Properties being purchased using the HECM for Purchase program must meet FHA’s minimum property requirements. Where major property deficiencies threaten the health and safety of the homeowner and/or jeopardize the soundness and security of the property, all repairs must be completed by the seller prior to closing.
Appraisers must complete the appraisal report as “Subject To” the completion of these repairs.
Major Property Deficiency Examples:
• No running water
• Leaking roof
• No primary heating source
• Inadequate electrical systems (including lighting)
• Inoperable doors and windows (inhibited ingress and egress)
• State or local code violations
For additional information see Mortgagee Letter 2009-11 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
HECM Mortgagee Letters
Handbook 4000.1, Handbook 4235.1