www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

October 18, 1993
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER 93-33
     TO:  ALL APPROVED MORTGAGEES
     ATTENTION:  SINGLE FAMILY SERVICING MANAGERS
     SUBJECT:  Waiver of Prepurchase Housing Counseling Requirement
               under Section 506 of the Housing and Community
               Development Act of 1992
 
          In accordance with the waiver provision of Section 506 of
     the Housing and Community Development Act of 1992 (HCD), HUD
     hereby waives the applicability of Section 506 pending the
     completion of implementing regulations.
 
          Section 506 amends Section 203(b)(2) of the National Housing
     Act (12 U.S.C. 1709 (b)(2)).  The amendment prohibits the
     Secretary from insuring or entering into a commitment to insure a
     mortgage for a first-time homebuyer involving a principal
     obligation in excess of 97 percent of the appraised value of the
     property unless the prospective homebuyer "has completed a
     program of counseling with respect to the responsibilities and
     financial management involved in homeownership."  The principal
     obligation includes initial service charges, appraisal,
     inspection, and other fees approved by the Secretary.
 
          The effective date provided in Section 506 was to be twelve
     months after passage of the HCD Act on October 28, 1992.
     However, before the Department can implement this provision we
     must, among other things, establish minimum requirements for the
     required "program of counseling," and publish regulations.
 
          When we are ready to implement Section 506, we will notify
     you by a Mortgagee Letter.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing
- Federal Housing Commissioner