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c. Inspection and Repair Requirements for HECMs Pending Endorsement in
Presidentially-Declared Major Disaster Areas (08/19/2024)
i. Standard
All Properties with HECMs pending endorsement in areas under a PDMDA designated for individual assistance must have an onsite damage inspection report that identifies and quantifies any dwelling damage, which includes interior and exterior photographs. The damage inspection report must be completed by an FHA Roster Appraiser even if the inspection shows no damage to the Property, and the report must be dated after the Incident Period (as defined by FEMA) or 14 Days from the Incident Period start date, whichever is earlier. The Appraiser may, at their discretion, perform a Remote Observation of the Property. If the effective date of the appraisal is on or after the date required above for an inspection, a separate damage inspection report is not necessary.
FHA does not require the Appraiser to ensure utilities are on at the time of this inspection if they have not yet been restored for the area.
Damage inspections may be completed by any FHA Roster Appraiser in good standing with geographic competence in the affected market. If the Mortgagee uses a different Appraiser than the Appraiser that did the original inspection of the Property, the Appraiser performing the damage inspection must be provided with a complete copy of the original appraisal.
All damages must be repaired by licensed contractors or according to local jurisdictional requirements. All damages, regardless of amount, must be repaired and the Property restored to pre-loss condition with appropriate and applicable documentation.
Based on the damage amounts shown in the Pending HECM Endorsement table below, repairs may be:
• completed prior to submitting for endorsement; or
• completed after endorsement provided that a repair escrow is established, and repair costs do not exceed permissible thresholds.
The terms and conditions of establishing a repair escrow are not under FHA’s purview and must be negotiated between the Borrower and Mortgagee.
ii. Required Documentation
Mortgagees must include the initial damage inspection report in the case binder for all Properties. The following table shows additional required documentation for Properties that have closed but have not been endorsed.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages
7. Post-closing and Endorsement
Pending HECM Endorsement If… Then... No damage exists, Submit the HECM for endorsement and provide the initial damage inspection report. Damages are below $5,000 and the Property is habitable,
omplete repairs prior to submitting for
endorsement and provide the initial damage inspection report; or Establish a repair escrow prior to
submitting for endorsement and provide the initial damage inspection report and repair escrow statement.
Damages are $5,000 or above and the Property is habitable,
Do not submit the HECM for endorsement. Repairs must be completed prior to endorsement. Provide the initial and final damage inspection report. The Property is not habitable, Do not submit the HECM for endorsement. Repairs must be completed prior to endorsement. Provide the initial and final damage inspection report.