Answer
Required repairs outstanding on the appraisal report must be satisfied before the mortgage is submitted for insuring. Satisfaction of repairs may take one of the following forms.
1. Compliance Inspection Report (CIR - Form HUD-92051): A CIR, prepared by an appraiser or inspector, certifies that the repairs have been completed satisfactorily. For inspections that require architectural expertise (structural or system repairs), a FHA fee inspector must complete Form HUD-92051. In addition, a professionally and/or appropriately licensed, bonded, registered engineer, or home inspector or tradesperson (as applicable), can provide documentation to support that the deficiencies have been corrected.
A FHA-approved inspector list is available via FHA Connection located at https://entp.hud.gov/clas/.

2. A Fannie Mae Appraisal Update and/or Completion Report (Form 1004D) may be used for case numbers assigned on or after February 15, 2010, to report completion of repairs and/or satisfaction of conditions for appraisals that meet the criteria set forth in ML 09-51 and which do not require architectural expertise.

3. A Mortgagee Certification (that conditions have been satisfied) is acceptable in cases where repairs are minor and uncomplicated. If a homeowner can complete the work as normal maintenance, FHA considers the work minor.

4. Escrow of Funds: If adverse weather conditions prevent completion, it is not always necessary to complete all new construction items or required repairs (such as landscaping or exterior painting) before submitting the mortgage for insuring. In some cases, funds may be escrowed, and FHA will accept a Mortgagee's Assurance of Completion, Form HUD-92300, at insuring. This process may be used when:
a. The dwelling is habitable, safe, and essentially complete
b. The deferred work cannot be completed prior to closing, but will be completed within six months
c. All appraisal conditions have been satisfied by compliance inspections or escrowed
d. The lender has not been denied the privilege of using a Mortgagee's Assurance of Completion.
The lender is responsible to complete the improvements, regardless of the adequacy of the escrow funds.

ML:09-51
Handbook 4155.2: 4.6.a-e
HOC Reference Guide, Section 1-22