A reverse mortgage repair completion inspection is the visit that confirms work listed for a 24 CFR 206.47 set-aside was actually finished, so the servicer can release holdback. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. Remaining repairs at origination cannot exceed 15 percent of maximum claim amount, and the holdback is 150 percent of the estimated cost. The inspection is how that holdback stops being a theory.
Sabine, 72, occupies a house in Tehachapi, California that closed with a roof set-aside. The contractor finished in June. She sent photos. The shop still wanted an inspector. See repair set-aside rider for what was withheld at closing, and repair set-aside release for leftover dollars. Stay here for the inspection itself.
A HECM is FHA-insured. A selfie of a shingle is not an inspection.
When is a completion inspection actually ordered?
After the borrower or contractor says the required work is done. Before the servicer releases the 150 percent holdback. Not instead of the origination appraisal. Not as a substitute for occupancy certification. Different clipboard, different question.
Sabine’s leftover cash besides the holdback still sat in the mid-30s to low-50s percent of appraised value at origination, depending on age and expected rate. The holdback was extra money spoken for. The origination calculator does not inspect a roof. Do not interpolate HUD rows.
24 CFR 206.47 still requires the property to meet HUD’s minimum property standards after repairs, or to have been acceptably completed. I will not invent the inspector’s form number or a HUD day-count for when the visit must occur. Ask the servicer. Overlays differ.
Jay confirmed a LESA cannot be added after closing to pay a contractor who ran long. Repair set-asides and LESAs are different origination boxes. Mixing them is how a tax set-aside gets treated as a roof fund.
What does the inspector need to see, and what fails?
The items on the origination repair list, completed. Permits if the channel required them. No new holes that make the dwelling unsound. A roof that was the listed item, not a kitchen the borrower added because leftover cash felt tempting. Scope creep is how inspections fail.
A second geography: a 65-year-old in Wickenburg, Arizona whose well work was on the list and whose inspector wanted potability results the origination file already demanded. Well-septic overlays are lender-specific. I will not invent a HUD lab panel. Bring what the origination commitment listed.
Initial MIP of 2.00 percent of maximum claim amount was already charged (HUD Mortgagee Letter 2017-12). The 2026 cap is $1,249,125 (HUD Mortgagee Letter 2025-22). Fifteen percent of that cap is the remaining-repair ceiling at origination, not a post-closing renovation budget. Origination fees, capped at $6,000 under 24 CFR 206.31, do not inspect the work.
What happens if the inspection fails or the work never starts?
The holdback stays. The servicer can demand completion. A stalled repair can become a due-and-payable problem under 24 CFR 206.27 if the dwelling is not kept in repair as required. Communication is how extra time that actually exists gets granted. Silence is how a roof file becomes a default file.
An adjustable HECM still accrues at 1-month CMT plus lender margin while the roof sits unfinished. Accrual does not inspect.
Counseling at origination cost $125–$175. The certificate lasted 180 days. California Civil Code 1923.2(k) does not sit on a post-closing inspection. Arizona never had that statute and still inspects set-aside work.
Annual MIP of 0.50 percent of outstanding balance still accrues, including on funds that remain in the set-aside until they are released or applied as the documents provide.
If Sabine’s heirs later keep Tehachapi, they still repay the outstanding balance under 24 CFR 206.125(a)(2)(i). An unfinished roof is their problem if the inspection never passed while she lived.
Can I finish extra remodeling with the holdback if the listed item is already done?
No. The set-aside is for the origination list. A passed inspection on the roof does not convert leftover holdback into a bathroom fund on the same visit. Unused dollars follow the release rules on repair set-aside release. Asking the inspector to “just look at the kitchen too” is how a clean roof report gets muddied.
Sabine still occupies. Mortgagee Letter 2023-23 still wants an occupancy certification. A repair inspector is not that certification. Taxes and insurance still run. The 2026 claim cap of $1,249,125 (HUD Mortgagee Letter 2025-22) still capped remaining repairs at origination at 15 percent of MCA. That ceiling does not grow because the contractor had a good idea.
Post-closing repairs are a servicing clock, not the origination average I quote on a complete refinance — about 30 days after the file is whole.
Who should not treat unused holdback as a kitchen fund before the inspector arrives?
This path does not help a household that wants me to originate around 24 CFR 206.47 because the contractor “will start soon.” I work with multiple lenders. Close on a rider only when the work is real.
It does not help someone who finishes a different project and sends those photos. The list is the list.
Call the servicer when the listed work is done. Let their inspector walk it. Then ask about leftover holdback. Occupancy, taxes, and insurance continue while that clipboard is in the driveway. The inspection is a visit. It is not a renovation loan. Sabine still occupies Tehachapi while the holdback sits, and Mortgagee Letter 2023-23 still wants that yearly occupancy certification.