If you default on your mortgage payments, your servicer may order monthly property inspections to ensure that its interest in the property is protected. This kind of inspection is different than the home inspection that was completed when you purchased the property.
Keep reading to learn the difference between a home inspection connected with the purchase of a property and property inspections that are completed in connection with a foreclosure.
A home inspection is often performed in connection with the purchase of a property. This type of inspection normally includes a review of the condition of the:
Many home inspectors also offer additional services such as testing for mold, radon, and water quality, as well as perform energy audits.
Following the home inspection, the inspector prepares and delivers a written report of findings to the prospective purchaser who then uses the report to make a decision about whether or not to purchase the property. The cost of a home inspection is ordinarily several hundred dollars.
A property inspection, on the other hand, is generally performed in connection with a foreclosure. (To learn about foreclosures in your state, check our Key Aspects of State Foreclosure Law: 50-State Chart.)
Most mortgage and deed of trust contracts generally provide the lender with the right to take necessary steps to protect its interest in the property if you default on your loan. So, if you're late on your payments or you violate the terms of the agreement in some other way, your loan contract most likely allows the loan servicer to hire someone to conduct property inspections.
Inspections are generally ordered automatically once the loan goes into default so the lender can find out whether or not the property is occupied and being appropriately maintained. Properties that are in foreclosure, especially if unoccupied, can often suffer damage from things such as:
Performing routine inspections allows the lender and loan servicer to keep tabs on the property.
The property inspection will generally be drive-by in nature. (A home inspection, on the other hand, is much more in-depth than this type of property inspection.) The amount charged for each property inspection is typically minimal, costing around $10 or $15. The charges for the inspections are then added to the total mortgage debt.
While this may not appear to be a significant amount, inspections are usually performed monthly or more often, so the charges can add up quickly. Though some courts have found that repeated inspections are not necessary when the loan servicer is in contact with the homeowner, knows the property is occupied, and has no reason to be concerned about the condition of the property. (To learn about the different types of charges that may be assessed to your account and how they affect the balance of your mortgage debt, see our article What Fees Can the Lender Charge If I’m Late on Mortgage Payments?)
If you're facing a foreclosure and want to learn more about the process, including your rights during the process and whether you have any defenses to the foreclosure, consider talking to an attorney.