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U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

February 1, 1989
Mortgagee Letter 89-9
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Revised Single Family Subdivision Processing
            Requirements - VA/CRVs and MCRVs
 
     In Mortgagee Letter 89-1 , dated January 4, 1989, we provided you
with information about the requirements to facilitate HUD acceptance
of subdivisions in which the Veterans Administration  has issued a
CRV or MCRV.  Upon further review of the requirements set forth in
Mortgagee Letter 89-1 , the Department has concluded that certain
modifications to those requirements are necessary.
 
     Mortgagee Letter 89-1  requires the following processing steps
prior to the conversion of the initial CRV or MCRV:
 
     a.  A site inspection of the subdivision lots by a HUD fee
         appraiser, VA fee appraiser, DE underwriter or DE staff
         appraiser.
 
     b.  Completion by the appraiser or DE underwriter of Page 1 of
         the Appraiser/Review Appraiser Worksheet, Form HUD-54891.
 
     c.  Submission to the HUD Field Office of the HUD-54891, a  copy
         of the recorded plat or subdivision plan showing the lots
         included on the HUD-54891 and a copy of the CRV or MCRV.
 
     This Mortgagee Letter changes the above processing steps, as
follows:
 
     a.  A site inspection of the subdivision lots by an appraiser or
         DE underwriter will not be required.
 
     b.  The DE underwriter will complete on Page 1 of the HUD-54891
         the boxes labeled Subdivision Name, Location, Description of
         Improvements, Type of Unit Proposed and Lot Size and, if the
         underwriter has knowledge, Questions 1.2 and 1.3.  If the
         underwriter does not have the information to complete
         either of these two questions or any part thereof, he should
         insert "No Knowledge" as appropriate.  In the box labeled
         "Case Number and Lot and Block Number of Properties," enter
         the number of lots
                                                                2
 
         that are covered by the HUD-54891.  The DE underwriter
         completes Page 2 of the HUD-54891, in its entirety except
         for Question 2.10 which is to be left blank, and signs the
         form where indicated.  The underwriter may make any
         comments, answer any additional questions or provide such
         other information as he deems appropriate in completing and
         submitting the form.  If the underwriter has visited the
         site, this should be noted.
 
     c.  The DE underwriter will submit to the Field Office the
         HUD-54891, a copy of the recorded plat or subdivision plan
         and a copy of the CRV or MCRV.
 
     Upon receipt of these documents in the local HUD Office, the
review as set forth in Mortgagee Letter 89-1 will be undertaken.  In
accordance with that Letter the HUD Office is authorized to reject
some or all of the lots in the subdivision if it determines that the
lots are adversely affected by environmental or other hazards.  The
HUD Office must advise the lender in writing of its decision.
Alternatively, the HUD Office may impose conditions for acceptance,
instead of complete rejection.
 
     Based upon a review of HUD-54891 and other information known to
the office, if the office has reason to believe that environmental or
other adverse conditions exist that affect the health and safety of
the mortgagors, it may perform a site inspection.
 
     The provisions of Mortgagee Letter 89-1 that are not changed by
the aforementioned instructions are still in full force and effect.
 
     If you have any questions concerning this Mortgagee Letter,
please contact the Valuation Branch of your local HUD Field Office.
 
                            Sincerely yours,
                            James E. Schoenberger
                            General Deputy Assistant Secretary
                              for Housing