+----------------------------+--------------------+-------------------+
| ![](media/image1.wmf)      | ***Florida/Virgin  | ***Office of the  |
|                            | Islands***         | State Director*** |
|                            |                    |                   |
|                            | ***4440 Northwest  | *Telephone: (352) |
|                            | 25^th^ Place***    | 338-3402*         |
|                            |                    |                   |
|                            | ***Post Office Box | *FAX: (352)       |
|                            | 147010***          | 338-3405*         |
|                            |                    |                   |
|                            | ***Gainesville, FL | *TDD: (352)       |
|                            | 32614-7010***      | 3383499*          |
|                            |                    |                   |
|                            |                    | *www.ru           |
|                            |                    | rdev.usda.gov/fl* |
+----------------------------+--------------------+-------------------+

January 25, 2006 FL/VI AN 941 (RD Inst. 1980-D)

SUBJECT: Inspections of Existing Homes;

Thermal Requirement for Pre-1980 Homes

Guaranteed Rural Housing Loan Program

TO: All RDM, AD, FL, VI

FROM: CHARLES W. CLEMONS, SR.

State Director

[PURPOSE/INTENDED OUTCOME:]{.underline}

Clarify the lender's compliance relative to Rural Development thermal
standards.

Clarify compliance requirements relative to HUD handbooks 4150.2,
Appraisal Handbook, and 4905.1, Requirements for Existing Housing-One to
Four Family Living Units and their revisions.

[COMPARISON WITH PREVIOUS AN:]{.underline}

Replaces FL/VI AN 938 (RD Inst. 1924-A), dated November 15, 2005.

[DEFINITION OF EXISTING DWELLING:]{.underline}

An existing dwelling is one which has been completed for more than 1
year as evidenced by an occupancy permit or a similar document.

[IMPLEMENTATION RESPONSIBILITIES]{.underline}:

[Property inspection issues simplified]{.underline}:

Policy (FL/VI): The underwriting lender is responsible for determining
the dwelling meets requirements of the HUD handbooks 4905.1,
Requirements for Existing Housing and handbook 4150.2, Appraisers
Handbook, as revised by HUD Mortgagee Letter 2005-ML-48 on this subject
dated December 19, 2005, and Rural Development thermal standards.

EXPIRATION DATE: September 30, 2006 Filing Instructions: Preceding

Exhibit D, RD Instruction 1924-A

& RD Instruction 1980-D

Rural Development (FL/VI) relies on the Lenders Certification that the
conditions listed on the Conditional Commitment for Loan Note Guarantee
have been met. Lenders are expected to retain and maintain ample
evidence of compliance. The lender's signature on the Form 1980-18,
"Conditional Commitment for Loan Note Guarantee", lender's
certification, will serve as adequate certification of compliance with
Rural Development regulations and loan conditions.

Lenders may contract with either FHA or conventional state certified
appraisers. The lender is responsible for assuring that non-FHA
appraisers are knowledgeable of FHA and Rural Development requirements.
Any repair items noted by the appraiser as being in non-compliance with
FHA/HUD requirements must be repaired or escrow set up. See RD
Instruction1980-D regarding escrowing for repairs.

Drinking water supplied from an individual well on the security property
must meet local or state requirement for water quality. Lenders retain
the water test.

[Thermal requirements]{.underline}:

EXCEPTION: Dwellings constructed in 1980 or later are exempt from Agency
thermal requirements (FL/VI only).

Agency approved underwriting lenders are responsible for retaining
evidence that existing detached or attached single family homes financed
with the Guaranteed Rural Housing loan program meet the requirement of
the RD Instruction 1924-A, Exhibit D IV (B) unless the lender documents
that the actual cost of heating and cooling is not significantly greater
than those costs for a dwelling that meets Agency thermal standards. The
U values required by Exhibit D translate into R-19 ceiling insulation
and R-11 for off-grade floors in and south of the counties of Levy,
Marion, and Flagler and R-26 ceiling and R-14 for off-grade floors for
counties north of Levy, Marion, and Flagler. Heating and cooling ducts
located in a non-insulated crawl space must be insulated. Only the top
story of multi-story attached housing units must meet the ceiling
insulation requirement.

The lender, not Rural Development, will determine whether the dwelling
meets these requirements. The lender will retain adequate documentation
to support their decision. Underwriters may interpret an appraiser's
comment saying the insulation is adequate as meaning the insulation
meets state code and therefore meets the above Agency requirements.

Please direct questions concerning this Administrative Notice to Bob
Coordsen at

\(352\) 338-3474 or <bob.coordsen@fl.usda.gov>