FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Completion of Required Repairs (04/29/2024)

FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Completion of Required Repairs (04/29/2024)

l. Completion of Required Repairs (04/29/2024) i. Definition Completion of Repairs refers to an agreement the Borrower may have entered into at closing to complete required repairs after closing. The provisions of this agreement are contained in the Repair Rider to the Loan Agreement that the Borrower signed at closing. ii. Standard The Mortgagee must adhere to the provisions of the Repair Rider and ensure that the repairs are completed and inspected before funds for repairs are disbursed. When the required repairs are completed, the Mortgagee must: • complete and sign form HUD-92051, Compliance Inspection Report; • during the First 12-Month Disbursement Period, change the payment plan, if available under the Initial Disbursement Limit, and disburse from an existing line of credit. If sufficient funds are not available in the line of credit to cover the cost of repairs, recalculate future payments and provide an unscheduled payment; • after the First 12-Month Disbursement Period, change the payment plan and disburse from an existing line of credit. If sufficient funds are not available in the line of credit to cover the cost of repairs, recalculate future payments and provide an unscheduled payment; • disburse jointly to the Borrower and the contractor(s) funds equal to the cost of the repairs; • add the amount of the disbursements to the outstanding HECM balance when the payment is made; • after disbursing funds to pay for all required repairs, if there are excess funds in the Repair Set-Aside, send the Borrower with an adjustable rate HECM a notice which states the remaining funds are available in the line of credit, which the Borrower is encouraged to maintain to meet unexpected expenses; • reimburse Borrowers for the actual cost of repair materials from the Repair Set- Aside, but must not reimburse for any labor the Borrower performed; • not make additional funds available to the Borrower with a fixed rate HECM, regardless of any funds remaining after the funds are disbursed for repairs, except that a Borrower may be reimbursed for the cost of repair materials (not including labor); and • where the required repairs are not completed by the date specified on the Repair Rider, or any additional time as approved by HUD (not to exceed 12 months from closing), suspend all payments until the repairs are satisfactorily completed. iii. Required Documentation The Mortgagee must retain in the Servicing File, copies of the following: • inspections after the required repairs are completed; • the completed and signed form HUD-92051; • a signed mechanic’s or materialman’s lien release, if applicable; III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 1. Servicing of FHA-Insured HECMs Handbook 4000.1 1461 Last Revised: 11/26/2025 • invoices or sales receipts for any materials that the Borrower ordered and paid and for which the Borrower is reimbursed; and • checks payable to the Borrower and contractors.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Completion of Required Repairs (04/29/2024) · source URL · snapshot 8c03836f77f317e1