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The applicant has the option of selecting another lender if they feel these requirements/conditions are excessive.

2.  Poor Condition Properties - If the subject property is in such poor condition that it may be cost prohibitive or impractical to bring it up to FHA’s minimum property requirements, the appraiser should recommend Rejecting the property and:

a.  Complete the appraisal on an “AS IS” basis, clearly marking the report as rejected for Section 203(b) and provide reasons for the rejection;

b.  Provide a list of all major deficiencies and state that the list should not be considered all inclusive.  Additional items may be required before acceptable for FHA Insurance; and

c.  Provide photographs if possible.

D.   Code Enforcement for Existing Properties - As stated in HUD Handbook 4150.2 HUD has neither the authority nor responsibility for enforcing code.  This rests with the local municipalities.

E.   Clearing Conditions on Existing Homes - (HUD Handbook 4000.2 REV-2, Section 2-19.)

1.

All repair items required by the appraiser or underwriter must be inspected and the clearance documented.   The form HUD-92564-VC states “A professionally licensed, bonded, registered engineer, licensed home inspector or appropriately registered/licensed trades person, as applicable, must provide documentation that all deficiencies have been acceptably corrected upon completion of repairs.”  “As applicable” has been determined to mean any individual who the lender deems to be qualified.

Professionals as defined above may use their company’s forms and letterhead to make the certifications.  Appraisers and fee inspectors are to use the Compliance Inspection Report, HUD-92051.  The individual signing Section II must be the person who actually performed the inspection.  Section III or IV, as appropriate, is to be signed by the Direct Endorsement Underwriter.

a.

Mortgagee Certification - When a Mortgagee Certification is used to clear minor conditions the HUD-92051 must be used.  

2.  Mechanical Certifications - See Heating & Electrical section of this manual.

B.

Refinances - (See section on Appraising Refinances.)  All refinances require a complete appraisal with repair conditions. Although HUD does not require completion of the repairs on a streamline refinance, except lead based paint repairs, the lender may require completion of repairs.  A streamline refinance may be insured with or without an appraisal. Handbook 4155.1, Rev.  4 Chpt. 1, and Mortgagee Letter 96-10

PEST CONTROL

To access information quickly, click on one of the following:

A.  Requiring Reports and Treatment

B.  Appraiser’s Observations

C.  Sectioned Reports and Condition Clearance

Copy Printed: REVISION  I

   02/16/0226       Revision Effective:  05-30-00

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