What are the Occupancy Inspection and follow up requirements for delinquent FHA-insured mortgages?

If the Mortgagee is unable to reach the Borrower(s) by the 45th Day of delinquency, the Mortgagee must perform a visual inspection of the mortgaged Property to determine occupancy status.

The Mortgagee must perform the initial Occupancy Inspection no later than the 60th Day of delinquency when:
  • the Mortgage is in Default;
  • a payment has not been received within 45 Days of the due date; and
  • efforts to reach the Borrower or occupant have been unsuccessful.
If the Mortgagee is unable to determine the Borrower’s occupancy status through the initial Occupancy Inspection, the Mortgagee must perform Occupancy Follow-Ups and, if necessary, Occupancy Inspections every 25-35 Days from the last inspection until the occupancy status is determined.

When payments are not submitted as scheduled by a Borrower in bankruptcy, the Mortgagee must contact either the bankruptcy trustee or the Borrower’s bankruptcy attorney for information concerning the status of the Borrower, to determine if an Occupancy Inspection is needed. The Mortgagee must continue to perform exterior-only visual inspections until the Default is cured, the Property is disposed of, or the bankruptcy court has granted approval for the Mortgagee to contact the Borrower or to take any required Property Preservation and Protection (P&P) actions. If the Mortgagee determines that the Property is vacant or abandoned during the period in which the Mortgagee is prohibited from contacting the Borrower, the Mortgagee must note:
  • the date it made its determination in the servicing file; and
  • that contact with the attorney or trustee has been made.
If the Mortgagee determines through an Occupancy Inspection that the Property is vacant or abandoned, the Mortgagee must:
  • send a letter, via certified mail or other method providing delivery confirmation, to Borrowers at the property address informing them of the Mortgagee’s determination that the Property is vacant or abandoned. This letter must include the Mortgagee’s contact information;
  • commence Vacant Property Inspections; and
  • take appropriate Property Preservation and Protection actions to secure and maintain the Property. 
The Mortgagee must retain in the servicing file:
  • the dates and methods of Occupancy Follow-Ups and vacancy letters;
  • evidence of payment to the inspector;
  • copies of all completed inspection reports; and
  • any accompanying follow-up documentation for Occupancy Inspections.
Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (800) CALLFHA (225-5342) or by email to answers@hud.gov.  Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339. 
See policy in Handbook 4000.1 Section III.A.2.h.xi. (B)-(C) at:  https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

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-04104