When is a 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, together with the estimated cost to cure. If the Appraiser cannot determine that a Property meets HUD’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS), the Mortgagee may obtain an inspection from a qualified Entity to make the determination.

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.

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 ReportPart B, is countersigned by the underwriter, and completed, signed and dated by an approved inspector.

A local government inspection with the Underwriter Certification may be accepted.

For additional information see:

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03987