Bank Insanity #3

When I usually write about bank insanity, it usually involves the short sale lender or the REO owner.  Today I am going to let you know about a buyer's lender who is driving me up the wall.  The buyers are using Navy Federal for their loan.  The only item missing from the file before they would order the loan docs was the termite clearance.  We submitted the clearance yesterday and this morning I received a call that the processor saying it is inadequate, that they require the Section 2 item to be repaired.  What?  Really?  Since when are section 2 items required?

When you have a termite inspection done the report is broken down into 2 sections.  Section 1 is evidence of active infestation and lists the work necessary to provide a clearance.  This work is done in order for the termite company to provide a clearance stating that the property is free of pests.  The second section of the report is the Section 2 items.  These are recommendations or findings of items that could lead to infestation in the future.  Items such as moving dirt away from walls, stucco damage from sprinklers, grading issues.  These are things that a homeowner might want to remedy to prevent damage in the future.  I have never had a transaction where the buyer's lender required section 2 items to be done in order to get the loan.

I have sent numerous emails and left messages for clarification.  All the loan officer would say is that all repairs have to be made.  The section 2 item on this particular report is "Stucco deterioration".  The recommendation is to get it checked out by an "appropriate tradesman".  The report is not even recommending a repair.  All the loan officer will say is that "the processors is requiring it to be fixed".  What repairs?  Do they want the buyer to pay a stucco company $100 to say "Yup, the stucco is chipping"?  If so, this is going to be required for 99% of the sales in California since most homes are stucco and most homes have had a sprinkler hit the wall!  Or are they suggesting that we should re stucco the house?  Good luck with that one since it is owned by Bank of America.

So, here I sit, waiting for a call from either the processor or the supervisor to hopefully get them to listen to reason and understand this is a section 2 item and no repair is being recommended.  If in fact they did change all their requirements and now need section 2 inspections and repairs completed, why did they wait until now to let everyone know?  The buyers (their clients) now risk losing the house, their deposit, the appraisal fee and inspection fee.  All because either a processor does not understand the requirements or Navy Federal has changed theirs.