www.hudclips.org 


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

 
August 27, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
MORTGAGEE LETTER 97-41
 
TO:  ALL APPROVED MORTGAGEES
 
SUBJECT:   Single Family Loan Production - Clarification of
           Mortgagee Letter 97-22  Regarding New Construction
           in Floodplains
 
 
On May 20, 1997, the Department issued Mortgagee Letter
 97-22 .  Attached to that Letter was the National Valuation
Condition Sheet (VC) Form which lists by paragraph and item
various matters which the appraiser must review and then
document by completing statements in the Form.  Paragraph 10A
inadvertently misstates FHA's requirement regarding
eligibility of properties located in a floodplain.  Paragraph
10A informs the appraiser that a property within the 100-year
floodplain is ineligible to secure an FHA-insured mortgage
unless a LOMA or LOMR is filed along with the request for
endorsement.  This statement has caused confusion because it
conflicts with the position taken in Mortgagee Letter 90-16 ,
May 22, 1990, and subsequent HUD issuances.
 
In order to dispel the confusion and clarify FHA's
requirement in this regard, paragraph 10A as it appears in
the VC attached to ML 97-22 is replaced by the following:
 
A.   If any portion of the property improvements (the
dwelling and related structures/equipment essential to
the value of the property and subject to flood damage)
is located within the 100-year floodplain, the entire
property, improved and otherwise, is not eligible for
FHA insurance unless a LOMA or LOMR is submitted with
the case for endorsement.
 
Should you have any question concerning this Mortgagee
Letter, please contact your local HUD Office or HOC.
 
Sincerely,
 

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