ASHI, AI Applaud HUD Intent While Recommending Revisions

According to Randall G. Pence, Esq., President, Capitol Hill Advocates, Inc. and ASHI lobbyist, “ASHI is THE voice for the home inspection profession in HUD and on the Hill, and increasingly, ASHI is seen as a positive player and a force to be reckoned with in federal housing policy.”

As the voice of the profession, ASHI has taken the position that the federal government should eliminate confusion caused by the key element of the Cuomo Homebuyer Protection/Enhanced Appraisal: the Homebuyer Summary sheet.

The central piece of the 1999 Enhanced Appraisal that causes the confusion between home inspections and appraisals is the Homebuyer Summary Sheet. ASHI continues to seek established stakeholder allies in pursuing its efforts on the Hill and in the agencies. Last month, ASHI and the Appraisal Institute sent a joint letter advocating changes to the HUD VC sheet/Enhanced Appraisal scheme.

Tuesday, July 17, 2002
The Honorable Mel Martinez
Secretary
Department of Housing and Urban Development
451 Seventh Street, S.W. Room 10000
Washington, D.C.  20410

Dear Secretary Martinez:

The Appraisal Institute and the American Society of Home Inspectors, Inc. (ASHI) applaud efforts by the U.S. Department of Housing and Urban Development to help American consumers make informed decisions when buying homes using popular FHA programs.  Both of our associations are pleased to offer recommendations on an ongoing basis to improve and enhance the home buying process in America.  We do so today.

Our organizations share with HUD in its commitment to informing homebuyers of the condition of homes sold in the FHA program.  Unfortunately, the “Homebuyer Summary Sheet” may be doing more harm than good. 

For homebuyers, the perception that the Homebuyer Summary Sheet amounts to a complete appraisal report or a de facto home inspection is problematic.  Based upon that perception, homebuyers might defer from requesting a complete appraisal report, which is their right, or from obtaining bona fide, thorough home inspections by professional home inspectors trained to provide that unique service. 

In fact, the Homebuyer Summary Sheet is neither a complete appraisal report, nor is it a home inspection report.  Its true nature is ambiguous, as is its ultimate functional value to homebuyers.

To eliminate the potential for confusion and unintended consequences, and to help homebuyers be as fully and accurately informed as possible, we recommend that HUD adopt the following four changes:

1) Eliminate the Homebuyer Summary Sheet.

2) Revise HUD documents to clearly define the distinction between appraisals and home inspections in terms of purpose, scope and their respective meanings for homebuyers. 

3) With regard to home inspections, which are an elective option for homebuyers, HUD documents should be revised to suggest a greater sense of importance and should appear more prominently when presented to homebuyers at the time of loan application.       

4) Restore the pre-1999 policy allowing the cost of a home inspection to be included in the mortgage for long-term financing.  This option should be available to homebuyers without affecting loan eligibility under existing loan-to-value ratio requirements.

We believe these modifications would greatly improve the home buying process for all parties involved — especially consumers whose dreams of home ownership are linked to their ability to make knowing decisions based on full and fair information. 
The Appraisal Institute and ASHI would be very pleased to work with HUD to help put these recommendations into practice.

With best wishes,

Thomas A. Motta, MAI, SRA   
President 
Appraisal Institute

Michael W. Casey   
President
American Society of Home Inspectors