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a. Application of Minimum Property Requirements and Minimum Property
Standards by Construction Status (02/16/2021)
i. Existing Construction
(A) Definition
Existing Construction refers to a Property that has been 100 percent complete for over one year or has been completed for less than one year and was previously occupied.
(B) Standard
For Existing Construction, the Appraiser must notify the Mortgagee of the deficiencies when the Property does not comply with HUD’s MPR.
ii. New Construction
(A) Definition
New Construction refers to Proposed Construction, Properties Under Construction, and Properties Existing Less than One Year as defined below:
• Proposed Construction refers to a Property where no concrete or permanent material has been placed. Digging of footing is not considered permanent.
• Under Construction refers to the period from the first placement of permanent material to 100 percent completion with no Certificate of Occupancy (CO) or equivalent.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
3. Acceptable Reporting Forms and Protocols (04/10/2025)
• Existing Less than One Year refers to a Property that is 100 percent complete and has been completed less than one year from the date of the issuance of the CO or equivalent. The Property must have never been occupied.
(B) Standard
For New Construction, the Appraiser must notify the Mortgagee of the deficiencies when the Property does not comply with HUD’s MPR and MPS, including 24 CFR §§ 200.926a–200.926e.
iii. Determination of Defective Conditions
(A) Definition
Defective Conditions refer to defective construction, evidence of continuing settlement, excessive dampness, leakage, decay, termites, environmental hazards or other conditions affecting the health and safety of occupants, collateral security or structural soundness of the dwelling.
(B) Standard
The Appraiser must identify readily observable defective conditions.
Defective Conditions Requiring Repair
The Appraiser must identify defective conditions that are curable and will make the Property comply with HUD’s MPR or MPS when cured, and provide an estimated cost to cure.
iv. Inspection by a Qualified Individual or Entity
If the Appraiser cannot determine that a Property meets HUD’s MPR or MPS, an inspection by a qualified individual or entity may be required.
Conditions that require an inspection by qualified individuals or entities include:
• standing water against the foundation and/or excessively damp basements;
• hazardous materials on the site or within the improvements;
• faulty or defective mechanical systems (electrical, plumbing or heating/cooling);
• evidence of possible structural failure (e.g., settlement or bulging foundation wall, unsupported floor joists, cracked masonry walls or foundation);
• evidence of possible pest infestation;
• leaking or worn-out roofs; or
• any other condition that in the professional judgment of the Appraiser warrants inspection.
Appraisers may not recommend inspections only as a means of limiting liability. The reason or indication of a particular problem must be given when requiring an inspection.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
3. Acceptable Reporting Forms and Protocols (04/10/2025)
Required Analysis and Reporting
The Appraiser must observe, analyze and report defective conditions and must also provide photographic documentation of those conditions in the appraisal report.
If inspection is required, the Appraiser must cite the reason for requiring an inspection.