HUD HOC Reference Guide

1. Termite Infestation Probability Zones (TIP Zones) - After consulting Infestation Potential Maps issued by the Council of American Building Officials, One and Two Family Dwelling Code and Permanent Foundations Guide for Manufactured Housing Appendix H-10, published by HUD, and HUD's general policy on termite control, the Santa Ana HOC has identified three Termite Infestation Probability Zones.

a. Termite Infestation Probability Zone #1 (TIP Zone 1) consists of the States of California and Hawaii.

b. Termite Infestation Probability Zone #2 (TIP Zone 2) consists of the States of Arizona and Nevada

c. Termite Infestation Probability Zone #3 (TIP Zone 3) consists of the States of Alaska, Idaho, Oregon and Washington.

2. New Construction - (Mortgagee Letter (ML) 99-03 and 01-04.) (New Construction is defined as construction that is either proposed construction, under construction and existing less than 1 year old.)

a. TIP Zones 1 and 2 require treatment in accordance with MLs 99-03 and 01-04.

b. TIP Zone 3 will be required at the discretion of the appraiser and underwriter. If there is a possibility of termites at or near the general area of the site then treatment is required.

c. When treatment is required a builder is to provide a one (1) year guarantee against termite infestation.


• Form HUD-NPCA-99-A, Subterranean Termite Protection Builder's Guarantee is to be used.
• Form HUD-NPCA-99-B is used with form NPCA-99a only if the property is treated with a soil termiticide.
• The licensed pest control company is responsible for completing form HUD-NPCA-99-B, as appropriate, and providing it to the builder.
• The builder is responsible for attaching the forms together and distributing the completed forms to the lender.
• Lenders must provide one copy to the buyer at closing and include a copy in the HUD endorsement binder.

a. The TIP Zones can be a valuable source of information about the probability of infestation in homes in the subject's area for an underwriter that is not fully knowledgeable about the subject's property area.

b. The FNMA-1004, FNMA-1004C and the FNMA-1025 appraisal forms ask if there is evidence of infestation in the house and/or other structures within the legal boundaries of the property.

c. Inspection is necessary whenever there is evidence of decay, pest infestation, suspicious damage, when it is customary in the area, required by state law and/or requested by the lender. (Reference ML 05-48, Appendix D, ) - Inspection reports are valid for 90 days. (Please see ML 95-33)

d. When a clear inspection report is required on an existing property seeking FHA mortgage insurance:


1. The National Pest Management Association form NPMA-33, Wood Destroying Insect Inspection Report must be completed. Or if the property is located in a state having a mandated wood infestation form, then the State mandated form must be used. At this time the following States within the Santa Ana Homeownership Center's jurisdiction have their own mandated form for wood destroying insect infestation, and the use of the NPMA-33 is NOT required: Arizona, California, Hawaii and Nevada.
2. all improvements within the property lines must be inspected and be free of active infestation.

e. Streamline Refinance: While HUD does not require a cleared termite report on an FHA streamline refinance, the Underwriter may impose the condition based upon his/her discretion. (See "Appraising Refinances" elsewhere in this Reference Guide.)

4. Condominiums - The first floor units of a condo are subject to the same inspection requirements as other single family homes. The inspection is to include ground floor attached and/or detached garage, shed, and other structure that are a part of the subject.

5. Clearing Sectioned Pest Reports

a. Section I: The Santa Ana Homeownership Center requires Section I recommendations to be satisfied prior to insuring. All infestation must be cleared and the damage corrected.

b. Section II: Action on Section II items should be at the underwriter's discretion. When reviewing these items, keep in mind that HUD's general criteria must be followed and enforced, and that all items must be considered to determine their impact on value. Items such as peeling paint, health and safety, and those leading to structural unsoundness (earth to wood contact, dry rot, excessive moisture, etc.), are general criteria items and should not be waived.

If a condition is waived, the underwriter is to address the item and document the effect of that action. In many cases, this will require contact with the appraiser to determine the impact on the value assigned on the appraisal. The buyer is to be made aware that these conditions are not being cleared.