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

 
March 24, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Mortgagee Letter 95-14
 
     TO:  ALL APPROVED MORTGAGEES
 
        SUBJECT:  Single Family Loan Production - Changes to Section 518(a)
                          of the National Housing Act
 
                The purpose of this Mortgagee Letter is to inform you that
        Section 515 of the Housing and Community Development Act of 1992
        amends Section 518(a) of the National Housing Act.  Section 518(a)
        allows the Department, under certain circumstances, to make
        expenditures to repair structural defects in newly constructed homes
        that qualify for maximum loan-to-value financing because approval was
        given by HUD or the Department of Veterans Affairs before the
        beginning of construction.
 
             Section 515 of the 1992 Act amends and expands the provision to
        make eligible assistance for (1) newly constructed homes that qualify
        for maximum loan-to-value financing because they were covered by a HUD
        accepted 10-Year Warranty Plan; and (2) newly constructed condominium
        units (including common areas) that qualify for maximum loan-to-value
        financing for any reason.
 
                To be eligible for financial assistance the homeowner and the
        property must meet all of the requirements currently discussed in HUD
        Handbook 4070.1 REV-2, Chapter 2, except to the extent that
        eligibility has been expanded by the 1992 Act.  The request for
        financial assistance (Form HUD 92556) or other form of notification
        (i.e., a letter or a telephone call that was properly documented) must
        be filed with the local HUD Office not later than four years after the
        date of the first Mortgage Insurance Certificate (Form HUD 59100)
        issued in connection with the property.
 
                The Borrower Notification discussed in the Specific Commitment
        Conditions, item 16, Form HUD 92800.5B is no longer required.
 
        Questions concerning this Mortgagee Letter should be directed to
        your local HUD Office.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner
 
                     *U.S. Government Printing Office: 1995 - 387-734/20055