Study would concentrate on holes in consumer protection safety net

Inman News Features

A member of the U.S. House of Representatives has formally requested a General Accounting Office study to quantify the costs and benefits of mandatory home inspections in federal home loan programs.

Congressman Douglas Bereuter (R-Neb.), a member of the financial services committee and the subcommittee on housing, issued the request in an August letter to Comptroller General David Walker.

"Some in Congress have become increasingly troubled that FHA programs are devoid of requirements that inform home buyers of the technical details of their purchases. This represents a significant hole in America's consumer protection safety net," said Rob Paterkiewicz, executive director of American Society of Home Inspectors.

Several areas targeted for investigation under Bereuter's request include identifying:

-- The extent to which increased use of independent home inspections could protect the financial interests of consumers, to which the cost of home inspections would influence home buying decisions and how cost issues could be mitigated through FHA financing changes.

• -- The extent to which mandatory home inspections could protect consumers in vulnerable populations.
• -- The extent to which the lack of home inspections place taxpayer-funded loan programs at increased financial risk.
• -- The extent of consumers' knowledge about FHA-financed independent inspections available under HUD's existing Home Buyer Protection Plan, and whether the existing program sufficiently educates consumers about the differences between appraisals and inspections.
• -- The extent to which home buyers' choices for an inspection are affected by economic forces.
• -- The extent to which there is a correlation between foreclosed FHA properties and home inspections conducted prior to closing.

Copyright: Inman News Service