www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

 
May 26, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Mortgagee Letter 95-26
 
     TO:  ALL HUD-APPROVED MULTIFAMILY MORTGAGEES
 
     SUBJECT:  Physical Inspections
 
                In February 1992 the Department issued HUD Handbook 4350.4,
        Insured Multifamily Mortgagee Servicing and Field Office Remote
        Monitoring which incorporates Mortgagee Letter 88-22  Annual
        Inspection of Insured Projects.  This Handbook described a number
        of practices and procedures for multifamily mortgagees to follow
        in servicing mortgages insured by HUD.  Some of these principles
        are mandatory, while others are only recommended.  In the case of
        the physical inspections, the regulations at 24 CFR 207.260
        require mortgagees to submit physical inspections to the
        Department.
 
                Many, if not most, mortgagees are doing a good job in their
        mortgage servicing activities.  However, some are not and this is
        a matter of particular concern for the Department.
 
                The quality and the timeliness of the physical inspections
        and physical inspection reports of projects is of utmost
        importance to HUD.  The Department has found that in some cases
        the mortgagee's physical inspection reports show projects to be
        in satisfactory or good condition when in fact the projects are
        found to be badly deteriorated when inspected by HUD staff.
 
                Please be advised that HUD is taking action to ensure that
        quality timely physical inspections are submitted and appropriate
        sanctions against those mortgagees who do not comply will be
        imposed.  These sanctions include, but are not limited to, letter
        of reprimand, civil money penalties, probation, suspension, and
        withdrawal of approval.  Sanctions along with penalties can and,
        where warranted, will be imposed against holding and servicing
        mortgagees.
 
                Holding and servicing mortgagees should review HUD Handbook
        4350.4 to ensure that they are adhering to all of its
        requirements.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing
Federal Housing Commissioner