When Your Property Needs Completion Verification
You'll encounter these requirements when your appraisal identifies incomplete work or needed repairs. This happens more often than you might think.
Say you're buying a newly built home where the appraiser noted that landscaping and final paint touch-ups weren't finished. Or you're purchasing an existing home where the appraiser flagged a leaky roof that needs repair before closing. In both cases, Fannie Mae requires proof that the work gets completed.
The rules differ based on whether you're dealing with new construction or repairs to an existing property. Each situation has specific documentation requirements that your lender must collect before funding your loan.
New Construction Completion Requirements
For new or proposed construction, you have two main options to prove completion. Your lender can accept Form 442 (Appraisal Update and/or Completion Report) prepared by an appraiser, or Form 400 (Warranty of Completion) signed by both you and the builder.
The appraiser route gives you more flexibility. The appraiser can complete Form 442 through either an on-site visit or a virtual inspection using technology. Even an unlicensed appraiser trainee can prepare the report if a supervisory appraiser signs it.
Here's a real scenario: You're buying a spec home where the builder finished construction after the original appraisal. Your lender orders Form 442 from the original appraiser, who conducts a virtual inspection using photos and video calls to verify the home matches the plans and specifications.
The builder warranty option requires Form 400 signed by both you and the builder. This form confirms the property was completed according to the original plans and specifications. Your lender represents to Fannie Mae that no material changes occurred after the appraisal.
If the builder won't sign Form 400, your lender must use Form 442 instead. This sometimes happens when builders worry about liability or when there's a dispute about completion quality.
Required Documentation for New Construction
Both completion methods require specific documentation that your lender must keep in your loan file.
For Form 442, you need photographs clearly showing construction completion, the appraiser's signature, and a date before your closing. If the property was incomplete during the original inspection, additional photos may be required per Fannie Mae's photograph standards in [[5604.2(f)]].
For Form 400, you need the same photographic evidence plus signatures from both you and the builder. The form must be dated before closing and kept in your mortgage file. However, Form 400 cannot be used for GreenCHOICE Mortgages, which have stricter environmental requirements.
Existing Property Repair Verification
When buying an existing home that needs repairs, you have three documentation options. Your lender can accept Form 442 from an appraiser, Form 400 signed by you as the borrower, or a PDR Completion Report from a property data collector.
The appraiser option works similarly to new construction. The appraiser documents that required repairs or alterations were completed. They can use on-site visits or virtual inspections, except for CHOICERenovation Mortgages which require physical inspections.
Consider this example: The appraisal identified a damaged deck railing that needed replacement. After you hire a contractor to fix it, the appraiser completes Form 442 with photos showing the new railing installed properly.
The borrower warranty option requires Form 400 plus additional documentation. You must provide either a signed report from the professional who did the work or paid invoices proving completion. This gives the lender multiple layers of verification.
The PDR Completion Report option only works with hybrid appraisals. A property data collector visits the property and completes a standardized report confirming repairs were finished. This option provides cost savings while maintaining verification standards.
Professional Inspection Requirements
Some properties require inspections by licensed professionals or specialists trained in specific areas. This happens when the appraisal or property data report identifies potential structural, mechanical, or safety issues.
Your lender must obtain either an inspection report stating no repairs are needed, or an inspection report plus invoices showing required repairs were completed. The inspector must be qualified for the specific concern - a structural engineer for foundation issues, a licensed plumber for water damage, or a certified pest inspector for termite problems.
The inspection documentation must include the professional's license number when applicable, be dated before closing, and stay in your mortgage file. This creates a clear paper trail showing the property meets Fannie Mae's condition standards.
Why These Rules Exist
Fannie Mae requires completion verification to protect both you and the mortgage investor. Incomplete construction or unrepaired defects can affect property value and safety. The guidelines ensure properties meet minimum condition standards before loan funding.
The multiple verification options provide flexibility while maintaining quality control. Appraisers bring professional expertise, builders have construction knowledge, and property data collectors offer cost-effective inspections for routine items.
The documentation requirements create accountability. Signed forms and photographs provide evidence that work was actually completed, not just promised. This protects against fraud and ensures properties secure the mortgages they back.
Common Problems and Complications
Timing creates the biggest challenge with completion requirements. All documentation must be dated before your closing date, which can create pressure if repairs take longer than expected.
Weather delays often complicate new construction completion. If your builder can't finish exterior work due to winter conditions, you may need to delay closing or explore the incomplete improvements exception in [[5601.3]].
Builder cooperation can become an issue with Form 400. Some builders refuse to sign warranty forms due to liability concerns or disputes about work quality. When this happens, your lender must use the more expensive appraiser option.
Virtual inspection limitations can surprise borrowers. While allowed for most completion verification, virtual inspections cannot be used for CHOICERenovation Mortgages or certain complex repairs that require hands-on evaluation.
Documentation quality matters more than you might expect. Blurry photos or incomplete forms can delay closing while your lender requests better evidence. Professional contractors sometimes provide inadequate invoices that don't clearly describe completed work.
GreenCHOICE and CHOICERenovation Mortgages have additional restrictions that limit your verification options. These specialty loan programs require more stringent completion standards that may eliminate certain documentation methods.
References
For the official guidelines, see 5605.8: Requirements for properties subject to completion or inspection in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
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Original Freddie Mac Guideline Text
Bulletin 2025-7
, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal
®
appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of
Section 5605.9
.
This section contains requirements related to:
Verifying completion for new or proposed construction
Verifying completion for an existing property
Appraisal reports or PDRs requiring an inspection
(a)
Verifying completion for new or proposed construction
For appraisal reports of new or proposed construction (i.e., the construction has not started and the description of construction to be completed is based on plans and specifications and/or similar documentation) that are subject to completion, Freddie Mac will accept one of the following to verify completion of the subject property:
Form 442, Appraisal Update and/or Completion Report
, prepared by an appraiser documenting the property has been completed in accordance with the plans and specifications
Freddie Mac will accept a completion report prepared by an unlicensed appraiser or appraiser trainee (or similar classification) if a supervisory appraiser signs the completion report
The completion report may be based on an on-site visual inspection or by using technology to perform a virtual inspection of the subject property to evidence completion
Form 400, Warranty of Completion of Construction or Repairs/Alterations
, or other substantially similar form, signed by the Borrower and the builder confirming the subject property has been completed in accordance with the plans and specifications
By delivering the signed completion form to Freddie Mac, the Seller represents and warrants the subject property has been completed in accordance with the plans and specifications and there were no material or significant changes to the plans and specifications after completion of the appraisal report
Form 400
signed by both the Borrower and builder, then
Form 442
completed by the appraiser is required
The following table describes the completion verification requirements for appraisal reports subject to completion per plans and specifications:
Verifying completion for appraisal reports subject to completion per plans and specifications
The completion report must:
Include photographs that clearly identify completion of construction.
If the property was incomplete at the time of inspection, additional photographs may be required. (See
Section 5604.2(f)
for photograph requirements.)
Be dated before the Settlement Date, unless the requirements for incomplete improvements (
) or GreenCHOICE Mortgages
®
(
) have been met
The completion form must:
Include photographs that clearly identify completion of construction.
If the property was incomplete at the time of inspection, additional photographs may be required. (See
Section 5604.2(f)
for photograph requirements.)
Be dated before the Settlement Date, unless the requirements for incomplete improvements (
) have been met
Be signed by the Borrower and the builder
(b)
Verifying completion for an existing property
(i)
Appraisal reports subject to repairs or alterations
For appraisal reports of existing properties that are subject to repairs or alterations, Freddie Mac will accept one of the following to verify completion of the subject property:
Form 442
, prepared by an appraiser documenting the repairs or alterations identified in the appraisal report have been completed
Freddie Mac will accept a completion report prepared by an unlicensed appraiser or appraiser trainee (or similar classification) if a supervisory appraiser signs the completion report
Form 442
by performing an on-site visual inspection or by using technology to perform a virtual inspection of the subject property to evidence completion.
Virtual inspections using technology must not be used to verify completion for CHOICERenovation
®
Mortgages.
Form 400
or other substantially similar form, signed by the Borrower confirming the required repairs or alterations identified in the appraisal report have been completed.
By delivering the signed completion form to Freddie Mac, the Seller represents and warrants the repairs or alterations have been completed.
PDR Completion Report, prepared by a property data collector, attesting the repairs or alterations identified in the appraisal report have been completed
The property data collector must complete the PDR Completion Report by performing an on-site visual observation of the subject property to verify completion
The PDR Completion Report may be used only with a hybrid appraisal.
The following table describes the completion verification requirements for appraisal reports subject to repairs or alterations:
Verification of completion for an existing property – appraisal reports
The completion report must:
Include photographs that clearly identify the completion of repairs or alterations
Be dated before the Settlement Date unless requirements for GreenCHOICE Mortgages or CHOICERenovation Mortgages, as described in
Sections 4606.3(a)
and
4607.8
, respectively, have been met
Form 400
or other substantially similar form
The completion form must:
Include photographs that clearly identify the completion of repairs or alterations
Include either:
A signed report from the professional that completed the work, or
Paid invoice(s) for the repairs or alterations
Be retained in the Mortgage file
Not be used for GreenCHOICE Mortgages or CHOICERenovation Mortgages
PDR Completion Report
(May be used only with a hybrid appraisal report)
The completion report must:
Contain the data points and certifications in the PDR Completion Report data set (
)
Include photographs that clearly identify the completion of repairs or alterations
Be dated before the Settlement Date
Be signed/attested by the property data collector
(ii)
ACE+ PDR when the Seller’s review of the PDR determines required repairs or alterations
For ACE+ PDR when the Seller’s review of the PDR determines there are required repairs or alterations, Freddie Mac will accept one of the following to verify completion:
PDR Completion Report, prepared by a property data collector, attesting that the subject property has been completed in compliance with the required repairs or alterations.
The property data collector must complete the PDR Completion Report by performing an on-site visual observation of the subject property to verify completion.
Form 400
, or other substantially similar form, signed by the Borrower confirming completion of repairs or alterations identified in the PDR.
By delivering the signed completion form to Freddie Mac, the Seller represents and warrants the repairs or alterations have been completed.
The following table describes the completion verification requirements for PDRs when the Seller’s review determines repairs or alterations:
Verification of completion for PDRs when the Seller’s review determines repairs or alterations
The completion report must:
Contain the data points and certifications in the PDR Completion Report data set (
)
Include photographs that clearly identify the completion of repairs or alterations
Be dated before the Settlement Date
Be signed/attested by the property data collector
Form 400
or other substantially similar form
The completion form must:
Include photographs that clearly identify the completion of repairs or alterations
Include either:
A signed report from the professional who completed the repairs or alterations, or
Paid invoice(s) for the repairs or alterations
Be retained in the Mortgage file
Not be used for GreenCHOICE Mortgages or CHOICERenovation Mortgages
(c)
Appraisal reports or PDRs requiring an inspection
For appraisal reports that are subject to an inspection of the property or PDRs when the Seller’s review determines an inspection is required, a licensed professional or other person trained in the particular field of concern (e.g., structural engineer, plumber, pest inspector) must perform the inspection of the property.
The Seller must obtain either:
An inspection report stating that repairs are not required (i.e., Seller reviews to ensure property does not have deficiencies consistent with a C5 or C6 condition rating), or
An inspection report and invoice(s) stating that the required repairs have been completed and the issues have been corrected
The following table describes the requirements for reporting inspection results for appraisal reports or PDRs requiring inspections:
Reporting inspection results for appraisal reports or PDRs requiring an inspection
Documentation requirements
Inspection report or invoice(s), as applicable
The documentation must:
Be prepared by the professional who performed the inspection or completed the repair
Provide the professional’s license number, if applicable
Be retained in the Mortgage file
