HUD Issues Waiver for Property Inspections in Irma-Affected Areas

In response to requests by the Mortgage Bankers Association and its members, HUD yesterday issued a waiver of its policy on timeframes for completing inspection of properties in areas of Florida affected by Hurricane Irma.

“Today, the Federal Housing Administration issued a waiver of its policy on the timeframe for completing the inspection of properties prior to closing or submitting the mortgage for FHA insurance endorsement in the Presidentially-Declared Major Disaster Areas in the state of Florida impacted by Hurricane IRMA,” HUD said. “FHA believes that the situation in Florida has stabilized to the extent that further damage to the properties appears unlikely, despite FEMA not having closed its Incident Period for the IRMA PDMDAs in Florida. However, mortgagees should continue to monitor FEMA’s website to ascertain the latest information on the IRMA PDMDAs in Florida as additional counties may be added to the PDMDA until the Incident Period has closed.”

The waiver (https://portal.hud.gov/hudportal/documents/huddoc?id=DOC094.pdf) enables FHA-approved Mortgagees originating mortgages in presidentially declared major disaster areas in Florida impacted by Irma to go ahead with inspections without waiting for the Federal Emergency Management Agency or other federal agencies to issue a close date for the Irma Incident Period.

MBA President and CEO David Stevens, CMB, noted the waiver, which resulted through MBA’s “ongoing engagement with HUD on the re-inspection of residential properties,” applies only to areas impacted by Irma and that MBA would continue to work with HUD in crafting a permanent change in the policy.

“MBA will continue working with HUD to secure a long-term resolution for this issue so it does not continue to be an impediment to your business,” Stevens said in a Member Letter.

Over the past week MBA, in response to numerous inquiries from its members, asked HUD to align its re-inspection policies with those of the government-sponsored enterprises and other federal agencies. In a letter to HUD Secretary Ben Carson, MBA President and CEO David Stevens, CMB, said aligning HUD re-inspection policies would allow lenders to resume working with FHA homebuyers to expedite the process of re-inspecting properties, make repairs where necessary and help families (both the buyers and the sellers) return to normal.

MBA argued current HUD policy could be interfering with the ability of some families to complete home sales transactions that were in process prior to the hurricanes, but had not closed when the storms hit. MBA said HUD policy for re-inspections of properties securing loans that were in process prior to a declared disaster requires that the inspection be completed after the FEMA “incident period.”

“We have reviewed the policies of both the GSEs and the VA, and it appears that only HUD ties its re-inspection requirement to the end date of the FEMA incident period,” Stevens said. “This is an area where we believe HUD alignment with GSE standards would seem to make common sense.”

MBA recommended FHA alter its policy to state that the re-inspection needs to be dated after the start date of the FEMA incident period. “This policy alignment would allow literally thousands of pending home sales transactions get back on track, allowing loans to close on properties where there is no damage and expediting the repair process where necessary to restore the damage and complete the home sale,” Stevens said.