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Profile picture for lauren decker

USDA home loan

My husband and I closed on a USDA approved loan about a month ago. Since then we have discovered that per the USDA requirements on their website they do not allow many of the issues that we have. The inspection noted NO GFIC anywhere in the house, knob and tube wiring still in use, pipe leaks and corrosion, 3 prong outlets with no ground, sinking floor in the bathroom by toilet, 30 year old furnace past its life and with some cracks, 30 year old water heater past its life and with some cracks, no smoke detectors, improper grading, windows that are cracked and sealed shut, leaking faucet in the tub, no shut off valve under the sinks, no power fan in the bathroom. All of these were marked as recommend replacement. We also have lead paint and asbestos. From what we have read all of these needed to be addressed before the USDA would sign off on the loan and yet they were not. Do we have a big issue here with our loan, or have things changed and now they just allow people to move into homes that need $30k worth of work right away just to make the home safe??
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February 25 - US
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Profile picture for wetdawgs
"It is also their policy that they not put people in a home that will need a significant amount of work within 5 years."    You knew from the inspection that there were a number of issues, yet you chose to move forward.  Did you not identify mandatory repairs after the inspection?     It sounds like you were expecting a degree of due diligence from others (the underwriter/lender)  that you should have been doing yourself.     I'm still puzzled.   What did your agent say?

" NO GFIC in the entire house which is not only illegal, but could easily kill us with one wrong move. "  People lived with no GFIC in their homes for decades and survived using basic sense about water and electricity.   You can also go to your local electrical supply place (hardware store or whatever) and get some GFI outlets and replace them.  Cost to you?   less than $30 each.

It sounds like you bought a fixer upper and knew it was a fixer upper, but wanted the lender to solve the problems for you at not cost to you.  I'm so sorry you got yourself in this situation.
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February 26
Profile picture for lauren decker
We did have an inspection and it was submitted to underwriting and everyone else involved. The inspection noted all of the deficiencies. The appraisal mentions none of it, its like he didn't even go into the house. He states that he inquired about hazardous materials, including asbestos, which was in plain sight and should not have been missed. The reason we were trying to buy this home is because it was all we could afford, and that is the purpose of the USDA home loans is to help those who otherwise can't afford anything else. It is also their policy that they not put people in a home that will need a significant amount of work within 5 years. This home was was bad that we now find out our insurance won't cover it because of the electrical work, which should have been an issue for the USDA. According to their website this stuff should not have passed underwriting and been sent back saying these repairs need to be maid prior to the sale, either by us or the seller. This was not the case. Especially with the fact that there is NO GFIC in the entire house which is not only illegal, but could easily kill us with one wrong move. 
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February 26
The one possible legal issue could be your smokes & c0 detectors (In my state its a law this is done and if no disclosure was made prior to closing this is to be YOUR responsibility you may have cause to go to the Realtor, Closing attorney and make complaint for reimbursement on this).

As far as your other items as others have said the appraiser would have had to note them (which could have effected you being able to obtain this incredibly advantageous loan). also worth mentioning is EVEN if these items were "called out" as necessary for you to obtain the loan (it does NOT mean the seller would be required to do them!) The seller would have simply said in most cases "NO" and moved on to a better buyer who did not have to need an FHA, USDA or Gov. backed loan.

Hope this helps explain things a little better...
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February 26
Profile picture for wetdawgs
An appraiser is not an house inspector.    Did the appraiser for your loan note these issues?   Appraisers tend to look at the big picture for a home, and are not looking at furnaces, pipes, checking grounding, grading  etc.   Those are all the responsibility of the inspector the buyer hires before the appraisal.

If you had an inspection before purchase, I'm a bit puzzled at your current situation.    If you didn't have an inspection, I'm a bit puzzled how your agent could let you move forward without an inspection.   Would you care to share more?

  

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February 26
Yes, the appraiser would have needed to flag the items in order for USDA to know of the issue. Bigger question-why would you buy a home with so many issues and not mention these items to your loan officer? The LO could have specified appraiser feedback on your concerns. USDA will allow required repair costs to be rolled into the loan amount.
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February 26
look at your appraisal did appraiser call out these items? That is the only way a lender/USDA would know of any defects.
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February 26
 
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