House Committee Adopts ASHI Legislation for Home Inspection Counseling

Report from Randall Pence, Capitol Hill Advocates, Inc.

(Washington, D.C.)  — The U.S. House of Representatives committee charged with solving the home mortgage/foreclosure/credit crunch crises has added key home inspection counseling provisions to the Predatory Lending Bill, HR1728.

The Financial Services Committee, chaired by Rep. Barney Frank (D-MA) adopted the concept that was crafted by ASHI and championed on Capitol Hill by Rep. Nydia Velazquez (D-NY).

The development is an important advancement for the ASHI membership, and the product of ASHI’s targeted efforts to influence Capitol Hill on the importance of home inspections.

ASHI’s efforts are designed to use the vast resources of the federal government to awaken harried homebuyers to the benefits of home inspections at a critical time in the home buying process.

ASHI hailed the action by the Financial Services Committee to accept the Velazquez Amendment.  

Bill Richardson, ASHI president, said, “These provisions constitute the first comprehensive initiative by the U.S. government to educate prospective homebuyers, early in the home buying process, on the importance of obtaining a voluntary home inspection by a qualified independent home inspector.

“If the new language is implemented as planned, it could spread the good word on home inspection to millions of prospective customers for ASHI members.”
 
The ASHI provisions are an outgrowth of HR2130, the Consumer Protection Home Inspection Counseling Act of 2009, sponsored by Rep Velazquez.  

The home inspection language addresses a serious problem that diverts homebuyers from calling on home inspectors for help: the confusion caused by the sheer complexity in buying a home.    

The General Accounting Office (GAO) conducted a study, sought by ASHI, of homebuyer confusion and its impacts on home inspection. GAO found that, even among people who had just bought a home, most did not know that home inspections are not conducted automatically, or that appraisals are not home inspections, or that HUD recommends that buyers obtain a voluntary home inspection. Many thought that FHA performed inspections automatically or did not realize that they would need to initiate an inspection.

While homebuyers may eventually consider a home inspection, they often do so too late to make any difference.

The bottom line is that many potential customers for ASHI members slip through the cracks for a variety of reasons based on confusion, poor understanding and ineffective, untimely communication. Based on the figures in the GAO study, this means that hundreds of thousands of prospective ASHI customers, perhaps millions, are being missed.  

ASHI’s assertions of massive homebuyer confusion have been vindicated by revelations that homeowners now drowning in mortgage debt were utterly confused about many aspects of their purchases.  This has put the entire home sales industry at great risk.  

In response, the Financial Services Committee added a major chapter on housing counseling in the Predatory Lending Bill. The Velazquez Amendment adds to that counseling chapter.  

The provisions added to the Predatory Lending Bill require the U.S. Department of Housing and Urban Development to take such actions as are necessary to inform potential homebuyers of the availability and important of obtaining an independent home inspection.  

At a minimum, the new legislation requires HUD to: 

• Publish HUD’s advisory “For Your Protection: Get A Home Inspection”; 
  
  
• Create a new booklet for homebuyers advising them to obtain a voluntary home inspection;
  
  
• Publish HUD’s advisory “Ten Important Questions To Ask Your Home Inspector."
  
  
• Ensure the new booklet will address FHA and non-FHA home sales. 
  
  
• All publications shall be published in both English and Spanish to reach the growing market of Hispanic homebuyers. 
  
  
• HUD is charged to make the widest possible distribution of the materials, including electronic distribution on the Internet, and, where appropriate, public service announcements and toll-free hotlines operated by HUD. 
  
  
• The agency is charged to give special emphasis to reaching first-time and low-income homebuyers. 
  

One of the greatest challenges is making sure that prospective homebuyers get the message on home inspection with certainty, and early enough to influence the process, and that the message on home inspection reaches the entire market. Under the new provision:

• All FHA-approved lenders will be required to provide prospective mortgage applicants these materials at first contact, whether for pre-qualification, pre-approval, or initial application, to ensure that prospective homebuyers consider home inspection as early as possible in any transaction.
  
  
• The housing counselors for each counseling agency certified by HUD to provide housing counseling shall be required to provide these home inspection materials to prospective homebuyers as part of the counseling process.
  
  
• All HUD-approved housing counselors will be trained to counsel homebuyers on home inspection, including the importance and availability of home inspection, and information on how to locate and select a qualified home inspector. 
  

ASHI congratulates Rep. Velazquez for her hard work, and Rep. Frank’s Committee for accepting the language. At press time, the Predatory Lending Bill awaits action on the House floor. The bill is expected to receive priority treatment in the current Congress.  

If the bill becomes law as expected, ASHI plans to work closely with HUD to implement the housing counseling provisions, including providing technical assistance in drafting the language for the new booklet and how to maximum the outreach efforts to the public.


 



5/5/2009