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## II. Origination Through Post-Closing/Endorsement
### D. Appraiser and Property Requirements for Title If Forward and Reverse Mortgages
#### 3. Acceptable Reporting Forms and Protocols (04/10/2025)
##### 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.
**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.
**Handbook 4000.1 820**
Last Revised: 01/10/2025