items” or verbiage to that affect.

 

* Fully executed Inspection Resolution form is received, can proceed with appraisal order.

 

 Notes:

The appraisal management company does not review contracts.  It is up to the Loan Officer to ensure the above procedures are followed PRIOR to ordering an appraisal.

Escrow Holdbacks should not increase as a function of the new forms and language.  The fundamentals of the contract really haven’t changed. Nova does have its own in-house escrow holdback program if needed.

 This is of course how Nova views this and it may change depending on the lender. Unfortunately, the full ramifications of the changes are somewhat undetermined.  We will have to address specifics as we go and also see how the secondary markets react to the contract changes.

Nova does have its very own proprietary Escrow Holdback Program to accommodate repair items that cannot be completed prior to closing. Limited to “subject to” repair items listed on the appraisal report – additional items cannot be added. This can be used in conjunction with Conventional, FHA or VA loan programs.

This is a great program since most don’t have an escrow holdback option and when 203K is not the right fit.

Hope this helped shed some light on this topic. If you would like this information to be presented at your office or if I can answer any questions, please contact me at sean.young@novahomeloans.com.

 

Posted by

Sean Young
Mortgage Loan Officer

Cell: 303.521.7169

www.mylendersean.com

FacebookLinkedInTwitterGoogle +ZillowTrulia

NMLS: 191647  / LMB: 100013240

MyLenderSean.comFirstCal Colorado Mortgage

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