In an ongoing effort to streamline the loan process and reduce unnecessary costs to borrowers, HUD announced a couple of changes.
HUD eliminates the FHA Inspector Roster: Originally created in order to assure FHA inspections were standardized around the country, HUD has reviewed inspection services country wide and determined maintaining a separate FHA Roster of inspectors is unnecessary and an unnecessary roadblock for borrowers. Mortgagee Letter 2019-04 was released on March 12th. Because the International Residential Code (ICC) is used in 49 states, the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands and the International Code Council also certifies Combination Inspectors (CI) and Residential Combination Inspectors (RCI), a roster is no longer necessary.
Local government entities that provide building code enforcement have within their code’s adequate inspections. In cities or towns that do not have a building code, an International Code Council inspector certificate will suffice.
If a local jurisdiction does not have ICC Inspectors, the rule allows an inspection from a third party who is a registered architect, professional engineer, tradesperson or contractor with a minimum of 5 years’ experience and is licensed and bonded. Go to the HUD/FHA website to read the Mortgagee letter.
FHA: Removal of the 10-year protection plan requirement: Also, on March 12th, FHA announced in Mortgagee Letter 2019-05, effective March 14th, 2019, the requirement that borrowers purchase a 10-year protection plan in order to qualify for some mortgages on newly constructed single-family homes has been eliminated.
FHA’s requirement of a one-year builder warranty will continue. That warranty commences on the day title is conveyed to the buyer, the date the construction is completed or upon occupancy, whichever comes first.
You can read the Mortgagee letter on the HUD/FHA website.