Remediation plans on an FHA multifamily loan

Where a Phase II Environmental Site Assessment (ESA) finds contamination above the unrestricted criteria of the local, state, tribal or federal (LSTF) authority on a site proposed for Federal Housing Administration (FHA) multifamily mortgage insurance, chapter 9 of the Multifamily Accelerated Processing (MAP) Guide of the Department of Housing and Urban Development (HUD) requires a remediation plan. The plan must reach those criteria; where that authority finds this infeasible, HUD may accept incomplete removal under controls. This page rests on the 2020 MAP Guide, revision of March 19, 2021. Mortgagee Letter 2026-04, the only later letter or notice whose title touches the chapter as of October 9, 2026, changes no section cited here.

Who the rule binds

The lender submits remediation studies and plans with the pre-application or, where that stage is left out, the application for Firm Commitment, which also carries evidence of the LSTF authority's approval of the plan (MAP Guide, 9.4.3.B.6).
The LSTF authority must have jurisdiction over the project and give its approvals itself, not through a third party. A local authority's approval is acceptable only under delegation from the State (MAP Guide, 9.4.10).
HUD staff review the plan and its costs (MAP Guide, 9.5.1).

What it asks

A plan is required where the Phase II concludes that hazardous waste or petroleum products exceed LSTF unrestricted criteria, or that off-site contamination is likely to migrate onto the site (MAP Guide, 9.4.3.A).

Every plan:

Site characterization. It comes first: the contamination's full nature and distribution, the exposure pathways and the potential receptors. Where the plan's preparer determines that the Phase II established them, the Phase II becomes part of the plan (MAP Guide, 9.4.3.B.1).
Contents. A detailed summary in common language; the preparer's qualifications; every relevant contaminant phase, vapor included; and the requirement that residents and construction workers regularly on the site during remediation be informed of it and protected (MAP Guide, 9.4.3.B.2 to 9.4.3.B.4, 9.4.3.B.9).
Work already begun. Where remediation is under way or complete but lacks LSTF approval when the Phase I is submitted, the plan and all remediation studies go in with it (MAP Guide, 9.4.3.B.11).
Timing. HUD may require the plan carried out, clearance testing and No Further Action (NFA) letters included, before it issues the Firm Commitment. Where removal's extent and cost can be definitively determined and a contract can specify the cost, HUD may allow an LSTF-approved plan that completes work, testing, closure documents and LSTF approval before Initial Endorsement or, where the lender shows that impractical, before Final Endorsement and initial occupancy. Before Initial Endorsement the work waits until HUD completes its environmental review and approves an early start or pre-endorsement improvements (MAP Guide, 9.4.3.B.7, 9.4.3.B.8).
Complete removal. Except where incomplete removal applies, the plan must reach LSTF unrestricted criteria with no ongoing remediation, active or passive, and nothing that needs an engineering control, an institutional control or a monitoring well. A plan that controls off-site contamination or uses Tier 4 vapor encroachment mitigation is not permitted here but may be allowed as incomplete removal (MAP Guide, 9.4.4.A, 9.4.4.C).

Incomplete removal:

When. Where the LSTF authority determines that reaching its unrestricted criteria is infeasible, HUD may accept a plan that authority approved, a Risk Based Corrective Action (RBCA) or another accepted one, that reaches LSTF restricted residential criteria. Its cost, life cycle operation and maintenance (O&M) included, must be documented as sufficiently below that of complete removal (MAP Guide, 9.4.5.A, 9.4.5.B).
Cap. A hard cap is generally required if contamination will remain after Final Endorsement. Unless the lender justifies less, what remains should lie deeper than the foundations of existing or proposed structures, the existing or proposed utilities, and five feet below the surface, whichever is deepest (MAP Guide, 9.4.5.D.1).
Other controls. A slurry wall or its equivalent will be required where the Phase I or Phase II determines that likely off-site contamination puts the site at risk. Monitored natural attenuation may be allowed, with a conditional NFA letter and monitoring wells (MAP Guide, 9.4.5.D.1).
Groundwater. Contamination may remain in groundwater if an institutional control with LSTF approval prohibits all uses of it; the highest anticipated groundwater level stays below construction and anticipated utility work, unless shown not to spread the contamination enough to affect residents and workers; and vapors are shown to pose no significant risk (MAP Guide, 9.4.5.D.4).
O&M plan. One approved by the LSTF authority is required wherever there is an engineering control (MAP Guide, 9.4.5.D.2).
Closure. The LSTF authority's NFA, or a similar approval, must indicate that the remediation protects occupants' health and safety and does not conflict with the property's intended utilization (MAP Guide, 9.4.5.D.3).
Disclosure. Where contamination above LSTF unrestricted criteria remains after initial occupancy and final closing, maintenance workers who could compromise the controls, construction workers and residents are to be told its general type and extent and the protective measures taken (MAP Guide, 9.4.5.D.5).

Also:

Monitoring wells. A testing or monitoring well does not bar the property from consideration. One required to confirm that contaminants reached intended levels, or that natural attenuation is working, brings engineering and institutional controls until LSTF criteria are met and a Final NFA letter is issued (MAP Guide, 9.4.6.1).
Other wells. Final Endorsement and initial occupancy may not take place while a flushing well operates or will be required. Non-operating wells must be capped and closed out (MAP Guide, 9.4.6.4, 9.4.6.6).
Superfund. A project on a Superfund site, existing or proposed, requires consultation with the Environmental Protection Agency and its written documentation of suitability for residential use; a site not on the National Priorities List must also be cleaned up to residential levels (MAP Guide, 9.4.11, 9.4.11.1, 9.4.11.2).
Escrow. The escrow or bond must be at least 150% of the mitigation work's total estimated cost (MAP Guide, 9.5.2.3, 9.5.3.A).

What it means for the Phase I and the consultant

Controls. In the standard, a controlled recognized environmental condition is one addressed to the regulator's satisfaction with contamination left in place under required controls (E1527-21, 3.2.17). In the guide, contamination left above unrestricted criteria under controls is incomplete removal, with the conditions above (MAP Guide, 9.4.3.B.5, 9.4.5.A).
Wells. The site visit looks for wells on the subject property, monitoring and abandoned wells included (E1527-21, 9.4.27).

What the rule says

It is HUD policy that all property proposed for use in HUD programs be free of hazardous materials, contamination, toxic chemicals and gasses, and radioactive substances, where a hazard could affect the health and safety of occupants or conflict with the intended utilization of the property.

24 CFR 50.3(i)(1), edition revised as of April 1, 2025

This page is general reference for environmental professionals. It does not review any project. The regulation is the authority, and the determinations of HUD or of the entity responsible for the review govern.