4.1

OVERVIEW

The Section 184 statute provides flexibility regarding types of activities that may be undertaken. A loan guarantee may be provided for a range of activities, including purchase of existing property, acquisition and rehabilitation, refinance and/or new construction. The subject property may contain one to four dwelling units. This chapter provides guidance about eligible property types and the process for appraising and qualifying individual homes.

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4.2

ELIGIBLE PROPERTIES

The Section 184 Program is designed to enhance home mortgage lending on trust/restricted lands and in other Indian areas. Only single-family properties are eligible for inclusion in the Program.

1. Definition of Single Family Property. A single-family property is a single structure containing one to four family dwelling units. Multifamily properties (buildings containing more than four units) are not eligible for participation in this Program.

In order to be considered a single structure, multiple units must share a common roof and at least one wall that is connected to another unit. A site with four separate, non-connected structures is not considered to be one single-family unit.

2. Multiple Properties. Borrowers who are interested in developing multiple properties must apply for multiple loans and loan guarantees. For example, if an IHA/TDHE or Tribe wants to build 20 single-family homes for sale to individual tribal members, each of the homes must have a separate loan with a separate loan guarantee. The borrower may utilize a "master application" that references each individual home, loan and loan guarantee.

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4.3

MODEST HOUSING

The Section 184 statute requires that all housing under the Program be considered modest in size and design. To meet this requirement, no loan under the Section 184 Program may exceed 150 percent of the maximum FHA mortgage limit for the area. The FHA mortgage limits are published periodically by FHA in a Mortgagee Letter and by local FHA Field Offices if changes occur within their jurisdiction. The listing of mortgage limits may be obtained from either the Program ONAP or the Internet at: www.hud.gov.

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4.4

REHABILITATION OF EXISTING STRUCTURES WITH EXISTING DEBT:

1. Rehabilitation by Current Owner. If a current homeowner wishes to undertake rehabilitation with a Section 184 loan, the existing indebtedness may be rolled into the new Section 184 loan by using a credit qualifying refinance with an appraisal (see paragraph 11-4(a)(5). The appraisal will be for the after-improved value.
2. Mutual Help Units. A Section 184 loan may be used to "pay off" a Mutual Help home so that the property may be conveyed to the homeowner. A guaranteed loan could also be used to pay off and rehabilitate a Mutual Help home. A unit developed under the Mutual Help Program is not eligible for rehabilitation with a Section 184 guaranteed loan unless the unit has been paid-off and conveyed to the homeowner. Conveyed Mutual Help units may be rehabilitated with a Section 184 loan if the property meets the criteria listed in Paragraph 4.4a above.

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4.5

NEW CONSTRUCTION

When undertaking new construction, borrowers, lenders, and tribes are free to develop structures that meet the specific needs of individual households. These structures may be created to be culturally relevant and are not required to follow any one specific floor plan or design model. Homebuyers may wish to consult readily available home plan guides for design options or possibilities. However, if the borrower selects a home plan from such a guide, the lender and/or Program ONAP may decide whether a local licensed architect’s stamp is needed.

In addition, some IHAs/TDHEs may be able to provide homebuyers with sample plans and specifications. The lender and/or Program ONAP may require that these sample plans also be stamped by a local, licensed architect. (Chapter 7 contains further instructions on new construction.)

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4.6

RENTAL HOUSiNG

1. Eligibility. Rental housing may be developed under the Section 184 Program if the property meets the definition of single-family structure stated in Paragraph 4.2a. Multifamily housing may not be developed under Section 184.

All rental housing developed under the Section 184 Program must either be owned by:

1. An Indian family who is an owner-occupant (i.e., lives in one of the units); or
2. An Indian housing authority/tribally designated housing entity; or
3. An Indian Tribe.

Other forms of investor-owned rental housing are not permitted under the Section 184 Program.

2. Hotel and Transient Units. Section 184 units must be used as permanent housing. Hotel and Transient Use Certifications (form HUD 92561) must be signed by the borrower and obtained by the lender for every application on property containing two or more family units or a single family unit that is one of a group of five or more dwellings held by the same borrower. This is HUD’s assurance that the property will not be used for hotel or transient purposes or otherwise be rented for periods of less than 30 days.

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4.7

PROPERTY STANDARDS

All properties under the Section 184 Program must be decent, safe, and sanitary and must conform to general construction standards for the region. The Section 184 statute specifies the standards listed below. The following property standards represent a minimum level of housing quality. The lender, individual owner, Tribe or IHA/TDHE may wish to develop a property that meets a higher standard. The Tribe/IHA/TDHE must indicate to the lender which construction codes are followed, how building permits are handled and how building inspections will be performed.

1. Heating System. The heating system must:
1. Have the capacity to maintain a minimum temperature of 65 degrees Fahrenheit during the coldest weather in the area.
2. Be safe to operate and maintain.
3. Deliver a uniform distribution of heat.
4. Conform to any applicable Tribal heating code. If there is no applicable Tribal code, the system must conform to the applicable county, state, or national code.
2. Plumbing System. The plumbing system must:
1. Use a properly installed system of piping.
2. Include a kitchen sink and a separate bathroom with lavatory, toilet, and bath or shower.
3. Use water supply, plumbing, and sewage disposal systems that conform to any applicable Tribal code. If there is no applicable Tribal code, the plumbing must comply with the minimum standards established by the applicable county or state. If water and sewer systems cannot be connected to public systems, the water well and/or septic system must meet the requirements of the local health authority with jurisdiction.
3. Electrical System. The electrical system must use wiring and equipment that is properly installed and safely supplies electrical energy for lighting and operation of appliances and that conforms to any applicable Tribal code. If there is no applicable Tribal code, the electrical system must comply with an appropriate county, state, or national code.
4. Unit Size. The Section 184 statute specifies minimum unit sizes for the Program. The statute does not specify a maximum unit size, although all units must be modest in size and design (see paragraph 4.3). Borrowers should select homes that are within their budget and meet the needs of their family.

The size of the unit may be no smaller than:

1. 570 square feet in size, if the unit is designed for a family of one to four persons.
2. 850 square feet in size, if the unit is designed for a family of between five and seven persons.
3. 1,020 square feet in size if the unit is designed for a family of eight or more persons.

OR

4. The unit must be of the size provided under locally adopted standards for the size of dwelling units.

The Department may waive the above-stated unit size requirements based upon a request from a tribe or IHA/TDHE. If such a waiver is desired, the Tribe or IHA/TDHE should send a letter explaining the necessity of the change, along with any relevant background data or materials to the Program ONAP.

5. Energy Efficiency. For new construction or substantial rehabilitation (rehabilitation costing $25,000 or more), the dwelling unit must comply with the energy performance standards for new construction established by the Department under section 526(a) of the National Housing Act.
6. Lead-Based Paint. The dwelling unit must comply with lead-based paint rules at 24 CFR Part 35 (i.e., no cracking, peeling, scaling paint). The Environmental Protection Agency’s (EPA) lead-based paint pamphlet must be given to borrowers purchasing pre-1978 units before execution of the sales contract and include an acknowledgement signed by the borrower. The EPA Pamphlet, Protecting Your Family From Lead In Your Home, may be ordered through the Government Printing Office by calling: (202) 512-1800, stock number 055-000-00507-9.

Units must substantially meet all of the above-listed standards before borrowers will be allowed to move in. It is possible that a few minor "punch list" items may remain incomplete at the time that the borrower takes possession of the property. If that is the case, the lender must ensure that these final improvements are completed. See Paragraph 5.18a(3).

7. Compliance with Fair Housing Act Design and Construction Requirements. Until October 1, 1997, for those IHAs/TDHEs subject to the Fair Housing Act, all four unit newly constructed dwellings shall comply with the accessibility design and construction requirements set forth at 24 CFR Section 100.205.

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4.8

ARCHITECTURAL EXHIBITS

1. Authorized Parties. Borrowers who anticipate undertaking rehabilitation or new construction must submit detailed plans and specifications to the lender for review.
1. Plans and specifications for new construction must be developed by an architect and/or the proposed general contractor. The lender and/or Program ONAP may require that the architect be state certified or that the plans and specifications be stamped by an architect with such certification.
2. Plans and specifications for rehabilitation may be developed by an architect or by a contractor or inspector, depending upon the nature of the work.
3. Lenders must ensure that anyone developing work plans and specifications has sufficient expertise to effectively undertake that effort.
2. Minimum Requirements. The property plans and specifications and other architectural exhibits must be of sufficient detail to allow lenders, appraisers, and HUD to readily review the scope of work and analyze costs. The architectural exhibits must include:
1. A detailed plan and specifications. This should be divided by topic area (e.g., mechanical systems, exterior repairs) and must explain exactly what the contractor proposes to do. Appendix 4 contains a sample specification of work. It should also state model types or specifications for exactly the materials or processes to be used. The plans should show elevations and include a floor plan.
2. A cost estimate. This estimate must be the architect’s and/or contractor’s best estimate of the cost to complete the project. The cost estimate may not be developed by the borrower unless the borrower is a certified licensed contractor and/or architect. Cost estimates must include labor and materials sufficient to complete the work by a contractor. Homebuyers doing their own work cannot eliminate the cost estimate for labor, because if they cannot complete the work there must be sufficient money in the escrow account to get a subcontractor to do the work. This estimate should be firm and final. Borrower-, contractor-, or architect-directed additions or subtractions to this cost estimate will be accomplished only via an approved change order during the construction period. See Paragraph 7.5b for more information about change orders.
3. A site map and legal description of the property. On tribal trust land, this will generally be obtained from the tribe. In addition, BIA may be involved with any required property survey or mapping. However, circumstances may require the borrower to determine the legal description, at his/her cost, by having a survey of the exterior boundaries of the property to be leased be performed by a licensed land surveyor and a plot submitted to BIA for approval.

On allotted trust land, lenders and borrowers may contact BIA and/or the tribe to solicit assistance with site maps and legal surveys. As noted above, it is possible that the borrower may be required to pay for a legal survey of the property if one does not exist.

On fee simple land, borrowers and lenders must use a private title company to obtain information about the property’s legal description and map. The borrower may be required to pay for a property survey.

4. A plot plan showing the location of the structure with set backs, driveways, water/sewer lines and other relevant detail. This plan should include the finished grade elevations at the property corners and building corners. The plan should, where feasible, indicate the required flood elevation.
5. Name/Address/Phone of the Builder, as approved by the lender. It is recommended that a general contractor, who is licensed or registered in the state and who has appropriate experience and qualifications, perform all work. See paragraph 4.9 for more information about the selection of contractors. Although owner/builders are not prohibited, it is the responsibility of the approved lender to document sufficient managerial skill and available time to ensure the timely completion of a decent, safe and sanitary property that will pass final inspection by a licensed third party inspector or appraiser. The owner/builder will be required to submit bids and use licensed subcontractors who will provide minimum one year warranties for plumbing, heating, electrical work and the home foundation.
6. Proposed homeowner/contractor agreement between the borrower and the contractor specifying the terms of the construction contract and incorporating the architectural exhibits into the contract. At a minimum, this agreement should: (1) describe the work to be performed; (2) state when work will start and be completed; (3) make provision for binding arbitration on disputes; (4) state the total amount to be paid to the contractor and terms of payment; (5) provide a one-year warranty on all work completed by the Contractor. A sample Homeowner/Contractor Agreement is contained in Appendix 4. Where the lender has determined that the borrower has sufficient experience to do the work or act as the general contractor, the lender should obtain a Self-Help Agreement from the borrower. A sample Self-Help Agreement is contained in Appendix 4.
7. Builder’s Certification, HUD-92541signed and completed by the builder.
8. Schedule of Amounts for Contract Payments, form HUD-51000. Shows construction loan breakdown by the contractor in sufficient detail to guide construction draw downs by the lender. It may be convenient to use columns (1) Item Number and (2) Description of Item in the Period Estimate for Partial Payment, Form HUD-51001 or a draw request form, which would be the basis for construction draws. It is important that the lender analyze the breakdown in order to avoid "front loading" of draws. (In some instances, lenders may request supporting bids from subcontractors and suppliers.) In addition a sample draw form is contained in Appendix 4. If the lender’s construction department has a similar draw form currently in use, this would also be acceptable to HUD.

Once lenders receive the above-noted materials, they will order an appraisal and will have the plans and specifications reviewed to determine whether the costs are reasonable and whether the plans are appropriate.

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4.9

CONTRACTOR/ARCHITECT SELECTION

Borrowers are given maximum flexibility in the selection of architects and contractors. However, all such entities must be experienced and qualified to the satisfaction of the lender.

1. Procurement Requirements. Borrowers are not required to use Indian Preference or other federal procurement procedures when selecting contractors or architects unless other federal program funds are provided to assist the homebuyer with the development. If other federal program funds are used in the project, refer to the procurement requirements of those programs.

Borrowers are required to sign an agreement with the selected contractor and/or architect. See Paragraph 4.8b(6) for more information about these requirements.

2. IHA/TDHE or Tribal Force Account Labor. As noted in Chapter 4, an IHA/TDHE may elect to act as a developer under the Section 184 Program. The IHA/TDHE may use force account labor for either the contracting or the related services (such as architecture, inspections, etc.) if these staff are qualified and acceptable to the lender. The IHA/TDHE may also contract with the tribe for force account labor. If the IHA/TDHE uses force account labor, the cost of that labor may not be charged to other HUD housing programs. Thus, the IHA/TDHE may not pay for Section 184 force account labor out of its Mutual Help or Low Rent Program funds.
3. Qualifications. The Program ONAP and lender will determine whether the contractor must be licensed and insured/bonded and whether the architect must be licensed within the state.
4. Sweat Equity. The individual borrower may elect to act as his/her own general contractor if he/she can demonstrate skills and experience in such activities to the satisfaction of the lender and HUD. However, the homebuyer may not act as the actual trades contractor unless he/she is skilled in that area. An architect, contractor, or inspector must develop the cost estimate and plans. The lender and/or Program ONAP may require that a state certified architect stamp the plans.

If the homebuyer acts as the general contractor, he or she may not be compensated for this work. In addition, no profit/overhead can be taken by the individual homebuyer on items constructed or materials purchased by the homebuyer. The borrower must request reimbursement for the actual cost of any materials on the draw request form. The difference between the estimated cost to complete the work and the actual cost of materials must remain in the escrow account until all work on the property is complete. After completion of the work, any excess funds remaining in the escrow account may be used for (1) documented cost overruns; (2) verified additional improvements to the property; or (3) prepayment of the mortgage principal.

The borrower’s sweat equity contribution may be applied toward his/her required down payment amount when the lender carries the interim construction loan only. This amount must be included in the architect/contractor’s estimate of costs and the lender must document the contributory value through either the appraiser’s estimate or through a cost estimating service.

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4.10

APPRAISALS

1. General
1. Purpose of the Appraisal. All properties under the Section 184 Program must be appraised. The purpose of the appraisal is to estimate the value of the property. Based in part upon the information contained in the appraisal, lenders will determine the mortgage amount and terms. Any required repairs are limited to those necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants.
2. Ordering the Appraisal. On new construction, the lender must provide the appraiser with contracts, property plans and specifications and other related construction exhibits (see paragraph 4.8), when the appraisal is ordered.
3. Appraisal Guidelines. The cost approach is often the primary indication of value based on the unique nature of the reservation setting. Lenders and appraisers should refer to Appendix A-2, Appraisal of Single Family Homes on Native American Lands, Page A-4, HUD Handbook, 4150-2, Valuation Analysis for Home Mortgage Insurance for Single Family One-to-Four, for additional guidance in determining the exact methods of appraisal for trust land. A copy of the handbook can be obtained on the following website: http://www.hudclips.org.
4. Qualifications. Lenders may select any qualified, certified, and licensed appraiser. The appraiser should be familiar with Appendix A-2 of HUD Handbook 4150.2.
2. Methodology
1. Trust/Allotted Land. On trust or allotted land, appraisers will generally use the Marshall and Swift handbook. This is a cost-based approach to computing value. On existing homes where comparable sales data is available, the appraiser should use a market approach to value.
2. Fee Simple Land. On fee simple land, appraisers should use the market method of appraisal including a review of comparable sales. If this methodology is not appropriate, given the location of the home, the appraiser should refer to Appendix A-2 of HUD Handbook 4150.2 (see paragraph 4.10(3) above).
3. Review of Plans and Specifications. As a part of the appraisal, the appraiser will review the plans and specifications and other related construction exhibits and contracts.
4. Appraisals are acceptable for 6 months on existing construction and 12 months for new construction.
5. Appraisal Form. The appraisal will be conducted using the standard Uniform Residential Appraisal Report (URAR) format.
6. Review of Appraisals. All appraisals may be subject to a desk review. If errors are found in the initial appraiser’s methodology, the review appraiser may adjust the value accordingly. In case of a dispute over the appraisal amount, the Program ONAP may consult with the lender and the appraiser to make the final determination.
3. Land Value. Tribal trust and individual allotted trust land. Lenders and appraisers can refer to Appendix A-2, HUD-4150.2 for further guidance.

On fee simple land, the value of the land should be included as a part of the normal appraisal process.

4. Real Estate Commission. The Marshall and Swift handbook typically includes in its estimate of value an amount for a real estate commission in tract development. When this expense is not present, the appraiser will subtract the typical estimate of the real estate commission from the total value.

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4.11

ENVIRONMENTAL REVIEW

Environmental reviews are required on Section 184 loans. The review will be completed by the Tribe (assuming the responsibility for HUD) or by HUD (or a representative for HUD) if staff resources permit.

1. 24 CFR 50: Covers rules and procedures for HUD when preparing an environmental review. HUD-4128 (Appendix 4) should be completed. HUD has responsibility for approval.
2. 24 CFR Part 58: Covers rules for Tribes to meet NEPA and other federal requirements when assuming the role of the responsible federal office for environmental reviews.
1. New Construction.

(a) 1 to 4 units on one-site or 5 or more units on scattered sites (2,000 feet apart). Categorical exclusion can be converted to exempt if in compliance with CFR 58.5. Statutory Worksheet (Appendix 4) must be completed and signed by responsible tribal entity.

(b) 5 or more units at a specific site requires a full Environmental Assessment prior to commitment of funds.

2. Existing Housing.

   (a) Compliance with 24 CFR 58.6 — Environmental Review Record (Appendix 4)

   • Flood Plain
   • Coastal Zone
   • Airport Clear Zone

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4.12

FLOOD PLAINS

If an existing property is located in an area mapped by the Federal Emergency Management Agency and it is in a special flood hazard area (100 year flood plain), flood insurance must be obtained. HUD will not guarantee properties located in a mapped flood plain without such insurance. This is a statutory requirement and an elevation certificate does not eliminate the flood insurance requirement.

When an area is not mapped, the tribe may request the Federal Emergency Management Agency to map a specific area or an entire reservation. This is recommended, especially if it is anticipated that there will be significant Section 184 activity.

Absent a flood plain map, the appraiser must indicate that to the best of his/her knowledge the property is or is not in a flood plain. If the appraiser believes the property is in a flood plain, no guarantee may be issued unless flood insurance is obtained. If the appraiser will not provide an opinion on this issue, the lender may contact the tribal housing office for flood plain information. The Tribe/IHA/TDHE may certify that the property is not in a flood plain.

The only way new construction can be done in a mapped or unmapped flood plain is to demonstrate that there are no practicable alternatives to floodplain development. Executive Order 11988 outlines an 8-step decision making process which is outlined in 24 CFR 55.20. An elevation certificate alone would not allow for new construction in a flood area. In most communities, there is vacant, buildable land that is located outside the floodplain and in such cases proposed flood plain development is to be rejected in favor of flood-free locations.

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4.13

TITLE

All properties must have clear title in order to participate in the Section 184 Program. This is demonstrated using different methods, depending upon land type.

1. Tribal Trust and Allotted Trust Land. For properties on tribal trust or allotted trust land, HUD will accept a title status report (TSR) that has been signed and approved by BIA. BIA is responsible for recording the lease and security instrument on the TSR.
2. Fee Simple Lands Within an Indian Area. These properties should be reviewed using a standard title search process through a private title company.

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4.14

INFRASTRUCTURE

1. Review. In addition to an appraisal and an analysis of environmental issues, all new construction must be reviewed to ensure sufficiency of water and sewer access. This analysis may be undertaken by the IHS or by a local health authority for the reservation that is authorized to perform this function. On fee simple land, this review may be conducted by the local government.

Information on the IHS may be obtained from the tribe. The tribe must approve the IHS application and send the application to IHS for review. IHS will schedule the review and submit a report to BIA and to the owner. BIA will work with IHS to ensure that this review is completed. BIA will not sign a leasehold document until any needed water and sewer review is complete.

2. Eligible items. Within the LTV limits and the borrower’s ability to pay, the Section 184 mortgage may include any on-site infrastructure needed to support the rehabilitated or newly constructed unit.
3. Off-Site infrastructure improvements. New Construction Project Development. If a tribe or IHA/TDHE incurs specific costs to develop the off-site infrastructure of a project development, Section 184 will allow the lesserof: (a) the actual pro-rata portion of those costs to be included in the cost of the individual home or (b) up to 10% of the cost to construct the subject house.

   Documentation must be provided (i.e., canceled checks, paid contracts) to clearly establish what the total cost of the development is and documentation as to the total number of homes within the development. Any costs included will be limited by the appraised value and loan limits for the area.

   If the Indian Health Service or other agency provides the infrastructure at no cost to the tribe or IHA/TDHE, this amount cannot be included in the cost to be reimbursed to the tribe or IHA/TDHE.

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4.15

MANUFACTURED HOUSING

HUD’s terminology for mobile home is "manufactured home" but does not include modular construction which is also a factory built home but is treated the same as stick-built housing.

Manufactured and modular homes are built in the same factory and come off of the same assembly line, but it is important to know the difference. A modular home is brought to the building site on a trailer and the home is removed from the trailer and set on the foundation. The trailer is then returned to the factory (where practical). A manufactured home is brought to the building site and set on a foundation system. Only the truck pulling the home returns to the factory. On a manufactured home the trailer is a structural part of the house. A second method of separating the two involves how a house is set on the foundation system. On a manufactured home the weight of the unit rests on the "I" beams that run the length of the house. The weight of a modular home is supported by the exterior walls of the house in the same manner as a stick built home.

1. General Eligibility Criteria for Manufactured Housing. Appraisers selected to do appraisals on manufactured housing should be knowledgeable of the requirements.
1. Section 184 statute specifies minimum unit sizes for the Program (see paragraph 4.7d)
2. The home must be constructed in conformance with the Federal Manufactured Home Construction and Safety Standards as evidenced by the affixed certification label.

This is the RED TAG that is on the rear of each section of the manufactured home. If the RED TAG is missing the house is not eligible for Section 184 financing.

3. Only manufactured homes built after June 15, 1976 will bear that seal. Manufactured homes built before that date are ineligible for Section 184 financing.
4. The home must be classified and taxed as real estate (as applicable).
5. The mortgage must cover both the manufactured unit and its site or the appropriate lease documents must be in place. The mortgage must have a term of no more than 30 years from the date amortization begins.
6. The manufactured home must not have been installed or occupied previously at any other site or location.
7. The finished grade elevation beneath the manufactured home or, if a basement is used, the lowest exterior grade adjacent to the perimeter enclosure, must be at or above the 100-year return frequency flood elevation.
8. The house must be permanently attached to the foundation system. Existinghomes must be attached to the foundation system by either cable or rebar welded to the frame rail or similar fashion. The unit must be anchored to the footing (or pier). See paragraph 4.15b(1) below for further guidance on new construction.
9. The axles and tongue must be removed from the unit. The chassis must stay in place.
10. The house must have adequate skirting and insulation around the perimeter to prevent the crawl space area from freezing and allow proper ventilation of the crawl space. If the skirting is wood, the wood must be properly treated to prevent decay.
2. New Construction Manufactured Homes. In addition to the general eligibility criteria:
1. Proposed homes must have, with or without a basement, a site-built permanent foundation that meets or exceeds applicable requirements in the Permanent Foundations Guide for Manufactured Housing issued September 1996 or local Rural Housing Services, USDA requirements. A licensed builder or the manufactured home dealer must sign a Warranty of Substantial Completion, HUD 92544, for the foundation, whether the lender carries the interim construction loan or the loan is done as a single close construction loan. A Warranty of Substantial Completion will also be required for the manufactured home.
2. The unit must be braced and stiffened before it leaves the factory to eliminate racking and potential damage during transportation.
3. Minimum inspections required include an inspection of the permanent foundation and a final inspection of the entire property (paragraph 7.6i).
4. All other requirements for new construction must be met.
5. Lenders that are making loans on manufactured housing should obtain copies of three documents: (1) Program regulations at 24 CFR 3280, the Manufactured Home Construction and Safety Standards and the Interpretive Bulletins to the Standards; (2) 24 CFR Part 3282, Manufactured Home Procedural and Enforcement Regulations; and (3) the Permanent Foundations Guide for Manufactured Housing issued September 1996 (available from HUD User by calling 1--800-245-2691). Another publication that lenders will find particularly useful is Manufactured Home Installations, publication A225.1-1994, produced by the National Conference on Building Codes and Standards (505 Huntmar Park Drive, Herndon, VA 20170). This publication contains information on site preparation, foundations, installation procedures, preparation of appliances and utility system connections.

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4.16

HOME INSPECTIONS

When purchasing an existing home, buyers are encouraged to obtain an inspection service to make the determination that the house they are purchasing is free of defects. Since HUD does not warrant the condition of the home, the buyer is best served when they are aware of their own responsibilities for assuring that the property is acceptable to them. Therefore, all lenders must provide a notice to the borrower. A sample form is contained in Appendix 4, or the lender may develop their own disclosure. The inspection disclosure is not required for new construction loans.