FHA Updates Property Preservation and Protection Inspection Fees

FHA released Mortgagee Letter 2023-20, which updates the allowable amounts that servicers may charge for property inspections.  In certain instances, such as when a borrower becomes delinquent or when the servicer believes the property may be vacant, HUD requires servicers to conduct property inspections to confirm occupancy status, ascertain the property’s condition, and determine whether other property preservation is required.  In some instances these fees may be charged to the borrower, and in others FHA reimburses the servicer for these costs.

Under the mortgagee letter’s new fee schedule for property inspections, FHA will allow $30 for initial occupancy inspections and occupancy follow-up inspections.  Additional units inspected as part of either are allowed at $20 each.  For vacant inspections, FHA now will allow $45 for both first-time vacant property inspections and follow-up vacant property inspections, with $30 allowed for each additional unit inspected.

This change went into effect on November 14, 2023, for all FHA Title II Single Family mortgage programs, including Home Equity Conversion Mortgages.