When is a HUD Compliance Inspection required?
When examination of a Property reveals noncompliance with the Property Acceptability Criteria, the Appraiser must note all repairs necessary to make the Property comply with HUD’s Property Acceptability Criteria. This note comes with the estimated cost to cure. If the Appraiser cannot determine that a Property meets HUD’s MPR or MPS, the Mortgagee may obtain a FHA Compliance Inspection from a Beryl Project Engineering to make that determination. Beryl uses the FHA required HUD-92051 Form along with a catalog of photos produced after their inspection to meet the FHA Compliance Inspection requirements.
Minimum Property Requirements (MPR) refer to general requirements that all homes insured by FHA be safe, sound, and secure. Minimum Property Standards (MPS) refer to regulatory requirements relating to the safety, soundness and security of the house and grounds.
The Mortgagee, through their loan officer or real estate agent should evaluate the appraisal and any supporting documentation to determine if the Property complies with HUD’s Property Acceptability Criteria. Existing and New Construction Properties must comply with Application of MPR and MPS to qualify for a loan.
When the appraisal report or inspection from a qualified Entity indicates that repairs are required to make the Property meet HUD’s MPR or MPS, the Mortgagee must comply with Handbook 4000.1, II.D.3.o. Repair Requirements. If repairs for Existing Construction cannot be completed prior to closing, the Mortgagee may establish an escrow account in accordance with Repair Completion Escrow Requirements. This escrow can fall into the categories of the 203k streamline, 203k full, or 203b loan.
The Mortgagee must confirm that:
– the Property complies with the eligibility criteria in Handbook 4000.1, II.A.3.a. Property Acceptability Criteria;
– form HUD-92300, Mortgagee’s Assurance of Completion, is completed and signed, if applicable; and
– form HUD-92051, Compliance Inspection Report, or Fannie Mae Form 1004D/Freddie Mac Form 442, Appraisal Update and/or Completion Report, Part B, is countersigned by the underwriter, and completed, signed and dated by an approved inspector. Local government inspection with the Underwriter Certification may be accepted.
For additional information see Handbook 4000.1 II.D.3.o; II.A.3.a; II.A.7.b.xv; II.A.7.c. at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh
Click here for more information about the items inspected as during a FHA Compliance Inspection.