www.hudclips.org 


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

 
January 11, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Mortgagee Letter 95-04
 
     TO:  ALL APPROVED MORTGAGEES
 
     SUBJECT:  Single Family Loan Production - Release of CHUMS Additions
 
        This Mortgagee Letter is to inform you that a recent addition has
        been made to our CHUMS system so that lenders and HUD can more easily
        track Construction/Permanent loans.
 
        A construction/permanent mortgage provides for funds during the
        construction period and then converts to a permanent loan upon its
        completion.  Since there is only one closing, prior to the start of
        construction, it is considered a purchase transaction.  The purpose
        of permitting lenders to utilize these mortgages and provide mortgage
        insurance once the construction is satisfactorily completed is to
        assist builders in obtaining construction financing, and to save
        considerable closing costs since there is only one closing.
 
        The construction/permanent loan is made directly to an approved
        borrower/homebuyer.  During construction, the loan is not eligible for
        HUD mortgage insurance.  It becomes eligible only after either a final
        inspection or upon issuance of a certificate of occupancy, whichever
        is later.  The Department believes this additional source of
        construction financing can be extremely helpful to the building
        industry as well as to prospective buyers of new homes.
 
                Currently, Program Identification Code 51 is being used for
        Construction/Permanent Mortgages.  Because Solar Energy Dwellings for
        non-Veterans is also being used by Program Identification Code 51, a
        new Program Identification Code 36 has now been established for
        Construction/Permanent Mortgages.  When processing
        Construction/Permanent mortgages, lenders need to use Program
        Identification Code 36.
 
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                If you have any questions regarding this enhancement, please
        contact your local HUD office.
 
Sincerely yours,
..TX

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