www.hudclips.org 


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

 
March 15, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
MORTGAGEE LETTER 95-11
 
     TO:  ALL APPROVED MORTGAGEES
 
        SUBJECT:  Single Family Loan Production - Reduction in
                  Documentation/Paperwork on New and Proposed Construction
                  Cases
 
                The Department is pleased to announce the next phase of its
        "Reducing FHA Paperwork" effort.  Begun with Mortgagee Letter 94-55,
        this reduces the number of exhibits required on New and Proposed
        Construction cases.
 
        First, only the following construction documents need be
        submitted to the local HUD office in the endorsement package for high
        (above 90 percent) loan-to-value ratio cases where the property is
        less than one year old:
 
          1.   Builder's Certification of Plans, Specifications, & Site
               (Form HUD-92541).
          2.   Builder's Warranty (Form HUD-92544) and 10-Year warranty
               (when required).
 
        Second, only the following architectural exhibits are required
        to be retained by the lender in its origination binder (as per HUD
        Handbook 4145.1, Chapter 2):
 
          1.   Builder's Certification of Plans, Specifications, & Site
               (Form HUD-92541).
          2.   Plot Plan; and
          3.   Plans and Specifications required by the local authority
               for building permit approval.
 
        Further, only if the local authority does not approve plans and
        specifications to obtain a building permit, must the following
        additional exhibits (in addition to 1, 2, and 3 above) also be
        retained by the lender:
 
          1.   Foundation or basement plans.
          2.   Floor plans and exterior elevations.
          3.   Description of Materials (Form HUD-92005); and
          4.   Design and local authority approval of individual water
               supply and/or sewage disposal system.
 
                                2
 
        In addition to the documents described above that the lender is to
retain in its origination binder for resolving construction complaints
and Section 518(a) complaints for structural defects, the lender should
also retain in its case binder any additional exhibits made necessary when
the mortgage risk could be affected by unstable soil or other differential
ground movement, ground water problems and other site or toxic hazards
(i.e., engineers' reports on soil exploration and testing; earthwork
specifications (79-G); special foundation and related designs; slope or
other stability evaluations; evaluations of underground sewage effluent
disposal and waste disposal sites, etc.).
 
        All other documents normally submitted, such as inspection reports,
soil poisoning certifications, appraisal reports, etc., are to be included
in the endorsement binder as usual.
 
For "under-construction" properties that will be insured at 90 percent
loan-to-value or less, the lender is to retain a copy of the architectural
exhibits in its origination binder.  However, the Builder's Certification
and the Builder's Warranty are not required.  For an "existing" property
less than one-year old (100 percent complete), the lender does not need to
retain any architectural exhibits, including the Builder's Certification
and warranties.
 
The above list does not apply to manufactured housing or condominiums.
Those documentation requirements remain the same.
 
        These revised documentation requirements are effective immediately.
If you have any questions concerning this Mortgagee Letter, please contact
your local HUD office.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner
 
                     *U.S. Government Printing Office: 1995 - 387-734/20035