A Loan Modification Should Be More Than a Band-Aid

A Loan Modification Should Be More Than a Band-Aid

A valid question recently posed by James Budrow of Sacramento Inspection LLC in Sacramento, California is why the government or the bank doesn’t require the home to be re-inspected by a certified home inspector as part of the process before a loan modification is finalized? If an inspection is not performed and major deficiencies are not addressed, the loan modification could be nothing more than a band-aid on an issue that will clearly come back on the home owner or the bank down the road.

A Loan Modification Should Be More Than a Band-Aid

Sacramento Inspection LLC has been called out to do inspections on homes recently handed back to the banks that have clearly not been maintained. Some of the situations found at these homes are non-permitted additions, structural foundation problems, leaking roofs or roofs past their life expectancy, heating and air conditioning systems that don’t work properly, defective plumbing issues, unsafe electrical issues, and mold growth inside the home that is so prevalent that the inhabitants were sick 24/7.

Any one of these issues can potentially cost a home owner tens of thousands of dollars unexpectedly and can start a chain reaction, lessening the desire to continue to make the payments on the loan or allowing the home to fall into further disrepair if the problem is not corrected. If the occupants walk away from the home and allow it to go into foreclosure and back to the bank without making the necessary repairs, the home will either sit vacant on the market indefinitely or be sold via auction at a drastically reduced price, further weakening the already fragile real estate market. If these homes had been inspected prior to the loan modification being finalized, the investment the government, the bank, and the homeowner has in that property could be protected further by adding enough money to the loan to make necessary repairs to the home to bring it to acceptable standards.

James Budrow feels that the homes need to be inspected by a certified home inspector, a “cost-to-cure” analysis compiled, and that the bank and home owner should be required to agree as part of the loan modification that all major defects be repaired before the loan modification paperwork is finalized.  A program like this would be a move in the right direction that could benefit more than the initial parties. It would stimulate the economy by putting more contractors back to work to make those repairs, help the government update homes to be more energy efficient, and keep the homes in good repair to maintain their value over time.  James Budrow believes that this may be the only way to insure that more home owners can be compelled to make their monthly payments for the life of the loan modification.

A Loan Modification Should Be More Than a Band-Aid