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FHA Final Inspection

Discussion in 'FHA/HUD and VA' started by Chuck from Calif, Dec 8, 2009.

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  1. Chuck from Calif

    Chuck from Calif New Member

    Nov 24, 2008
    Professional Status:
    Certified Residential Appraiser
    Just finished my first new construction FHA appraisal. On my first visit the house was about 90% complete and I appraised it "subject to completion per plans." When it was finished I filled out the CIR and submitted finished photos. Now the lender has sent me the Builder's Certification, a termite report and a Certificate of Occupancy from the county and a Warranty of Completion of Construction and asked me to "fill out the necessary documentation." Any suggestions on what to do? The person who ordered the Necessary Documentation isn't any help, unfortunately. Thanks.
  2. Steve Maxwell

    Steve Maxwell Sophomore Member

    Jan 31, 2002
    Professional Status:
    Certified Residential Appraiser
    My CIRs orders are sent by the lender. I don't go out until the lender(s) request it. Saying that, I thought the Builder's Cert was to be given to you prior to submitting the original report. I also scan as much of that documentation into the report as possible.
  3. CANative

    CANative Elite Member

    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    That's the crappola they have to put in the case file. It must be their first FHA too.
  4. timd354

    timd354 Elite Member
    Gold Supporting Member

    Jan 11, 2008
    Professional Status:
    Certified Residential Appraiser
    Most of the stuff is not for appraiser to deal with and there is no other "necessary documentation" for the appraiser to fill out. The one thing that you should been given upfront was the builder's certification. The builder's cert is required to be delivered to the appraiser before the appraisal is done and the appraiser is supposed to actually look at it as the information contained in the builder's cert.:

    Appraisers must receive a fully executed Form HUD-92541, Builder’s
    Certification of Plans, Specifications, & Site, before performing the appraisal on
    proposed, under construction or less than one year old properties. Appraisers must
    review Item 1 on the form and note in the Appraisal Report any discrepancies
    between the information in Item 1 and the actual conditions observed on site. The
    lender is responsible to address any yes answer in Item 1.

    The builder's certification is also supposed to be signed and dated by the builder within 30 days prior to the date the appraisal was ordered......this lender sounds like they don't know what they are doing...they may end up eating this loan if they don't figure it out what they are supposed to do.

    You should take a look at the HUD/FHA requirements for new construction, many of which can be found here:



    Tell the lender to take a look at the same webpages....if they actually read and learn what is required, it may just keep them from eating a loan that HUD/FHA won't insure because it was'nt originated correctly.
  5. Lloyd Bonafide

    Lloyd Bonafide Senior Member

    Jan 15, 2006
    Professional Status:
    Certified Residential Appraiser
  6. ghrousseau

    ghrousseau Member

    May 5, 2006
    Professional Status:
    Licensed Appraiser

    Send them this link:


    Tell them to carefully read chapter 8 and chapter 12, and then go pound sand.

    Last edited: Dec 9, 2009
  7. Pam Weed

    Pam Weed Sophomore Member

    Mar 14, 2004
    Professional Status:
    Certified Residential Appraiser
    New York
    Final inspections

    Okay, I emailed HUD in regards to final inspections. This encompasses both new construction and repair items:

    FAQ : How many inspections are needed for new construction?

    Solution Details : The number of inspections required for new construction will depend on the process used by the lender to qualify the property for FHA insured financing and the type of property. If the lender uses the process in Mortgagee Letter 2001-27, then the Certificate of Occupancy (or equivalent, such as a building inspection card) issued by the local government agency will be equivalent to a final inspection and that is the only inspection required under this process. (However, condominium units and manufactured housing are not eligible for processing under Mortgagee letter 2001-27.)

    If the lender uses the Early Start process or has the appraisal completed prior to the beginning of construction, then three inspections are required: an initial inspection, a framing inspection and a final inspection.

    If the lender uses a ten year warranty, then just a final inspection is needed. If the property is 100% complete at the time of appraisal the appraisal can serve as the final inspection. If not 100% complete, a final inspection by an inspector on HUD's Roster is required. If the property is under construction at the time of the appraisal and a ten year warranty is not being used, a final inspection by an inspector on the HUD Roster is required. If the property is a new manufactured home only two inspections (not three) are required. The final inspection must be done by a HUD Roster inspector or an engineer--not the appraiser.

    Handbook 4145.1, Section 4-4
    Mortgagee Letter 01-27'

    FAQ : What are my options for satisfying repair requirements on the appraisal?

    Solution Details : Required repairs outstanding on the appraisal report must be satisfied before the mortgage is submitted for endorsement. Satisfaction of required repairs can take one of the following three forms.

    1. Compliance Inspection Report (Form HUD-92051). A Compliance Inspection Report, prepared by an appraiser or inspector, certifies that the repairs have been completed satisfactorily. Generally, since an appraiser places the repair requirements, the same appraiser would be able to determine whether the repair has been made. For inspections that require architectural expertise (structural or basic system repairs), an inspector must complete Form HUD-92051. A FHA fee inspector must complete the report. A FHA-approved inspector list is available via FHA Connection located at https://entp.HUD.gov/clas/. In addition to the appraiser or inspector, a professionally licensed, bonded, registered engineer, licensed home inspector or appropriately registered/licensed trades person, as applicable, can provide the documentation to support that all deficiencies requiring repair noted by the FHA appraiser have been acceptably corrected.

    2. Mortgagee Certification. Mortgagee certification (that the conditions have been satisfied) is acceptable in instances in which the required repair items are minor and uncomplicated. If the homeowner could complete the work himself or herself as normal maintenance, FHA considers the work minor.

    3. Escrow of Funds. If adverse weather conditions prevent completion of the repairs, it is not always necessary to complete all new construction items (for example, landscaping) or required repairs (such as exterior painting) before submitting the mortgage for insurance endorsement. In certain situations, funds may be escrowed, and FHA will accept a Mortgagee's Assurance of Completion, Form HUD-92300, at the time of endorsement. This procedure may be used only when the following conditions apply:
    a. The dwelling is habitable, safe, and essentially complete
    b. The deferred work cannot be acceptably completed prior to loan closing, but will be completed within six months
    c. All other conditions of the appraisal have been satisfied by compliance inspections or by an acceptable Mortgagee's Assurance of Completion, and
    d. The lender has not been denied the privilege of using a Mortgagee's Assurance of Completion due to poor follow-up or non-satisfaction of outstanding escrows.

    The lender assumes the obligation to satisfactorily complete the improvements, regardless of the adequacy of the funds reserved by escrow or letter of credit.

    Handbook 4155.2: 4.6.a-e
    HOC Reference Guide, Section 1-22

    DISCLAIMER: 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.
  8. RSW

    RSW Elite Member

    Feb 18, 2002
    Professional Status:
    Certified Residential Appraiser

    This is what I have always understood.
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