Form RD 2006-46 (Rev. 01-98)

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| TO               |                           | MANUAL    | ISSUE NO. |
|                  |                           |           |           |
|                  |                           | SAL       | 816       |
+------------------+---------------------------+-----------+-----------+
|                  | U. S. DEPARTMENT OF       | DATE      |           |
|                  | AGRICULTURE               |           |           |
|                  |                           | 8/8/2006  |           |
+------------------+---------------------------+-----------+-----------+
|                  | RURAL DEVELOPMENT         | ##        |           |
|                  |                           |  DISTRIBU |           |
|                  |                           | TION CODE |           |
+------------------+---------------------------+-----------+-----------+
|                  | EAST LANSING, MI          | "S" State |           |
|                  |                           | Office    |           |
+------------------+---------------------------+-----------+-----------+
|                  |                           | "A" Area  |           |
|                  |                           | Offices   |           |
+------------------+---------------------------+-----------+-----------+
|                  | # STATE PROCEDURE NOTICE  | "L" Local |           |
|                  |                           | Offices   |           |
+------------------+---------------------------+-----------+-----------+
|                  | #                         |           |           |
+------------------+---------------------------+-----------+-----------+

**[MANUAL CHANGES]{.underline}**

**INSERT MI Instruction HB-1-3550 STATE SUPPLEMENTS**

**Appendix 7**

**(S,A,L)**

**Remove Insert**

MI Ins. HB-1-3550 Pages 5 & 6 MI Ins. HB-1-3550 Appendix 7

Pages 5 & 6

This State Supplement is revised to add additional information
pertaining to title insurance policy and survey coverage as it relates
to existing and new construction housing.

Information added regarding the footing drain requirement for new
construction.

**Remove** **Insert**

MI Ins. HB-1-3550 Appendix 7 MI Ins. HB-1-3550 Appendix 7

Forms Index (dated 6/1/05) Forms Index (dated 8/8/06)

**Remove** **Insert**

MI Ins. HB-1-3550 Appendix 7 MI Ins. HB-1-3550 Appendix 7

MI Manufactured Housing Dealer Review Guide MI Man. Housing Dealer
Review Guide

(dated 7/13/06)

Item #4 on the checklist has been updated to change the remittance code
used on the schedule of remittance from a 10 to a 1.

**Remove** **Insert**

MI Ins. HB-1-3550 Appendix 7 MI Ins. HB-1-3550 Appendix 7

Index (dated 5/31/2005) Index and

> Redelegation of SD Approvals

Page 65

Delegation of State Director approvals for Single Family Housing issued
to the Rural Development Managers.

**Remove** **Insert**

MI Ins. HB-1-3550 Appendix 7 MI Ins. HB-1-3550 Appendix 7

SFH Direct Loan Application Info. SFH Direct Loan Application Info.
(7/14/06)

Checklist has been revised to include a request for picture ID, taxpayer
ID, and copies of divorce decrees and discharge from bankruptcy.

**Remove** **Insert**

MI Ins. HB-1-3550 Appendix 11 MI Ins. HHB-1-3550 Appendix 11

Net Recovery Value Worksheet dated 6/17/05 NRV Worksheet dated 6/17/06

Worksheet revised regarding the Lead Based Paint deduction based on the
year the home was constructed. A \$11,000 LBP deduction is given for
each home built before 1960 and \$500 deduction for each home
constructed after 1960.

**Insert**

MI Ins. HB-1-3550 Appendix 7

2005 Management Control Review of 504 Loan/Grant Program

Details to address the concerns raised as a result of the FY 2005
Management Control Review for the Section 504 Loan and Grant Program.

**Remove** **Insert**

MI Ins. HB-3550 Appendix 7 MI Ins. HHB-1-3550 Appendix 7

Quit Claim Deed dated 6/25/02 Quit Claim Deed dated 8/24/06

Remove the old quit claim deed that was used to convey the borrower's
"redemption rights" to RD. period. (The quit claim deed for this purpose
was already located on page 59 of the procedure section in Appendix 7.)
Replace with a quit claim deed that is used to convey RD's interest
during sale of an REO property. .