FHA INFO 2026-08: Reminders Regarding Initial Occupancy Inspection Requirements and Communication Methods for Mortgages in Default

April 17, 2026 - The Federal Housing Administration (FHA) is reminding lenders of its requirements regarding initial occupancy verification and borrower contact methods for mortgages in default.

Under Section III.A.2.g.ix.(B) of the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1), mortgagees must determine the occupancy status of a property by the 45th day of delinquency. Mortgagees can make this determination through contact with the borrower. When a borrower in default cannot be reached by the 45th day of delinquency, the mortgagee must obtain an initial occupancy inspection. The initial occupancy inspection must be completed no later than the 60th day of delinquency.

When contacting a borrower, Handbook 4000.1 Section III.A.2.g.iii. Communication Methods states that the mortgagee must use the method or methods of communication most likely to receive a response from each borrower and consider the borrower’s expressed preference for using certain methods of communication. Mortgagees may use mail, certified mail, in person, any acceptable method of electronic communication, or telephone contact attempts to establish contact with the borrower.

Mortgagees may attempt to contact an unresponsive borrower at the property as part of an occupancy inspection, as this would be considered an in-person attempt. This can include leaving a notice at the property.

Mortgagees may include costs associated with occupancy inspections, when a mortgagee files a claim including Part C or D of HUD Form 27011 and the actions are performed in accordance with the Department of Housing and Urban Development (HUD) policy. Appendix 7.0 of Handbook 4000.1 lists the maximum allowances that HUD will reimburse for property inspections, which may be included in a claim:

Mortgagees are encouraged to review Sections III.A.2.g.ix.(B); III.A.2.r.iii(B); IV.A.2.a.ii(D)(2); IV.A.2.b.i(B)(1); IV.A.2.b.ii(B)(1); IIV.A.2.d.ii(B); and IV.A.2.e.ii(A)(2) of Handbook 4000.1 for the full policy.

If you have questions, contact the FHA Resource Center (referenced below).