That's correct, Bruce. It's mortgagee letter 88-5. You can find the letter at the link

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The lender, however, can choose who they want to use and as I understand it, it is within their right to decide who they want to use. Again I suggest taking a copy of the mortgagee letter to the head of underwriting for the lender and letting them know that in HUD's view, you are qualified.

And, lastly to clarify, I inspect homes for clients and have a contractual obligation to represent the home's condition accurately. So, if I'm working with a home buyer, for example, I'm representing the buyer, my cleint. I have, however, often been contacted by the lender to inspect predications from an appraiser for the 203B loan and never inspected the home for the buyer. If inspecting the home for the buyer and they are getting an FHA loan, you inspect it for the buyer's benefit, as obilgated, BUT you can also provide the lender copies of components that have been predicated provided the buyer gives you permission to do so. Buyers generally appreciate the "added value" this provides them. The preidicated components that do not meet current HUD requirements, typically code items for that municipality, must be repaired or the loan will not go through. The only time I've seen HUD allow a homeowner to make their own repairs was when they were qualifed, e.g. contractor, electrician, etc. and then the lender required me to go back and inspect their work.

There are two distinct hats required when doing this type of inspection. Home Inspector for the buyer (if you're hired to inspect the home) and another hat that represent's HUD's interests. While it might appear to be different, they are not at odds with one another.

Don Norman