CHAPTER 1.

SECTION 1. ADMINISTRATION

\*1-1. ASSIGNMENT OF FUNCTION. Complaints are received and

resolved by the Office of the Director, Housing Division in

an Area Office or by the Office of the Supervisor in a

Service Office.

a\. An individual in the office of responsibility is

designated Complaint Officer. The Complaint Officer

must possess a demonstrated ability to perform the

duties in a sympathetic but firm manner and to

provide fair and impartial decisions based on

supported facts.

b\. The Single Family Architectural and Engineering \*

Branch shall provide technical assistance in complaint

matters to the Complaint Officer upon request.

c\. The individual designated as Complaint Officer

shall not be Chief of a Technical Section.

1-2. RELATIONSHIP WITH HOMEOWNER. In order to provide for

orderly processing of a complaint, it must be in written

form. The complaint may be by letter with an itemized list

of defects, or on Form HUD-92556, Construction Complaint

\* (Figure 1-A). If the complaint is taken by phone, Form HUD

92556 shall be filled in for the homeowner.

a\. Complaints received from groups, or verbally, shall

be reduced to writing on an individual basis. It may

be necessary for the Complaint Officer to assist the

homeowner(s) in preparing individual written

complaint(s). At no time shall any homeowner or group

of homeowners be refused a courteous hearing and all

needed assistance in registering complaints. Visiting

the owner in the home may be necessary. \*

b\. If the owner requests permission to examine the

drawings and specifications, approved change orders

and inspection reports pertaining to the property,

\* these exhibits shall be made available for review \*

and/or copying. Technical assistance to review and

interpret these exhibits and to explain HUD-FHA

requirements shall be made available. Under no

circumstances may the exhibits be removed from the

office. Copies may be made at the homeowner\'s

expense.

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\*1-3. FILES AND RECORDS. A Form HUD-92557, Construction Complaint

Case History Card (Figure 1-B), and correspondence folder

shall be initiated for each individual complaint case

received. Case History Cards are to be filed alphabetically

by the last name of the builder for proposed construction

complaints. For existing construction complaints, they shall

be filed alphabetically by the last name of the homeowner.

Correspondence folders are to be identified by the

homeowner\'s name and the FHA case numbers and are filed

alphabetically by the last name of the complainant. The files

are to be segregated into those which are Closed and those

which are Active.

The Case History Cards which make up the active segment

of the file will be flagged or otherwise organized to permit

positive prompt follow-up upon the arrival of established

suspense dates.

a\. A chronological history of every action of the

complaint, from date of receipt to the date of final

disposition, will be entered on the Case History Card.

All entries shall be supported by data contained in the

individual case correspondence folder.

b\. Enter a brief statement on the Case History Card

regarding the nature of each action and its date, i.e.,

\* \"Referred to Area Manager\", \"Inspection Appointment Made\*

with Homeowner\", \"Inspection Made\", \"Builder Requested to

Correct\", \"Mortgagor Notified\", or other such

appropriate entries. These entries may be made with ink.

1-4. PERIODIC REVIEW OF BUILDER\'S FILE. At not less than six-month

intervals, the Case History Cards filed by builder\'s name will

be reviewed for the purpose of evaluating the performance of

builders whose previous construction has been the subject of

registered, justifiable complaints concerning workmanship,

materials, or land improvement. On the basis of such review,

as well as the performance of the builder in making

corrections on a particular case or group of cases, the Field

Office will formulate any courses of action to be imposed upon

particular builders to induce corrective action and will

notify VA accordingly.

The Housing Division Director/Supervisor also reviews the \*

Case History Cards while making a periodic check of the

Builder\'s Workmanship Adjustment.

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SECTION 2. PROPOSED CONSTRUCTION COMPLAINTS

\*1-5. RECEIPT OF COMPLAINT. A homeowner who informs the office of

a complaint shall be told that HUD-FHA will attempt to

resolve the complaint to the extent of its authority after

the builder has first been given the opportunity of resolving

the matter.

a\. The homeowner shall be asked to notify the builder in

writing of the complaint in accordance with the terms of

the Warranty, if this has not already been done, and to

allow two weeks for a response to the complaint. The

homeowner shall be told that if a satisfactory response

is not received in such time, HUD-FHA will assist in

resolving the matter. The office must follow-up on all

complaints.

b\. If the homeowner has already written to the builder and

received unsatisfactory response, they should not be

referred back to the builder. The homeowner may be

requested to furnish copies of any correspondence with

the builder.

1-6. INITIAL REVIEW. Upon receiving a complaint, the Complaint

Officer shall:

a\. Review written submission for completeness. (See

Paragraph 1-5.)

b\. Prepare acknowledgement or request for further necessary

information (Figure 1C or 1D). Additional information

can be requested and received by telephone to expedite

complaint servicing.

c\. Initiate Form HUD-92557 Case History Card (Figure 1B),

and a correspondence folder.

d\. Determine whether or not mortgage insurance under one of

the HUD-FHA programs is in effect. In the event HUD-FHA

is not involved either directly or indirectly, notify the

homeowner of this by letter and, if possible and

appropriate, refer the incoming correspondence to those

who may be able to provide assistance such as the

Veterans Administration or Farmers Home Administration.

e\. Initiate request for the insured case file and other

necessary information. It will be necessary to have the

drawings, Description of Materials and construction \*

compliance inspection reports (Insured Case Backup File),

if a technical review is required.

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f\. Notify builder of complaint items. The notice (Figure 1E)

\* will allow 15 days for reply. \*

\* g. If an attorney writes to HUD on behalf of a homeowner, a

copy of the correspondence sent to the owner shall be sent

to the attorney.

NOTE: All complaints requiring a reply by the Assistant

Secretary for Housing-Federal Housing Commissioner,

or the Secretary of HUD, shall be given priority in

all complaint processing stages to meet the due dates.

In the initial stage, the matter may be referred by

the Complaint Officer to the Single Family

Architectural and Engineering Branch for technical

review without waiting for the builder\'s reply.

Where the complaint is eligible for HUD assistance and

the defect is of a nature to make the dwelling

uninhabitable, normal procedures may be abbreviated

to permit immediate repairs.

1-7. FOLLOW-UP. It is essential for expeditious complaint

servicing to assure positive, prompt follow-up on the

established suspense date.

a\. If no answer to the original complaint notice to the

builder if received in 15 days, a follow-up letter (Figure

1F) is sent. The letter is a warning notice and allows

the builder an additional 15 days to reply.

b\. When the builder does not reply to the second notice by

the stated due date, 30 days from the date of the first

letter, an Order of Temporary Denial of Participation

shall be issued to the builder. (See Figure 1G and

Paragraph 1-15.) If there is any evidence in the

construction complaint file that all or part of the

complaint items may be eligible for financial assistance

under Section 518(a), for those items follow instructions

in Paragraph 1-15b.

c\. This order shall not be rescinded until the builder

satisfactorily completes all necessary repair work or

reimburses HUD for funds expended to repair, or 12 months

have elapsed.

1-8. RECEIPT OF BUILDER\'S REPLY. When the builder notifies the

Field Office that corrective action has been taken, the

homeowner is notified by letter (Figure 1H). Reword second

sentence of the third paragraph as follows: \*

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The case is \"closed\" unless the homeowner notifies

the field office that corrective action has not been

taken (See Paragraph 1-12 and the following):

\* a. If the builder notifies the Field Office that

corrective action will be taken, the homeowner is

notified by letter (Figure 1H). The builder shall

state the date by which necessary repairs will be

completed.

b\. If the builder does not notify the Field Office of

completion of corrective actions by the date

established, a follow-up letter (Figure 1-0) allowing

15 days for a written reply is sent to the builder.

c\. In no case shall excessive time be allowed for the

correction of complaints. If the corrective action

is not or cannot be accomplished within 45 days after

the receipt of the builder\'s initial reply, an Order

of Temporary Denial of Participation shall be issued

to the builder. (See Figure 1-0) and paragraph 1-12c.

d\. If there is any evidence in the construction

complaint file that all or part of the complaint

items may be eligible for financial assistance under

Section 518(a), for those items follow instructions

in Paragraph 1-12b. \*

1-9. TECHNICAL REVIEW. Those complaints which cannot be resolved

\* by the Complaint Officer shall be forwarded to the

Architectural and Engineering Branch for necessary action. \*

Such complaints would include but are not limited to: Builder

disclaims any or partial responsibility for items of

complaint; homeowner is dissatisfied with corrective action;

and Congressional inquiries.

\* a. The resolution of a construction complaint may

be a difficult matter. The Chief Architect should review

cases presenting potentially difficult aspects and shall

append a note to the case documents to identify any

special or unusual comments or instructions he deems

necessary, when assigning the case for inspection. \*

b\. The Chief Architect shall assign each complaint case to an

inspector qualified to handle it judiciously.

c\. The complaint offices should determine how many

complaints, and their nature, which have been filed

against the particular builder. This information should

influence the sanctions imposed against the builder.

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1-10. COMPLAINT INSPECTION. The inspector shall make the inspec-

tion as soon as possible. An appointment shall be arranged

with the homeowner. It is essential that the homeowner

know that an inspector will be visiting the property. It

is desirable to have the homeowner or owner\'s

representative present during inspection but mandatory only

if the inspector must enter the house. If a complaint

inspection involves exterior items, the inspection may be

made without the homeowner being present but not without

their knowledge that the inspection is scheduled. When an

appointment is made to inspect the property, an entry

\* is made on Form HUD 92557, Construction Complaint Case \*

History Card, to document this fact.

a\. There is no objection to the builder being present

\* during inspections. The builder shall be notified in

advance of the time of inspection and invited to be

present. However, it is not required that the builder

be present. If the homeowner objects to the

builder\'s presence, the builder shall not be invited.

Add the following sentence to Form HUD 92557 under

Other Actions or Details:

If no one is home on the date set for an

interior inspection, the homeowner shall be sent

a form letter unless other arrangements for

inspection can be made expeditiously by

telephone.

\* b. The inspector should be careful not to make personal

judgments as to responsibility to the homeowner or

builder. The inspector shall be courteous to all

parties regardless of provocation. The inspector

shall answer any questions and provide technical

explanations within the scope of his personal

knowledge and authority, but shall not commit the

Field Office to specific actions. If a homeowner or a

homeowner\'s representative is belligerent, provocative

or emotional, the inspector shall courteously refrain

from discussion of his observations, shall request

that the homeowner submit to the HUD Complaints

Officer in writing any additional information or

comments the homeowner desires that HUD consider, and

shall note on the inspection report the attitudinal

problem encountered. The inspector\'s function is to

help homeowners whenever help is justifiable, not to

be the recipient of abuse or insults. \*

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\* c. The inspector should try to avoid considering or

discussing nonrelated verbal complaints at this time,

and should inform the homeowner to submit any

additional complaints in writing to the builder. The

inspector should explain that this is required under

the warranty. The inspector may wish to look at

additional items to avoid additional inspection trips.

Such additional items are to be reported separately

and will not be considered unless a subsequent

complaint is received.

d\. Each item of complaint shall be covered on Form HUD-

92051, Compliance Inspection Report, or by memorandum.

Determination as to builder responsibility, owner

maintenance, or \"no determination possible\" shall be

made. A clear, concise, technical explanation for the

conclusion on each item shall be included. It

shall be stated if the complaint is due to a

noncompliance with drawings, Description of Materials,

or Minimum Property Standards, or a deficiency caused

by faulty material, construction, or workmanship.

e\. The Chief Architect shall review the inspector\'s

report for completeness, comparing it with the

homeowner\'s complaint to assure that every item of

complaint has been evaluated, that reported findings

are technically accurate, that there are no

inconsistencies with prior inspection reports, and

that any additional items or concerns reflects in

post-inspection correspondence from the homeowner

have been addressed, before submitting the report to

the Complaint Officer. If the review indicates any

omission or technical inaccuracy, the file shall be

returned to the inspector for such further action as

may be necessary.

1-11. FINAL DETERMINATION BY COMPLAINT OFFICER. After review

of the file, including any inspection report, the

Complaint Officer shall place the complaint in one of

three categories for further handling.

Category 1. That none of the items of complaint are

justifiable.

Category 2. That some items of complaint are

justifiable and the builder\'s respon-

sibility. Responsibility for other items

cannot be determined or items are a

maintenance responsibility of the homeowner.

Category 3. That the entire complaint is justifiable

and that the corrective action is the

responsibility of the builder. \*

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\* a. Complaints in Category 1 only may be closed by sending

a letter to the mortgagor advising that HUD has

evaluated the complaint and does not find it the

responsibility of the builder to correct the item(s).

The basis for the determination, for each item of

complaint, shall be provided the mortgagor in the

letter. Form letter (Figure 2C) shall be used for

this purpose. Similar notice shall also be given to

the builder.

b\. Complaints in Categories 2 or 3 are considered

justifiable either in part or in whole. The

Complaint Officer shall initiate appropriate requests

for correction of the items to the builder and

implement such follow-up procedure as is necessary to

assure timely corrective actions. Form letter (Figure

1-J) may be used for this purpose. If a reply is not

received within 10 days, follow-up letter (Figure 1-K)

shall be sent. The above letters shall be completed to

reflect the particular conditions. Appropriate copies

of all such correspondence are to be provided to the

homeowner to keep the homeowner informed of the

actions being taken to provide assistance. Duplicate

copies should be sent any mortgagor known to be

represented by counsel. Form letter (Figure 1-M) shall

be used in transmitting copies to the homeowner and

may be modified to the extent necessary to reflect

special local conditions. The letter will include a

list of any homeowner complaint items determined not

to be the builder\'s responsibility to correct, and the

reasons for each such determination.

1-12. BUILDER\'S FAILURE TO RESPOND OR TAKE CORRECTIVE ACTIONS.

When a builder (or other person responsible for correction

of a defect) fails to respond within ten days to the second

request to make repairs, the Area Office Manager shall

issue an Order of Temporary Denial of Participation to the

builder (Figure 1-L). When a builder (or other person

responsible for correction of a defect) fails to complete

corrective actions within 45 days following HUD\'s second

request that repairs be made, and the delay is occasioned

by other than weather or special timing sequences dictated

by the nature of the repairs, the Area Office Manager

shall issue an Order of Temporary Denial of Participation

to the builder (Figure 1-L). In either instance, the order

shall remain in effect until the builder satisfactorily

responds to a request for repairs or reimburses HUD for

expenditures made to repair a property, or 12 months have \*

elapsed.

a\. After notifying the builder, a letter shall be sent to

the complainant to explain HUD-FHA\'s position (Figure

1N).

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\*(1-12) b. If there is any evidence in the construction

complaint file that all or part of the complaint

items may be eligible for financial assistance under

Section 518(a), the modified format for letter (Figure

1N) shall be used to advise the homeowner that a

claim for assistance with major structural defects

will be accepted specifically for the major structural

defect item(s). Evidence of potential Section 518(a)

eligibility may be deduced from an inspector\'s

finding or recommendation, from homeowner\'s opinion

that such a defect exists, or from a homeowner\'s

description of defects that might come within the

definition of major structural defects in Section 2-3.

c\. An Order of Temporary Denial of Participation must

comply with the requirements found in 24 CFR Part 24,

Subpart B. The relevant provisions of these

regulations are summarized below:

\(1\) The order shall be for a temporary period

pending a satisfactory response from a builder

concerning a request to make repairs or to

reimburse HUD for expenditures made to repair a

property.

\(2\) The restrictions imposed by the order shall

not extend beyond the jurisdiction of the Area

Office Manager and shall be limited to the

program under which the offense occurred.

\(3\) Written notification of the order shall be

sent to the builder by certified or registered

mail, return receipt requested (Figure 1L).

\(4\) The notice shall clearly state the grounds

as well as the regulatory basis for the Order,

and the Order shall be effective on the date of

the notice.

\(5\) The temporary nature of the order shall be

explained in the notice.

\(6\) The notice shall also explain the impact of

the order on the builder\'s participation in

Departmental programs and shall specify the

geographical area affected by the order.

\(7\) The notice shall advise the builder that a

written request for an informal hearing may

be made to the Area Office Manager. The request

must be received within 20 days of the notice

from the Area Office Manager. \*

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\* (8) The notice shall advise the builder

that the order will remain in effect during any

appeal process.

d\. Informal hearings shall be conducted in accordance

with the following instructions.

\(1\) Upon receipt of a request for an informal

hearing, the Area Office Manager shall promptly

communicate with the builder to arrange a

hearing (Figure 1P). The date for the hearing

shall be set within 30 days of receiving

a timely request.

\(2\) The builder may be represented by counsel who

may present all relevant materials to the

hearing official.

\(3\) Formal rules of evidence and procedure will not

apply.

\(4\) A transcript of testimony should not be made,

but the Area Office Manager should prepare and

retain a summary of all information presented.

This summary should contain a sufficient

detail to justify any action taken by the Area

Office Manager. If a person requests that the

hearing be transcripted, he/she shall pay the

cost.

\(5\) The Area Office Manager shall send written

notice to the builder of a decision to withdraw,

modify or affirm the order (See Figure 10 for

sample letter affirming the order).

\(6\) If the order is affirmed, (see Figure 1-Q) the

builder may appeal that decision to the

Assistant Secretary for Housing in accordance

with the provisions of 24 CFR 24.7(b).

1-13. HOMEOWNER APPEALS. The right to appeal an unfavorable or

adverse decision on a construction complaint is available

to the homeowner. This appeal process is not to be equated

with the procedure by which an informal hearing is made

available after an Order of Temporary Denial of

Participation is imposed against a builder. A homeowner

appeal may be a request for further review based upon new

or additional information, or it may be a request for

review without submission of new or additional information.

Appeals may be submitted to the Area Office

Manager/Service Office Supervisor or to the Director,

Office of Regional Housing. The following procedures are

applicable: \*

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\* a. Area Office Manager/Service Office Supervisor: Upon

receipt of an appeal, or a request for further

consideration, the complaint file shall be reopened and

reviewed in its entirety, including a property inspection

by the Architectural and Engineering Staff. If the request

was received directly from either party to the complaint,

the Area Office Manager/Service Office Supervisor shall

resolve the matter and the Complaint Officer shall prepare

and send any required letters to the parties of the

complaint.

b\. Director, Office of Regional Housing: Upon receipt of an

appeal or a request for further consideration, the Director

shall send an interim acknowledgement to the complainant.

The correspondence shall be immediately referred to the

Field Office having jurisdiction for further review and

examination and a complete report. The Area Office

Manager/Service Office Supervisor\'s recommendation for

disposition and the complaint file shall be forwarded to

the Region for final decision and reply to the

complainant. The complaint file will be returned to the

Field Office for any additional actions needed to close out

the file. \*

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SECTION 3. COOPERATION WITH THE VETERANS ADMINISTRATION

1-14. GENERAL.

a\. HUD/FHA may issue a high-ratio commitment on

properties completed less than one year if the

properties were submitted to the Veterans

Administration for guaranty, insurance or direct loan

prior to beginning construction and compliance

inspections during construction were made by VA.

Likewise, maximum VA benefits are available on

properties approved for mortgage insurance prior to

beginning of construction and inspected during

construction by HUD-FHA. This same type of

cooperation continues into the field of construction

complaints.

b\. HUD/FHA will accept primary responsibility

for HUD/FHA inspections. VA will accept primary

responsibility for VA inspections. This procedure

will be followed regardless of the fact that the other

agency may have made supplemental inspections.

1-15. HUD-FHA INSURED PROPERTY INSPECTED BY VA. When initial

review of a construction complaint (Paragraph 1-9) shows

that compliance inspections were made by VA and

construction was acceptably completed under VA inspections,

the homeowner\'s complaint shall be referred to that agency

for disposition. The homeowner shall be advised of the

referral and the complaint shall remain open. When VA has

completed its action regarding the complaint, it will make

a written report to the Area Office Manager/Service Office

Supervisor that the complaint has been satisfied or that

the builder refuses or has failed to satisfactorily

correct the defect(s) although deemed the builder\'s

responsibility.

a\. If the case has been resolved or referred

to VA, HUD/FHA will close the matter.

b\. If VA has concluded that certain construction

defect(s) are the responsibility of the builder who

failed or refused to correct them, the Area Office

Manager should determine whether an Order of Temporary

Denial of Participation should be issued to the

builder. (Note: VA has no authority to initiate

restrictive action against a builder unless the

property is security for a VA loan). This

determination should be based upon documentation from

VA or upon an inspection made by a HUD/FHA staff

member, which supports the VA conclusion that the

builder failed or refused to correct the defects.

These documents must contain sufficient data to

support the Department\'s administrative action in an

appeal hearing if one is requested by a builder.

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c\. If the VA reports that the complaint is not the

builder\'s responsibility, the homeowner will be

notified and the case will be closed.

\* d. The Area Office Manager/Service Office Supervisor may

act on the report made by VA, or request (1) that an

inspection be made by a HUD-FHA staff member, or (2)

request a joint inspection with FHA-VA

representatives. The VA should be advised of actions

taken.

e\. To assist the HUD-FHA purchaser in cases involving VA

inspections, the local VA office may request that a

HUD-FHA representative accompany the VA representative

to inspect the property. Such request shall be

accepted. The HUD-FHA and VA representatives shall

inspect the property together and jointly agree as to

recommendations for corrections, then forward it to

the Complaint Officer for his review.

f\. The Complaint Officer shall hold the report in

abeyance for notification by VA that the complaint has

been remedied. If the complaint is remedied, the HUD-

FHA complaint shall be closed out. If the complaint

is not remedied, an Order of Temporary Denial of

Participation shall be issued to the builder. See

Paragraph 1-12c.

g\. If agreement cannot be reached locally as to items of

builder responsibility or if there is any disagreement

between HUD-FHA and VA about restriction of the

builder, the entire file, together with the Area

Office Manager\'s recommendations, shall be forwarded

to the Regional Director for Housing for review. No

action shall be taken on the complaint pending

instructions from the Regional Director. \*

1-16. VA GUARANTEED PROPERTY INSPECTED BY HUD-FHA. If a

construction complaint received by VA is referred to HUD-

FHA as the agency having primary responsibility for

servicing the complaint, it shall be received and handled

as an initial complaint by HUD-FHA. The procedure contained

in Paragraphs 1-8 through 1-16 is applicable.

a\. If correction of justified complaints cannot be

accomplished, the VA field office referring the

complaint shall be so notified.

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b\. A VA guaranteed property is not eligible for financial

assistance under Section 518(a), even though

inspection during construction was made by HUD.

Veterans Administration legislation similar to Section

518(a) is provided in Section 1827 of Title 38 of U.S.

Code.

1-17. CONTINUING RELATIONSHIPS WITH VA. In some instances, it

may be necessary for both HUD-FHA and the VA to determine

the conditions upon which the other predicated its

commitment to insure or issued its Certificate of

Reasonable Value. HUD/FHA will afford representatives of

the VA the opportunity to examine drawings and

specifications on file where such examination is related to

VA operations. Similar courtesy will be extended by the

VA.

a\. Field Offices will provide the manager of the Regional

Office of the VA with copies of the notification

letters identified as Figure 1J and 1L containing the

name of the builder who has failed to correct

construction deficiencies, as well as copies of any

subsequent letters which have the effect of

withdrawing such notification.

b\. When VA notifies HUD-FHA that it is refusing to do

business with a builder due to a failure to correct a

justifiable complaint, the Area Office Manager shall

refer the matter to the Assistant Secretary for

Housing with a recommendation that debarment

proceedings pursuant to 24 CFR 24.6(a), be initiated

against the builder. \*

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CHAPTER 1, FIGURE 1-C

(Letter of Acknowledgement to Mortgagor)

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

I am replying to your letter dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_concerning

the problem(s) you are experiencing with your home.

To assure that your case is given every possible consideration, it

is essential that we consider all information which relates to your

case.

We have communicated with the appropriate individuals and as soon as

we have received and reviewed the required facts, I will write to

you.

Sincerely,

Page 1-17 8/81

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CHAPTER 1, FIGURE 1-D

(Letter to Obtain FHA Case Number from Complainant)

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

This is in response to your letter of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ concerning

the home you recently purchased.

To enable us to locate our file on your property, please furnish us

with the FHA Case Number, which may be obtained from the lending

institution to which you make your payments; or, it may be found

among your papers relating to the purchase of your home.

Your early attention to this matter will be appreciated.

Sincerely,

8/81 Page 1-18

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CHAPTER 1, FIGURE 1-E

(Letter Transmitting Mortgagor\'s Complaint to Builder,

Seller, Warrantor, Guarantor or Certifying Contractor)

(Modify as Necessary for Particular Addressee)

(Send copy to Complainant)

Subject: FHA Case Number

Owner

Property Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

Enclosed is copy of a letter (or Form HUD-92556) received from the

above owner expressing dissatisfaction with the property purchase

from you.

\*If you regard the complaint(s) as justified, please advise us,

within 15 days and in writing, when you will have completed necessary

repairs. Repairs must be completed within 60 days unless the

weather or other factors make it impracticable to do so.

It is important that we hear from you on this matter within fifteen

\(15\) days from the date of this letter whether or not you agree. \*

Sincerely,

Enclosure

Page 1-19 8/81

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CHAPTER 1, FIGURE 1-F

(Follow-up on Figure 1-E Letter to Builder, Seller,

Warrantor, Guarantor or Certifying Contractor

(Modify as Necessary for Particular Addressee)

(Send copy to Complainant)

Subject: FHA Case No.

Owner

Property Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

On \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, we
mailed you a copy of a

construction complaint on the property identified above.

We asked for a reply by
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, which
has

not been received.

Failure to respond by (15 days from date of this letter) will be

cause for imposing administrative sanctions to restrict your

participation in HUD-FHA programs.

Sincerely,

Enclosure

(Copy of First Letter - Figure 1-E)

8/81

Page 1-20

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CHAPTER 1, FIGURE 1-G

(Letter to Builder, or Other Person Responsible for the

Defect, Who Fails to Respond to Figure 1F Request

(Modify as Necessary for Particular Addressee)

(Do Not Send Copy to Complainant)

REGISTERED MAIL - RETURN RECEIPT REQUESTED

Subject: FHA Case No.

Property Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_:

Our records indicate that you have not responded to my letter of

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ regarding a construction
complaint on the

property identified above.

\*As a result of your failure to respond to my letter, an Order of

Temporary Denial of Participation, pursuant to 24 CFR 24.18,

effective as of the date of this letter, is imposed against you. We

will decline to process any future applications wherein you are a

party to the transaction. This order is limited to the jurisdiction

of this office, but the order will not be removed until you respond

to my letter of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
until 12 months has

elapsed. Failure to respond could lead to more serious

administrative sanctions.

If you disagree with this decision, you may obtain an informal

hearing by sending a written request to me for reconsideration of

this decision. The request must be received within 20 days from the

date of this letter.

Sincerely,

(Area Manager or

Regional Administrator) \*

8/81

Page 1-21

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CHAPTER 1, FIGURE 1-H

(Letter to Complainant - Builder, Seller, Warrantor, Guarantor

or Certifying Contractor Has or Will Make Repairs

(Include Copy of Builder, Seller, etc. Letter)

(Modify as Necessary for Particular Addressee)

Subject: FHA Case No.

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

I know you will be pleased to learn that the builder of your home has

\*agreed to correct the conditions which you reported to us in your

letter.

The builder has agreed to begin making the corrections on
\_\_\_\_\_\_\_\_\_\_

and to complete the work by \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

When the corrections have been completed, I would appreciate your

writing to us again so that we can close the file on this complaint.

If the builder does not adequately complete the corrective work by

the date identified above, please write me explaining which items of

work are incomplete or unsatisfactorily completed, so that HUD may

take proper further action.

OR

I am pleased to learn that the builder of your home has corrected the

conditions referred to in your recent letter. Accordingly, we are

closing the file on your construction complaint. If you do not agree

that your complaint has been satisfactorily resolved, please write me

within 45 days from the date of this letter, explaining why you

disagree, so that we may reopen your complaint file or take other

proper action. \*

If I may be of further assistance, please write again.

Sincerely,

8/81

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CHAPTER 1, FIGURE 1-I

(Letter to Complainant When

Complaint Officer Determines Complaint Not

Justified - Proposed Construction)

Subject: FHA Case No.

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

I am replying to your recent letter concerning the difficulty you

are experiencing with your home.

We have determined that the property you purchased was constructed

in substantial conformity with the plans, Description of Materials

and HUD Minimum Property Standards and any approved changes thereto.

(Basis for Determination)

In view of the foregoing, we cannot request that repairs or

corrections be made.

If you believe your complaint has not been fairly reviewed, you may

request reconsideration by writing to me and presenting any facts,

information or arguments not previously considered.

\*You may examine and copy at your own expense all documents in our

files pertaining to your home, including plans, specifications,

approved change orders and inspection reports. If you wish to

examine these documents, please call or write
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

at \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
telephone number \_\_\_\_\_\_\_\_\_\_\_\_ for

an appointment to do so. Technical assistance to review and

interpret these documents will be provided if the necessary staff is

available. \*

Sincerely,

8/81

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CHAPTER 1, FIGURE l-J

(Letter to Builder, Seller, Warrantor, Guarantor, or

Certifying Contractor Informing Him/Her of HUD-FHA

Determination that Corrective Action is Their Responsibility)

(Copy to Complainant)

Subject: FHA Case No.

Owner

Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

This office has written to you previously concerning defects in the

property identified above. Inspection of the property shows that

the owner\'s complaint is justifiable and of a nature which should be

corrected by you.

Correction of the following items is determined to be your

responsibility:

Please inform this office within 10 days as to the approximate dates

you expect to commence and to complete the corrective work and make

necessary arrangements with the homeowner for access to the property.

Sincerely,

8/81 Page 1-24

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CHAPTER 1, FIGURE 1-K

(Follow-up Letter to Builder, Seller, Warrantor,

Guarantor or Certifying Contractor Who Fails to

Respond to Figure 1-J)

(Modify as Necessary for Particular Addressee)

(Do Not Send Copy to Homeowner)

Subject: FHA Case No.

Owner

Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

This office wrote to you on
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ concerning

defects in the above property which were determined to be your

responsibility for correction. A copy of that letter is enclosed.

At this time, we have had no reply from you concerning this matter.

Please inform this office within 10 days as to the appropriate dates

you expect to commence and to complete the corrective work. It will

be necessary for you to make arrangements with the homeowner for

access to the property.

A failure on your part to respond to this request will be cause for

imposing administrative sanctions against you in order to restrict

your participation in HUD-FHA programs.

Sincerely,

Enclosure

8/81

Page 1-25

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CHAPTER 1, FIGURE 1-L

(Letter to Builder, or Other Person Responsible for

the Defect, Who Fails to Correct Justifiable

Construction Complaints)

(Do Not Send Copy to Complainant)

REGISTERED MAIL - RETURN RECEIPT REQUESTED

Subject: FHA Case No.

Property Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

This office has communicated with you both by letter and telephone

requesting that you correct defects in the property identified above.

This office has found the complaint to be justified, and you have

been asked to correct the following items:

(list items to be corrected)

\*As a result of your failure to take corrective action, an Order of

Temporary Denial of Participation, pursuant to 24 CFR 24.11(a),

effective as of the date of this letter, is imposed against you. We

will decline to process applications wherein you are a party to the

transaction. This order is limited to the jurisdiction of this

office, but the order will not be removed until all complaints on

the items listed above have been satisfactorily corrected or you

have reimbursed HUD for expenditures made to repair the property or

12 months have elapsed. Failure to take corrective action could lead

to more serious administrative sanctions.

If you disagree with this decision, you may obtain an informal

hearing by sending a written request to me for reconsideration of

this decision. The request must be received within 20 days from the

date of this letter. The order will remain in effect during any

appeal process.

Sincerely,

Area Manager or

Regional Administrator \*

8/81

Page 1-26

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CHAPTER 1, FIGURE 1-M

(Suggested Type Letter Informing Homeowner That

Complaint or Portion of Complaint is Justified)

Subject: FHA Case No.

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

\*Your attention is called to the enclosed copy of our letter to the

builder of your home.

You will note that the builder has been asked to make arrangements

with you to enter the property and take prompt action to correct the

defects listed in Section A which have been determined to be the

builder\'s responsibility.

Please let me know if the builder does not make these arrangements

within the next 10 days.

We have determined that the builder is not responsible for the

complaint items listed in Section B because the construction is in

substantial compliance with the HUD Minimum Property Standards and

with the plans and Description of Materials and any approved changes.

HUD\'s basis for this determination is \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.
If you

believe your complaint has not been fairly reviewed, you may request

reconsideration by writing to me and presenting any facts,

information or agreements not previously considered.

You may look at all documents in our files about your home,

including plans, specifications, approved change orders and inspec-

tion reports. If you wish to examine these documents, please call or

write \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ at
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, telephone number \_\_\_\_\_\_\_\_

for an appointment to do so. If you wish copies made, we will

charge you \_\_\_\_\_\_ per copy. If the necessary staff is available,
we

will assist you to understand the documents. \*

8/81

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CHAPTER 1, FIGURE 1-N

(Letter Informing Homeowner When Builder

Seller, Warrantor, Guarantor or Certifying Contractor Fails

to Correct Items That are Their Responsibility)

(Modify as Necessary When Other Than Builder)

Subject: FHA Case No.

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

I am replying to your recent letter concerning the difficulty you

are experiencing with your home.

Our examination showed that correction of these items should be the

responsibility of the builder. The builder is either unable or

unwilling to make the required corrections and has failed to

respond to our request to do so. In these cases, our recourse is to

decline to do further business with the builder.

The builder was notified, that until such time as all construction

defects for which the builder is responsible are corrected

satisfactorily, that HUD-FHA will decline to accept for processing

applications where the builder is a party to the transaction for a

period not to exceed 12 months. Generally, restriction of this type

alerts the builder to the responsibility and a decision may be made

to make the corrections. This is necessary if the builder desires to

restore eligibility to do business with HUD-FHA.

I am sorry that I cannot give you a more favorable reply, as to the

builder\'s correction of your justified complaints.

(Add if Section 518(a) may be applicable)

If you have justifiable complaints of structural defects in your

home, it may be possible for HUD to render some form of financial

assistance relating to them. Please fill our the enclosed Form HUD

92556SFA (Request for Financial Assistance) and return it to this

office no later than four years after the date of the first Mortgage

Insurance Certificate (Form HUD 59100) on your property. The date of

the Form HUD 59100 may be obtained from the parties to whom you

tender your mortgage payments, but will be approximately the date

when you originally signed papers transferring title of the property

to you. \*

Sincerely,

8/81

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CHAPTER 1, FIGURE 1-0

(Follow-up Letter to Builder, or Other Person

Responsible for Defect, When Notification is

Not Received by Suspense Date)

Subject: FHA Case No.

Owner

Address

Dear\_\_\_\_\_\_\_\_\_\_\_\_:

You informed this office that defects in the subject property would

\*be corrected by\_\_\_\_\_\_\_\_\_\_\_\_. To date, we have not been
notified of

the completion of corrective action on the following items:

(list items for which notice of completion has not been received)

Please inform this office in writing within 15 days as to the

completion of the corrective action or the reason for delay in

correction.

(Add when applicable)

Since corrective action on the above listed items will require more

than 45 days, effective as of the date of this letter, an Order of

Temporary Denial of Participation is imposed against you. We will

decline to process applications wherein you are a party to the

transaction. This order is limited to the jurisdiction of this

office, but the order will not be removed until all complaints on the

items listed above have been satisfactorily corrected, or 12 months

have elapsed.

If you disagree with this decision, you may obtain an informal

hearing by sending a written request to me for reconsideration of

this decision. The request must be received within 20 days from the \*

date of this letter.

Sincerely,

8/81

Page 1-29

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CHAPTER 1, FIGURE 1-P

(Suggested Type Letter for Responding to a

Request for an Informal Hearing)

REGISTERED MAIL - RETURN RECEIPT REQUEST

Subject: FHA Case No.

Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

Your request for an informal hearing is hereby acknowledged. On

(date/time), at (location), an informal hearing will be held to

\*reconsider the Order of Temporary Denial of Participation Imposed

against you. If these arrangements are not suitable, please inform

me so an alternative date may be selected. At the hearing, you may

be represented by legal counsel who may present all relevant

materials on your behalf. Formal rules of evidence and procedure

will not apply. Within 30 days of the hearing, I will advise you of

my decision to withdraw, modify or affirm the Order of Temporary

\*

Denial of Participation.

Sincerely,

8/81

Page 1-30

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CHAPTER 1, FIGURE 1-Q

(Suggested Letter Informing Builder, or Other Person

Responsible for the Defects That an Order of Temporary

Denial of Participation Has Been Affirmed)

REGISTERED MAIL - RETURN RECEIPT REQUESTED

Subject: FHA Case No.

Address

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

Having reviewed all materials presented at the informal hearing held

\*on \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, I have decided to affirm the
Order of Temporary

Denial of Participation. If you wish to appeal this decision, you

may write to the Assistant Secretary for Housing at 451 7th Street,

SW, Washington, DC 20410. Your written request must be received

within 20 days of the date of this letter. A hearing granted in

response to an appeal to the Assistant Secretary for Housing will be

conducted in accordance with 24 CFR 24.7(b). \*

Sincerely,

8/81

Page 1-31

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SECTION 4. EXISTING CONSTRUCTION COMPLAINTS

1-18. GENERAL. The extent of authority to correct defects

\* resulting from homeowner complaints, if an existing

property and insured under Section 235, is limited to

those eligible items in properties meeting the statutory

eligibility criteria under Section 518(b). Valid items

are to be corrected promptly.

HUD has no authority to correct defects resulting from

complaints pertaining to an incorrect or improper

contractor certification or mortgagees certifications or to

any defects overlooked by the HUD appraiser at the time

of appraisal.

1-19. EVALUATION OF ELIGIBLE COMPLAINTS. Complaints which

cannot be resolved by the Complaint Officer (C.O.) shall be

forwarded to the Director, Housing Division/Service Office\*

Supervisor for necessary action. Complaints that are

minor in nature, as outlined in Paragraph 1-26, or those

not requiring technical review or inspection may be

evaluated and disposed of by the C.O.

1-20. COMPLAINT OFFICER\'S ACTIONS. The C.O. will review

the formal complaint to determine if the submission is \*

\* complete and if HUD mortgage insurance is involved and will

also prepare an acknowledgement. If the submission is

incomplete, the C.O. will request further information. The

C.O. will initiate a Case History Card, HUD-92557, at this

time. In the event that HUD-FHA is not involved either

directly or indirectly, the C.O. will notify the homeowner

by letter and, if appropriate, refer incoming

\* correspondence to those who may be able to provide

assistance, such as the Veterans Administration, Farmers

Home Administration, etc.

If the C.O. determines that the case is Section 235

existing and eligible under Section 518(b), the procedures

contained in Chapter 3 of this Handbook must be followed.

If the complaint is justifiable, the C.O. will initiate a \*

request for the case binder and other necessary information

and notify all responsible parties (certifiers or

mortgagees) of complaint items. If no answer from a

responsible party is received in 15 days, a follow-up

letter is sent.

1-21. CORRECTION OF COMPLAINTS. The correction of an

eligible complaint will be attempted through, but not

limited to, written demands on the certifying contractor or

the certifying mortgagee as deemed necessary and

appropriate.

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If corrective action is not obtainable through the

certifying contractor or certifying mortgagee and the C.O.

has determined that correction cannot be accomplished

through the provisions of Section 518(b) of the Housing

\* Act, the complaint file will be forwarded to the Director,

Housing Division/Service Office Supervisor for assignment

for field inspection.

1-22. ASSIGNMENT FOR FIELD INSPECTION. Since the resolution

of a homeowner complaint is often a difficult matter, the

Director, Housing Division/Service Office Supervisor

should assign the complaints to the best technical

staff available when a field review is required. All

complaints will receive a field inspection, except those

meeting the exception criteria in Paragraph 1-26. The

Director, Housing Division/Service Office Supervisor will

assign all complaints to an appraiser or inspector who \*

is qualified to handle the particular complaint

judiciously. Each item of complaint shall be covered on a

Form HUD-92051 Compliance Inspection Report or by a

\* memorandum. \*

1-23. COMPLAINTS NOT TO BE FIELD REVIEWED. Complaints

which ordinarily will not require a field review are

those involving cosmetic or maintenance items which are

obviously not eligible for any kind of assistance.

However, should a complainant insist upon field inspection,

an inspection shall be made.

1-24. PARTICIPANTS IN THE FIELD REVIEW. There is no objection

to any responsible party to the complaint being present

during the inspection. They shall be notified in advance

of the time of inspection and invited to be present. The

inspector or appraiser should be careful not to make

personal judgment as to responsibility to any party to the

claim.

1-25. FIELD REVIEWER\'S ACTIONS. When the defect is one

that is not eligible for repair and/or compensation

through a HUD program, the appraiser or inspector shall so

\* inform the homeowner. The appraiser or inspector will, to\*

the best of their ability, inform the homeowner of what is

needed to correct the deficiency and suggest either \"do it

yourself\" methods if the defect is minor in nature or the

hiring of a contractor if the defect is more serious.

Every possible courtesy will be extended by the appraiser

or inspector to the homeowner. The appraiser or

\* inspector should then file a report with the Director,

Housing Division/Service Office Supervisor and the C.O. for

official follow-up action. \*

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1-26. FOLLOW-UP. The Director, Housing Division/Service

\* Office Supervisor upon receipt of the report concerning the

field inspection will take the actions indicated

by the report. If administrative action is indicated, the

Service Office Supervisor will initiate the action by

memorandum to the Area Office Manager. A written report to

the C.O. will be made concerning responsibility and other \*

pertinent matters necessary to resolve the complaint. If

HUD cannot be of further assistance, the C.O. will send a

follow-up letter to the homeowner which sets forth the

reasons for HUD\'s position along with HUD\'s opinion on the

manner in which the defect can best be corrected.

1-27. ACTION AGAINST NON-OCCUPANT SELLERS. In all cases

where a complaint is received and the seller is one who is

in the business of seller for profit and was not the last

owner-occupant, an attempt shall be made to obtain

correction of all justifiable items of the complaint. The

Field Office shall use all options available within the

scope of its authority to achieve timely and equitable

settlements from the seller. This procedure will be

followed regardless of the Section of the Housing Act

under which the appraisal was processed. All such attempts

will be thoroughly documented.

1-28. ACTION AGAINST CONTRACTORS. When the complaint

\* involves the failure by a contractor to resolve an

eligible complaint, an Order of Temporary Denial of

Participation shall be imposed. \*

Failure of a licensed firm to correct eligible complaint

may warrant notification of the appropriate licensing

authority in addition to the other actions described

herein.

\* Failure of a responsible party to correct an eligible

complaint may result in issuance of an Order of Temporary

Denial of Participation by which the Field Office will

refuse to accept future certifications from the parties

involved that the work is completed. \*

\* If when reviewing complaints, the Director, Housing

Division/Service Office Supervisor notices a non-typical

number of complaints being received on a specific

contractor, the contractor\'s name will be forwarded to the

Architectural and Engineering Branch requesting additional

field reviews be completed on the specific contractor.

8/81

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1-29. TIMELINESS OF ACTION. In all instances which require field

\* inspection, the inspection shall be scheduled and completed

within 5 working days after receipt of the case binder

relative to the complaint. Written response to the

homeowner concerning the action to be taken shall be

completed within 5 working days after completion of the

field inspection.

On those complaints not requiring a field inspection, a

written response to the homeowner concerning the findings

and any action to be taken shall be completed within 5

working days after receipt of the complaint.

In all instances where the complaint is found to be within

the jurisdiction of the Veterans Administration, the

Veterans Administration shall be so advised in writing

within 5 working days after receipt of the complaint. The

homeowner shall be notified that the complaint has been

routed to the Veterans Administration for response.

1-30. COMPLAINT CLOSE-OUT. The complaint file will be closed out

by the C.O. after the follow-up letter and/or any other

appropriate notification to the homeowner and other

interested parties is completed. \*

Page 1-35 8/81

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