www.hudclips.org 


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

October 2, 1996
 
MORTGAGEE LETTER 96-56
 
TO:  ALL APPROVED MORTGAGEES
 
SUBJECT:  Single Family Production - Homeownership Bridal Registry Accounts
 
     Secretary Cisneros has announced a new FHA initiative, encouraging couples
planning to get married to establish a bridal registry savings account in order
to help them accumulate the downpayment necessary for purchasing their first
home together.  Given that over two million people were married in 1995, such
an initiative could have a significant and positive impact on new families.
 
     As you know, FHA policy permits cash gifts to be used as an acceptable
source of funds for the downpayment.  This new initiative formalizes the use of
cash for the downpayment by allowing couples to open up a bridal registry
account where family and friends can deposit directly their gifts into that
account.  Then, when the newlyweds purchase their new home, the money will be
available and documented through a lender supervised account.
 
     While lenders will be given the flexibility to set up the details of this
program, the Department envisions that an engaged couple would contact a
mortgage lender and request it to establish a bridal registry account in their
name.  Participating lenders would set up the interest bearing account with a
financial institution supervised by a Federal or State agency.  The
lender should provide to friends and family of the couple information concerning
the bridal registry account and how it works.
 
     When underwriting the loan, the funds would be considered "gift funds" and
so indicated on the form HUD-92900-WS.  Because the funds are regarded as
"gifts", a copy of the bank statement verifying deposits and a letter from the
participating lender in which the lender and mortgagors certify to the best of
 
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their knowledge that these deposits 1) were from friends that do not have a
financial interest in the transaction and 2) were not from participants
(seller, builder, real estate agent, etc.) with a financial interest in
the transaction, should be included in the HUD casebinder.
 
     If you should have any questions concerning this initiative, please
contact your local HUD Field Office.
 
Sincerely yours,
 

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