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The Multifamily Housing Division of USDA’s Rural Housing Service (RHS) has launched a new process for conducting physical inspections that are a part of its Tri-Annual Supervisory Visit. The inspection process will be conducted according to the inspection standard found at 7 CFR 3560.103 and will use the Mortgage Banker’s (MBA) Standard Inspection Form (Version 3.03).

The new inspection process was piloted by RHS from October 2022 through August 2023. More than 1,000 inspections were undertaken via the Multifamily Physical Inspection Pilot Program (MPIPP). In September 2023, RHS awarded a 4-year contract to Tribal 1 Technology, LLC and it’s subcontractor, BISCO, Inc. For FY 2024, Tribal 1 and BISCO will conduct approximately 3,000 physical inspections on RHS’s behalf. Properties will be provided with a 28-day notice of the inspection.

Not Just a Physical Inspection

The Tri-Annual Site visits for USDA/RD properties that are part of this program will also include a tenant file review and compliance review. However, that portion will be conducted by USDA Rural Development Multifamily field staff either virtually or in person. Only the physical inspections will be outsourced to BISCO as of this time.

What is the Mortgage Banker’s Association Inspection?

The MBA Inspection is a commonly used inspection format in conventional housing by lenders and has been used by Fannie Mae and Freddie Mac for many years. These inspections focus on both the physical condition of the property, including deferred maintenance, and capital needs, as well as the comparable neighborhood and rental market conditions. Unlike inspections conducted by HUD and other agencies, there is no pass or fail to this inspection, it is a data collection inspection and follow-up on the inspection appears to be at the discretion of USDA/RD Multifamily field staff.

Joe Miksch is the Public Relations and Marketing Manager for US Housing Consultants.