MBA to HUD: Publish notices about challenges with real estate inspection protocols

The Mortgage Bankers Association (MBA) on Tuesday announced its submission of a letter to the U.S. Department of Housing and Urban Development (HUD), which urges the department to avoid reprimanding mortgage servicers for compliance lapses with the new National Standards for the Physical Inspection of Real Estate (NSPIRE) system until it is “fully accessible and usable to each participant.”

The letter is addressed to Ryan LaFollette, acting deputy assistant secretary in the Real Estate Assessment Center (REAC) at HUD. MBA CEO Bob Broeksmit explained that until the new NSPIRE system is fully accessible and usable for all users, servicers should not be held accountable for any compliance lapses tied to the standards.

“Servicers of Federal Housing Administration (FHA) loans are required to conduct inspections in a timely fashion, and any deficiencies are corrected per the Real Estate Assessment Center protocol,” Broeksmit said in the letter. “However, accessibility issues as well as system bugs that still must be worked through in the new NSPIRE system are preventing these activities.”

NSPIRE was implemented by REAC in October 2023, but MBA has received reports from servicers explaining the challenges they’ve encountered when attempting to use it, Broeksmit said.

“[S]ervicers have experienced difficulties logging into the system, scheduling inspections, maintaining inspection schedules and reviewing reports,” he explained. “Problems with the software and incorrect data have left a number of servicers unable to access the system. For those inspections that are completed, many servicers are unable to access the reports, with no ability to follow up on any potential necessary repairs.”

Servicers have expressed concern to MBA about being held accountable for compliance lapses, despite the impediments in accessing NSPIRE, the letter read.

“MBA urges HUD to provide a written assurance to the FHA loan servicing community that they will not be held accountable for NSPIRE requirements until the system is fully operational and accessible to each participant,” the letter stated. “Servicers are doing their best to work with the new system, but NSPIRE problems must be solved to enable servicers to comply with its requirements. We urge you to make this clear though an official notice or memorandum.”

According to a historical rundown of the protocol compiled by The Inspection Group, a provider of inspection services to public housing agencies and affordable housing management companies, REAC was established in the late 1990s and was the first standardized process for the inspection of federally subsidized properties.

Clearer guidelines and training programs emerged in the early 2000s for property inspectors, and the following decade saw additional technology regularly employed by inspectors to accomplish their tasks.

In 2020, NSPIRE was launched by REAC as a pilot program designed to address known challenges in the inspection process. A final rule was published in May 2023 that requires inspectors to use NSPIRE protocols.

Related More:

• Home inspections
• HUD
• Mortgage Bankers Association