CHAPTER 3. CORRECTION OF DEFECTS IN

EXISTING HOMES: SECTION 518(b)

3-1. GENERAL. This Chapter outlines processing procedure for

claims under Section 518(b) of the National Housing Act as

amended.

Section 518(b) authorizes assistance to owners of

existing one-, two-, three-, and four-family dwellings when

such housing is determined, in accordance with criteria

contained herein, to require correction of structural or other

major defects which so seriously affect the use and livability

as to create a serious danger to the life or safety of the

inhabitants. The revised statute is more restrictive than the

original, and all defects must clearly meet the statutory

requirements.

3-2. ELIGIBILITY REQUIREMENTS. In order to be eligible for

assistance, a claim must meet all of the following

requirements:

a\. Mortgage. The mortgage shall have been insured under

Section 235 of the National Housing Act.

b\. Dwelling. The dwelling may consist of a one-, two-,

three-, or four-family unit and shall have been more than

one year old on the date the conditional commitment was

issued.

c\. Application. The application for assistance must have

been submitted within one year after insurance of the

mortgage as evidenced by the date of insurance

endorsement.

d\. Extent of Defect. The defect must be a structural or

other major defect which so seriously affects the use and

livability of the property as to create a serious danger

to the life or safety of the inhabitants. To meet this

test, the defect must not be speculative or of limited

likelihood of becoming an actual danger. A defect which

has become a serious danger to the life or safety of the

inhabitants, but which was not so at the time of the

original appraisal inspection, is not eligible. For those

claims involving reimbursement for repairs previously

made, the defect must have been such that a judgment can

be made that it constituted a serious danger to life or

safety at the time of the original appraisal inspection.

e\. Determination of Existing Defect. The defect must be

determined by HUD-FHA to have existed on the date the

conditional commitment cover the property was issued and

must be one that a proper appraisal inspection of the

property could reasonably have been expected to reveal.

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3-3. DEFECTIVE CONDITIONS ELIGIBLE FOR 518(b) ASSISTANCE

a\. The file must be retrieved and reviewed by the Field

Office upon receipt of a claim which appears eligible on

its face. Examination of the conditional commitment

conditions may determine if the defective condition, or its

possibility was taken into consideration during the initial

appraisal inspection of the property. If a specific

repair requirement was made, or a certificate of condition

was required, and the condition meets the eligibility

criteria, the condition is deemed to have been recognized.

If the corrective steps taken as a result of repair

requirements were insufficient to eliminate the condition,

or the work was improperly performed, the condition will be

eligible for correction providing all other basic statutory

criteria are met. Where no repair requirements were shown

on the conditional commitment, the office must make a

judgment as to whether the defect was in existence on the

date of the appraisal inspection.

b\. To determine whether a defect is one that a proper

appraisal inspection could reasonably be expected to

disclose, one test is whether the appraiser, operating in

accordance with the outstanding instructions available at

the time of the appraisal inspection, should have observed

the defect or anticipated the probability of a defect due

to observable conditions. Additionally, however, other

circumstances may arise under which a claim may be

eligible.

3-4. ELIGIBLE DEFECTS. The following defects are eligible

for correction. This is not a complete list but can be used as

a guideline for determining other eligible items. To be

eligible, defects must meet the statutory requirements found in

Paragraph 3-2. d and e above.

a\. Seriously defective plumbing, heating or electrical

systems.

b\. A structural failure in framing members, floors, or

foundations visibly evident in an accessible area.

c\. A worn-out roof.

d\. Drainage problems, such as surface water in the crawl

space or running against the house.

e\. Rotted siding, porches, steps, deteriorated brickwork or

other seriously deteriorated exterior surfaces which affect

the structural integrity of the dwelling.

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f\. Cracking, scaling, peeling and loose lead-based paint on

interior surfaces and those exterior surfaces, such as

stairs, porches, windows and doors readily accessible to

children under seven years of age. (Defects under this

item will be repaired in accordance with 24 CFR, Parts

35.16 and 35.18. All such surfaces which require treatment

shall be thoroughly washed, sanded, scraped or wire brushed

and repainted with two coats of a suitable nonlead-based

paint, or where infeasible to control or correct the

cracking, scaling, peeling, or loosening of the lead-based

paint and the film integrity of the treated surfaces cannot

be maintained, the paint on these surfaces shall be

removed or covered with materials such as hardboard,

plywood, dry-wall, plaster, or other suitable material.)

Where at the homeowner\'s option additional painting work,

such as complete painting of the interior or the exterior

of the house or any room found to have the eligible defect

was performed or is to be undertaken, which exceeds the

treatment necessary to treat defective paint conditions

under 24 CFR, Part 35, compensation to the homeowner will

be limited to that portion of the expense attributable to

treatment of the defective paint conditions.

3-5. DEFECTS FOUND THROUGH CODE ENFORCEMENT. Defects found through a

code inspection are eligible only if they meet all statutory

requirements found in Paragraph 3-2. d and e. If a code

inspection is made, the homeowner is responsible for the repair

of defects that do not meet Section 518(b) eligibility

requirements.

3-6. DEFECTS NOT ELIGIBLE. The following defects are not eligible

except when they are an incidental part of an eligible defect.

This is not a complete list, but will serve as a guideline to

determine other items that are not eligible.

a\. Decorative and cosmetic work of any kind.

b\. Carpeting.

c\. Cracks in plaster or drywall, unless caused by structural

failure.

d\. Defects, such as burns, gouges, loosened hardware or

doors.

e\. Inoperative refrigerators, range, hot water tank,

dishwasher, disposal, exhaust fan, window or central air

conditioner or other such mechanical equipment.

f\. Broken glass and broken counterweight cords in windows.

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g\. Damages to personal property and damages suffered on

account of personal injury.

h\. Rotted window sills and door frames, unless they

constitute a threat to the life or safety of the

occupants.

i\. Defective light fixtures and outlets, when the electrical

system is otherwise sound.

j\. Minor cracked or broken floor tiles.

k\. Cracks in foundation not seriously affecting the

structure.

l\. Roof leaks when the roof appears acceptable.

m\. Plumbing leaks, if the basic system is sound.

n\. Termite damage, unless it seriously affects the structural

integrity of the building.

o\. Rotted out gutters and downspouts, except where gutters

are an integral part of the roof structure. (Box

gutters.)

p\. Defects in detached garages or other outbuildings, unless

there is serious risk of imminent collapse in which case

demolition only is eligible.

3-7. HEADQUARTERS REVIEW. Any claim or combination of claims

determined to be eligible for assistance in an estimated amount

of \$5,000 or more must be submitted to the Director, Single

Family Development Division, Washington, D.C., for review and

approval prior to notification to claimant of eligibility of the

claim. The complete file must be submitted with a request for

approval together with any explanatory information necessary to

clearly establish the basis for approval of the claim.

3-8. PREVAILING WAGE REQUIREMENTS. Contracts entered into by the

homeowner or by HUD are not bound by the labor standards

provision required by the Davis-Bacon Act, irrespective of the

cost.

3-9. CLAIMS INVOLVING APPRAISALS MADE BY VETERANS ADMINISTRATION OR

FARMERS HOME ADMINISTRATION. Claims involving appraisals made

by the Veterans Administration or Farmers Home Administration

shall be processed in the normal manner. Upon completion of the

processing and approval of the Form HUD 92875, the Complaint

Officer shall route a copy of the approved Form HUD 92875, to

the agency which made the inspection or appraisal for its

information. A log shall be maintained by the Complaint Officer

of all such instances for future corrective action if found to

be necessary.

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\*3-10. PROCEDURES FOR PROCESSING CLAIMS FOR ASSISTANCE.

Processing of applications for assistance is the

responsibility of the designated Complaint Officer who

shall process claims in accordance with the following

instructions:

a\. Procedure to Follow Where Defects Have Not Yet Been

Corrected.

\(1\) Upon receipt of request for assistance (whether

by phone, personal visit or letter), the

Complaint Officer (C.O.) shall acknowledge

receipt by issuing Format Letter CLA-l (Figure 3-

A).

\(a\) The C.O. shall furnish the homeowner with

copies of Form HUD-92556 SFA, Request for

Financial Assistance (Figure 3-I), a

certification that the defect existed at the

time of purchase, and a copy of the Section

518(b) fact sheet (Figure 3-M).

\(b\) If the initial request for assistance is a

Form HUD 92556 SFA with the certification,

the C.O. shall acknowledge receipt by

issuing Form Letter CLA-2 (Figure 3AA).

\(c\) The C.O. shall prepare a Case History Card,

Form HUD 92557, and establish a claim file.

\(2\) The homeowner shall complete Form HUD-92556 SFA

to the extent feasible and shall return it to the

C.O., together with the required certification.

\(3\) Upon receipt of Form HUD-92556 SFA, the C.O.

shall determine whether the request for

assistance meets the eligibility requirements for

assistance as listed in Paragraphs 3-2a through

3-2e. If the claim does not on its face meet the

criteria for eligibility, the owner shall be so

notified using Format Letter CLB (Figure 3-B).

\(4\) If review of the Form HUD-92556 SFA indicates

that the owner\'s claim may be compensable, or if

the owner responds to Format Letter CLB with a

request for further action, the C.O. shall order

the case binder from Central Files or from the

Field Office files if it has not yet been

transferred to Central Files (see Figure 3-J).

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(3-10) (a) Upon receipt of the case binder, the C.O. shall

prepare Form HUD-92875, Eligibility

Determination for Assistance under Section 518(b)

(see Figure 3-C) and shall route the claim file

and case binder to Chief, Valuation Branch for

further action.

\(b\) If the case binder is not received within 30

days, the claim shall be processed without

benefit of the case binder.

\(5\) The Chief, Valuation Branch (Field Offices), or

designee, is responsible for determining the validity

of a claim.

\(a\) Only those claims which meet all the eligibility

criteria set forth herein shall be found

eligible.

\(b\) The files shall be reviewed, and an appointment

shall be scheduled with the homeowner to inspect

the items in the claim.

\(c\) The inspection of the property shall not be

limited to the specific items in the homeowner\'s

claim, but shall encompass all eligible defects.

\(6\) If the appraiser has cause to believe that an eligible

defect existed at the time of original appraisal,

though he or she is unable to positively verify the

fact, the homeowner shall be given the benefit of

doubt.

\(7\) The property shall be inspected and the defects

eligible for correction identified. Specifications to

complete the repairs shall be written and an estimate

of the cost to repair shall be made. (This cost

estimate shall be the upper limit for work contracted

for by the homeowner.) The Chief Appraiser shall

utilize whatever additional technical assistance

necessary to prepare cost estimates. This may

include assistance from both the Architectural and

Engineering Branch and Cost Branch.

\(8\) Recommendations as to eligible repairs, repair

specifications, and cost examination of the repairs

shall be forwarded to the Director, Housing

Division/Service Office Supervisor on Form HUD-92875

together with a completed Format Letter CL-DD (Figure

3D-1).

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(3-10) The Director, Housing Division/Service Office

Supervisor shall review the Chief Appraiser\'s

recommendations and take whatever additional

actions are necessary.

\(9\) The Director, Housing Division/Service Office

Supervisor shall review Form HUD 92875, indicate

approval and sign Format Letter CL-DD. The CL-DD

Letter advises the homeowner of the repairs which are

eligible for reimbursement, sets forth the repair

specifications, and establishes a cost estimate which

is the maximum amount HUD shall reimburse for the

eligible repairs. The case binder, claim file and CL-

DD Letter are then repaired to the C.O.

\(a\) If the estimate of repairs is \$5,000 or more,

the case binder and the claim file are sent to

the Director, Single Family Development

Division, Washington, D.C., for review as

described in Paragraph 3-7 above. Format Letter

CL-DD shall be included in the review package.

\(b\) If the repair estimate is under \$5,000, the C.O.

shall mail the CL-DD Letter to the homeowner.

Format Letter FF (Figure 3-E), which is a

statement by the homeowner that the repairs have

been completed satisfactorily, shall be mailed

with the CL-DD Letter, along with a copy of HUD\'s

policy with respect to minority contractors

(Figure 3-L), and the contractor\'s Certification

of Repairs Completed (Figure 3-K).

\(10\) In the event the homeowner requests a reconsideration

due to an inability to obtain a contractor within the

maximum limit established by HUD-FHA, two alternate-

solutions are available.

\(a\) The Director, Housing Division/Service Office

Supervisor may approve an increase of the

maximum repair limit in an amount not to exceed

ten percent of the original estimate if it is

determined that the circumstances warrant such

action.

\(b\) If the bid obtained by the homeowner exceeds the

HUD-FHA estimate by more than ten percent, the

homeowner shall be required to obtain and submit

two additional bids. The bids shall be reviewed

by the technical staff and one approved if

feasible and within reason. Additional bids may

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(3-10) be required if those submitted are unrealistic

and inappropriate. (In instances of this type, a

field review of the defects and review of the

entire processing is indicated with corrections

made as appropriate.)

\(11\) Upon receipt of the bill and the homeowner\'s

statement (Format Letter FF), the C.O. shall prepare

standard voucher, Form SF 1034.

\(a\) The original and two copies of the voucher,

properly certified, together with the

contractor\'s bill (vendor\'s invoice), shall be

forwarded to the Office of Finance and

Accounting, Attention: Diversified Payments

Division, for payment to the contractor. The

voucher must be marked \"Structural Defect -

Section 518(b).\"

\(b\) The Office of Finance and Accounting shall make

payment directly to the payee shown on the

voucher. Where evidence is presented that the

bill has already been paid by the homeowner,

payment may be made to the homeowner.

\(c\) The documentation required to support vouchers

should be retained by the C.O. in the Field

Office.

\(12\) The C.O. shall systematically spot check completed

repairs prior to authorizing payment to assure that

HUD-FHA specifications are being met and that repairs

are completed in a workmanlike manner. Either the

Architectural and Engineering Branch or the Valuation

Branch can be utilized to accomplish this inspection.

A minimum of ten percent of all claims under \$5,000

and all claims over \$5,000 must receive this review

inspection. Records shall be maintained by both the

Section performing the inspection and by the Complaint

Officer on all inspections performed. Administrative

action shall be initiated against any contractor whose

work is not satisfactory and who refuses to correct

deficiencies. See paragraph 1-15c.

\(13\) Where a homeowner claims that a contractor cannot

be obtained to perform the repair work, the C.O.

shall provide the homeowner with a copy of Format

Letter GG (Figure 3F), which requires the homeowner to

certify reasons why he/she is unable to contract for

repairs. Upon receipt of the certification and if the

reason(s)

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(3-10) is plausible on its face, the C.O. shall arrange for

the repairs in accordance with Paragraph 3-10a above

with the following modification:

\(a\) If the estimated cost of the repairs is \$2,000 or

more and the homeowner cannot contract for the

repairs, the C.O. shall forward to the designated

Section 518(b) Contracting Officer the Form HUD-

92875, together with a memorandum requesting the

Contracting Officer to obtain bids and enter

into a contract to have the authorized repairs

made. This shall be accomplished in accordance

with applicable Federal Procurement Regulations,

Title 41, Chapter 1 and 2, HUD Procurement

Regulations, Title 41, Chapter 24 and HUD\'s

Procurement Policies and Procedures Handbook and

also the Small Purchases in HUD Handbook 2210.10.

The Contracting Officer shall forward a copy of

the contract to the Complaint Officer.

\(b\) If the estimated cost of repairs is under

\$2,000, the Complaint Officer shall utilize the

standard Voucher Form SF 1034 for payment.

Copies of the specifications shall be sent to

three contractors from the Contracting Officer\'s

Bidder List, with a requirement for five-day

response time. The lowest bid shall usually be

accepted. Bids need not be obtained for amounts

under \$500.

b\. Repairs Completed by the Homeowner Prior to HUD

Inspections. If the homeowner completes repairs prior to

HUD inspection, the procedure shall be as follows:

\(1\) The homeowner shall be asked to submit Form HUD-

92556 SFA together with a statement describing the

conditions that required correction, justification

for making repairs and any documentary evidence, such

as contractor estimates or bills to support the claim.

Documentary evidence, however, is not essential in

determining the validity of the claim.

\(2\) Upon receipt of Form HUD-92556 SFA and any supporting

documentation, the C.O. shall determine whether the

request for assistance meets basic criteria in

Paragraphs 3-2 a through e. If supporting

documentation was not included with the form,

processing shall not be delayed on that account.

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(3-10) (3) If review of the Form HUD-92556 SFA indicates that

the owner\'s claim may be compensable, or if the owner

responds to Format Letter CLB with a request for

further action, the C.O. shall then order the case

binder from Central Files or from the Field Office

files if it has not yet been transferred to Central

Files. Upon receipt of the case binder, the C.O.

shall prepare Form HUD-92875, Eligibility

Determination for Assistance Under Section 518(b)

(Figure 3-C), and shall route the claim file and case

binder to the Chief, Valuation Branch for further

action. If the case binder is not received within 30

days, the claim shall be processed without benefit of

the case binder.

\(4\) The Chief, Valuation Branch or designee, shall

determine the validity of the claim in accordance

with applicable criteria. The completed repairs

shall be inspected to determine the need for the

repairs made and whether the cost incurred is

reasonable.

\(a\) If the applicant has documentary evidence of

costs incurred for prior repairs and has not

previously submitted it to HUD, the homeowner

shall be requested to provide such documentation

at this time and/or submit a copy of the HUD

Office.

\(b\) The inspector\'s recommendation shall be entered

on Form HUD-92875 and shall be reviewed in

accordance with 3-10a above. Since the work has

already been completed, a great deal of judgment

shall enter into the recommendation. Repair or

replacement of items recited in Paragraph 3-6

above shall not be eligible. Total replacement

of major systems, such as plumbing, heating or

electrical, shall not be approved unless it can

be judged that in all likelihood the entire

system was beyond economic repair. For example,

to justify the replacement of an entire heating

system, it must be judged that the elements of

the old system were beyond repair.

\(c\) Where a homeowner chooses to replace an

otherwise functioning system when only a part of

the system has failed, only the cost of that part

of the system judged to have required replacement

as of the date of the commitment shall be

compensable.

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(3-10) (d) When the homeowner has obtained a loan to make

repairs eligible for payment under Section

518(b), the amount which constitutes the unpaid

principal, interest and financing charges should

be obtained from the finance company and be

submitted to the Office of Finance and

Accounting in accordance with 3-10 b(5) below,

for payment directly to the finance company.

\(e\) The homeowner shall be reimbursed for all costs

actually paid and found to be reimbursable,

notwithstanding the fact that the work could have

been done at a lower cost.

\(f\) Where the homeowner personally completed the

repairs, reimbursement for labor in an amount

equal to the cost of materials in the claim may

be approved.

\(5\) The C.O. shall transmit a properly prepared and

certified voucher to the Office of Finance and

Accounting, Attention: Diversified Payments Division.

In preparing the voucher for payment, the C.O. shall

include all applicable finance charges.

c\. Miscellaneous Situations.

\(1\) Insurance Proceeds. Where it is determined that the

homeowner\'s certification that insurance benefits have

been received, or will be received, the 518(b) payment

shall be for any difference between the insurance

payment and the total cost of eligible repairs.

\(a\) If the insurance payment shall be made

subsequent to the contractor\'s billing, the

homeowner shall enter into an agreement to

endorse the insurance payment to HUD (Figure 3-

G).

\(b\) The insurance company should be notified by a

copy of the agreement that HUD has assumed any

and all rights of the homeowner and that any

payment due should be made to HUD.

\(c\) These payments shall be forwarded by Certified

Mail to OFA, Attention: Diversified Payments

Division, with a memorandum indicating the FHA

Case Number and a statement that the remittance

represents reimbursement of monies under Section

518(b).

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(3-10) (2) Loan Assumptions. In all assumptions,

where the home is sold but the claim has not

been processed, the new homeowner succeeds to

the rights of the original purchaser.

\(3\) Sale of Property. In instances where a homeowner

files a claim under Section 518(b) and then sells

the home before HUD completes processing of the

claim, the original homeowner is eligible for

compensation for only those repairs actually

made.

\(4\) Foreclosure. In instances where the mortgage has

been foreclosed, compensation under Section

518(b) may not be made. The foreclosure action

extinguishes the mortgage instrument and, while

the homeowner may have a right to redeem the

property, the homeowner does not have a legal

right to reinstate the mortgage.

\(5\) Certifications. Where a defect is found which is

covered by a certification from a contractor,

tradesman, or mortgagee (plumbing, heating,

roofing, electrical, termite certification, or

other repairs), an attempt shall be made to

obtain payment or repair from the certifying

company before the Field Office authorizes

repairs.

\(a\) The company involved should be given ten

days to respond after which a meeting with

company officials should be held to review

the condition and to decide if any false

statement was involved in the certification.

If a negative response is given by the

company or certifier, continuation of

processing of the 518(b) claim should begin

immediately.

\(b\) In the event there is evidence that any

statement of condition contained in the

certification was false, the case and

supporting documentation should be referred

to the Regional Inspector General for

investigation in accordance with

outstanding procedures.

\(c\) If there is no evidence of a false state-

ment, the facts may be submitted to the Area

Counsel for an initial determination of

whether the facts would nevertheless support

an action for recovery of the costs of

repairs. If it is found that a claim

against the certifying company is

supportable, demand for payment should be

made by the Director, Housing

Division/Service Office Supervisor and, if

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(3-10) payment is not received within 30 days, the facts and

a recommendation shall be transmitted to the Regional

Counsel for concurrence and forwarded to the General

Counsel.

\(6\) Temporary Relocation of Family. If the repairs required to

the property in order to correct the defect involve work on

the house which requires moving the family while such work

is being performed, the Field Office is authorized to

reimburse the family for temporary living quarters while

such repairs are being made. This expenditure is not to

exceed the amount available to a Government family in

travel status within the Continental United States.

\(7\) Defect Not Repairable. If the Field Office determines the

defect in the house is such that it is not feasible to

expend the amount required to repair it, consideration may

be given to assisting the homeowner in disposing of the

house by the acceptance of a deed and acquiring another

house.

\(a\) The cost of repair versus the cost of acquisition is

the basic criterion to be used when deciding whether

to repair a property or to accept a deed under the

Section 518(b) program. The total cost of acquisition

includes the balance of the outstanding mortgage,

amount of mortgage amortized, legal fees, refunding of

downpayment, moving expenses, major improvement and

cost of demolition of the dwelling. The estimated

sales price of the vacant lot is deducted from the

above total indicating an estimate of the amount of

funds to be expended in order to accept a deed.

\(b\) In instances such as those discussed in this

paragraph 3-10c(7), the entire file, along with the

recommendations of the Director, Housing Division/

Service Officer Supervisor, shall be forwarded to the

Director, Single Family Development Division,

Washington, D.C., for technical review.

\(c\) After the Director, Single Family Development Division

has advised the Field Office of technical approval,

the mortgagee shall be advised by the Field Office to

submit all fiscal documents and title evidence.

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(3-10) 1. The file with all pertinent title

documents is then submitted to the

Assistant General Counsel, Home

Mortgage Branch, Office of General

Counsel, for final approval of the

transfer.

2\. This is to be done on all cases where

an arrangement with the homeowner is

made whereby HUD acquires title to the

property and accepts a deed. If a deed

is accepted, the Field Office Property

Disposition Branch shall be informed by

a memorandum.

3\. HUD will pay or reimburse the owner for

relocation expenses, reimburse the

owner the amount of the downpayment

plus amortization of the mortgage

balance to date and reimburse the owner

for major improvements to the property.

The terms of the Uniform Relocation

Handbook 1371.1 are not applicable to

the 518(b) program.

\(g\) Miscellaneous Situations not covered by

these instructions should be referred, by

memorandum or telephone, to the Director,

Single Family Development Division,

Washington, D.C.

d\. Disputes. Disputes with Field Office decisions may

arise over any facet of 518(b) interpretation and

implementation. Such disputes may involve homeowners,

contractors, sellers or mortgagees.

\(1\) When a dispute arises and the Director, Housing

Division/Service Office Supervisor concurs with

the decision of the Technical Staff, the

Complaint Officer shall prepare a cover

memorandum to the Director, Single Family

Development Division, Washington, D.C., for the

Director, Housing Division/Service Office

Supervisor\'s signature. The memorandum will

briefly cite Field Office findings and the

reasons the problem remains unresolved.

\(2\) The memorandum together with the files and any

documentation submitted by the disputant will be

reviewed by Headquarters and a final decision

will be rendered.

e\. Establishment of Time Frames.

\(1\) Response by the homeowner to notification that

defects are eligible.

8/81

Page 3-14

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(3-10) (a) If the homeowner does not contact the Field

Office within 90 days from the issuance of the

CL-DD-1 Letter, a copy of the CL-DD-2 Letter

shall be completed and sent by certified mail,

Return Receipt Requested.

\(b\) Should no response to the Letter CL-DD-2 be

received within the 30-day period prescribed

thereon, file may be closed, but file binders and

all documentation are to be retained by the Field

Office.

\(c\) Upon termination of benefits, the homeowner must

be advised with Format Letter CL-DD-3.

\(2\) Response by the homeowner to other Section 518(b)

communications.

\(a\) The homeowner should submit an appeal within 30

days of the date recorded on the Field Office

rejection of the claim.

\(b\) When additional data is required of a homeowner

to facilitate processing of the claim, it should

be submitted within the 30 days of the date

recorded on the request for the data.

\(c\) Where an appeal or additional requested data is

not received within this time frame, the case may

be closed. The data postmarked, or the date

stamped in by the receiving clerk when hand

delivered, may be used in establishing compliance

with the time frame.

\(d\) Information about the 30-day limitation and the

extension must be included in future letters to

homeowners. Homeowners to whom letters have

already been sent need not be advised of this

policy and should not be held to this time frame

unless the Field Office has occasion to send

another letter to the same homeowner.

\(e\) Should an extension be requested prior to the

end of the 30-day period, with valid reasons

offered, the Director, Housing Division/Service

Office Supervisor may grant such extension as

deemed appropriate. The Director, Housing

Division/Service Office Supervisor shall state,

in writing, the reasons for denying any such

request.

8/81

Page 3-15

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3-11. APPLICABILITY TO SALES OF SECRETARY-HELD PROPERTIES. The

provisions outlined in this Handbook shall apply to

properties sold by the Secretary provided the claim meets

the applicable criteria in Paragraph 3-2 above. However,

corrective action must first be exhausted under the one-

year warranty provisions which apply to such properties.

Claims involving properties sold by the Secretary under the

\* Property Disposition program shall be referred to the

Property Disposition Branch in Field Offices for review \*

and, where applicable, enforcement of repair contract

warranty provisions prior to implementing the claim

procedures of this Handbook.

3-12. MAINTENANCE OF RECORDS. The Complaint Officer is

responsible for maintaining complete records of 518(b)

claims. (Figure 3-H).

a\. Records must include readily extractable information

on the following:

\(1\) Volume and dollar amount of claims received to

date and quarterly.

\(2\) Number of claims in process (by case number).

\(3\) Number of claims (by case number) received but

not yet in process.

\(4\) Number and dollar amount of claims paid and

files closed.

\(5\) Number of claims found ineligible.

\* (6) A record of any false or misleading claims,

certifications, inspections or statements by

anyone within, or doing business with the

Department with respect to any phase of Section

518(b). (All such evidence shall, of course, be

brought to the attention of the Regional

Inspector General for investigation through

channels.)

\(7\) Number of claims under \$2,000 involving the

procedures prescribed in Paragraph 3-10a.

\(8\) Number of claims over \$2,000 involving the

procedures prescribed in Paragraph 3-10a. \*

8/81 Page 3-16

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\* b. A complete record must be kept on every claim filed,

whether found to be eligible or not. Every letter or

written communication of any kind concerning a claim under

this Section must be available in the Field Office

Complaint Officer\'s file during the period required by

HUD\'s approved records disposition schedule.

\(1\) A permanent record must also be maintained on all

claims where a finding of ineligibility is made based

on a telephone inquiry from a homeowner. Such

instances may include statutory ineligibility such as

age of property, date of insurance, and Section of

Act.

\(2\) The permanent record shall include name of homeowner,

address of dwelling, date and time of telephone

inquiry, brief description of complaint, and reason

for the finding of ineligibility. If a verbal

response is not acceptable to the homeowner, an

application can be filed and the claim processed in

the usual manner.

3-13. SHORTCOMINGS. It is incumbent upon the Complaint Officer

to bring to the attention of the Chief Appraiser, the Chief

Architect or others, as appropriate, any shortcomings of

procedures or personnel in connection with the processing

of 518(b) claims, and failing to effect corrective action,

to apprise superiors of problems being experienced.

3-14. PROMPT PROCESSING. A prompt and courteous response is to

be given all requests for assistance under Section 518(b).

The eligibility determination is also to be made promptly

so that the homeowner can contact a contractor and begin

the repair of all eligible defects in a timely manner. \*

Page 3-17 8/81

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CHAPTER 3, FIGURE 3-A

FORMAT LETTER CLA-1

(Address to Homeowner)

Dear

Subject: FHA Case No.:

\*This will acknowledge receipt of your recent letter in which you

listed the problem(s) and/or expenses you have experienced since

occupying your home.

The enclosed fact sheet identifies the type of defects which may

qualify under the Section 518(b) program. If you feel the defects in

your home may qualify, you should complete the enclosed form and

certification and return it to the HUD-FHA Field Office immediately.\*

Sincerely,

Enclosure

8/81 Page 3-18

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CHAPTER 3, FIGURE 3-AA

FORMAT LETTER CLA-2

(Address to Homeowner)

Dear

Subject: FHA Case No.

We have received your recent letter and application for assistance in

which you outline the problem(s) and/or expenses you have experienced

since occupying your home.

We have requested the return of the file on your home from our

Central Files in Washington, D.C. As soon as the file is obtained

and our review is completed, you will hear from us again.

Sincerely,

8/81

Page 3-19

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CHAPTER 3, FIGURE 3-B

FORMAT LETTER CLB

(Address to Homeowner)

Dear

This is in reply to your request for assistance under Section 518(b).

We have carefully reviewed your request and we must regretfully

advise that your claim for assistance cannot be approved because it

does not meet the following criterion (criteria) established by law

as (a) requirement(s) for eligibility.

(Recite specific criteria and how claim does not fulfill

requirements.)

If you believe that your claim has not been fairly reviewed in view

of the requirements of the law, you may request a reconsideration by

writing to me and explaining why you believe the rejection of your

claim was in error.

Sincerely,

8/81 Page 3-20

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CHAPTER 3, FIGURE 3D-1

FORMAT LETTER CL-DD

(Address to Homeowner)

Dear

Subject: FHA Case No.

Processing has been completed of your request for financial

assistance under Section 518(b) to cover the cost of repairs to your

home. To be eligible, it was necessary to establish that the defects

existed at the time HUD commitment was issued and that other

eligibility criteria were met.

The following items are eligible for repair: (see specifications

enclosed).

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

You are authorized to have a competent, reputable contractor complete

the eligible repairs. HUD/FHA will pay to you or on your behalf up

to the sum of \$\_\_\_\_\_ for the correction of the above items. You

should contract for these repairs as soon as possible and in no

event later than 90 days from the date of this letter. This office

is to be notified when the contract has been signed.

It is the policy of the Department of Housing and Urban Development

to promote the use of minority contractors in programs such as

Section 518(b). You should consider a minority contractor in

completing the repairs on your home.

You should also be aware that the prevailing wage requirements of the

Davis-Bacon Act are not applicable to repairs made under the Section

518(b) program. This means that the government does not require your

contractor to pay his/her employees\' established trade wages.

When you receive a bill from the contractor, which must not exceed

the amount approved by HUD, you should forward it to this office

along with a statement that the work has been completed and is

acceptable for payment. The contractor must include a certification

on the bill or statement that the work meets the applicable City

Codes or Ordinances and must itemize the work done for which payment

is claimed. \*

8/81 Page 3-22

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CHAPTER 3, FIGURE 3D-1

The following items were determined to be ineligible for assistance

under Section 518(b) since they did not meet required criteria:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

The items did not meet the following criteria:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

If we can assist or guide you in any way, or if you question our

determination of ineligibility or the amount allowable for repair of

the property, please contact (Complaint Officer) at telephone

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

Sincerely,

Enclosures

8/81

Page 3-23

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CHAPTER 3, FIGURE 3D-2

FORMAT LETTER CL-DD-2

(Address to Homeowner)

Dear

Subject: FHA Case No.

Processing of your request for financial assistance under Section

518(b) to cover the cost of repairs on your home has been completed,

and you were so advised by the enclosed letter dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

If you have been unable to contract for repair of the eligible

defects named in our letter or if you have encountered other

difficulties, you should contact this office immediately for

assistance.

Fiscal policy requires that repairs be completed and payment made at

the earliest possible date. Therefore, if we have no response to

this letter within thirty days, we must conclude that you do not

desire to utilize this program in repairing your home, and your

entitlement will be terminated.

Sincerely,

Enclosure

8/81 Page 3-24

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CHAPTER 3, FIGURE 3D-3

FORMAT LETTER CL-DD-3

(Address to Homeowner)

Dear

Subject: FHA Case No

You were advised in our letter of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ that in

the absence of a response within 30 days, your claim file would be

closed. To date we have received no reply to that letter.

You are hereby notified that your claim file has now been closed and

all entitlements under Section 518(b) of the Housing and Community

Development Act of 1974 have been terminated.

Sincerely,

8/81

Page 3-25

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CHAPTER 3, FIGURE 3-E

FORMAT LETTER FF

Date \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

To: HUD/FHA

The repairs authorized to be made on my property by HUD/FHA under

Section 518(b) have been completed in a satisfactory manner.

Signed

Homeowner \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Address \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Case No. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

8/81 Page 3-26

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CHAPTER 3, FIGURE 3-F

FORMAT LETTER GG

Date \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

To: HUD/FHA

I certify that I am unable to contract for authorized repairs under

Section 518(b) for the following reasons:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

I, therefore, request that HUD/FHA negotiate for the needed repairs.

Signed \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(Homeowner(s))

Address \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

FHA Case No. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

8/81

Page 3-27

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CHAPTER 3, FIGURE 3-G

INSURANCE REIMBURSEMENT AGREEMENT FHA Case No. \_\_\_\_\_

\* This Agreement is made in duplicate on this \_\_\_\_\_ day of
\_\_\_\_\_\_,

19\_\_, by \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
referred to as the Homeowner(s),

and the Department of Housing and Urban Development/Federal Housing

Administration (referred to as HUD/FHA).

WITNESS

The Homeowner has submitted a Request for Financial Assistance

Under Section 518(b) to cover the cost of repairs to his/her home,

and

The Homeowner expects to receive payment as a result of

insurance to cover all or a portion of the repairs,

THEREFORE, the Homeowner agrees to endorse the insurance payment

to HUD/FHA in return for HUD/FHA financial assistance under Section

518(b).

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ DEPARTMENT OF
HOUSING AND URBAN

(Homeowner) DEVELOPMENT/FEDERAL HOUSING

ADMINISTRATION \*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Homeowner)

8/81 Page 3-28

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CHAPTER 3, FIGURE 3-I

SAMPLE MEMORANDUM

FILES BRANCH, OFFICE OF GENERAL SERVICES

ATTENTION: 518(b)

DIRECTOR, XYZ FIELD OFFICE

REQUEST FOR INSURED CASE BINDERS - 518(b)

The following case binders are requested in order to respond to

complaints filed under Section 518(b):

Instruction:

Memorandum should be typed or carefully printed in triplicate, as

shown above, with two copies going to the Office of General Services

and one copy being retained in the Field Office. A copy will be

returned with the case binders to identify those binders which were

not available at first request. The endorsement date of each case

should be included in your request, if available, with numerical

sequencing of case numbers preferred.

8/81 Page 3-30

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CHAPTER 3, FIGURE 3-J

SAMPLE CONTRACTOR\'S CERTIFICATION

I certify that I have completed all repairs as specified in the

letter to \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ from the

Department of Housing and Urban Development. The payment due is

\$\_\_\_\_\_\_\_ for completion of the contract and does not exceed the

amount set forth in the aforementioned letter. HUD may rely on

this certification in order to make payment to me for these

repairs.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature

\_

\* \_ Check box if you are a minority contractor.

Section 1010 of Title 18, U.S.C., provides: \"Whoever, for the

purpose of\...influencing such Department\... makes, passes,

utters, or publishes any statement, knowing the same to be

false\...shall be fined not more than \$5,000 or imprisoned not

more than two years, or both.\"

8/81

Page 3-31

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CHAPTER 3, FIGURE 3-K

HUD\'s Policy with Respect to Minority Contractors

It is the policy of the Department of Housing and Urban Development

to promote the utilization of minority contractors in programs such

as Section 518(b). With your cooperation in this effort, you will be

helping the Government in one of its important objectives\--to assist

minority contractors by furthering their participation in the

economic benefits of the private enterprise system. You are,

therefore, urged to consider a minority contractor in completing the

repairs on your home. If you are unaware of minority contractors in

your area, telephone the Fair Housing and Equal Opportunity Director

in your local HUD Office. \*

8/81 Page 3-32

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CHAPTER 3, FIGURE 3-L

FACT SHEET

Section 518(b)

\* Section 518(b) of the National Housing Act, as amended, \*

authorizes the Secretary of HUD to correct, or to reimburse

owners for the correction of structural or other major defects

in some homes if the mortgages were insured by HUD under Section

235 of the National Housing Act.

Correction of such defects in your home may be eligible for

Section 518 assistance if all of the following requirements can

be met:

\(a\) The dwelling must have been more than one year old at the

time you purchased it.

\(b\) The dwelling must consist of not more than four living

units.

\(c\) The defect must be one which so affects the use and

livability of the property as to create a serious danger to

life or safety

\(d\) The defect must have existed at time of the original

appraisal and be one which a proper inspection by the HUD

appraiser would have normally revealed. The existence of a

defect at this time does not necessarily mean that you have

an eligible claim.

\(e\) The mortgage, financing the purchase of the dwelling, must

have been insured under Section 235 of the National

Housing Act.

\(f\) A claim must be filed with HUD not later than one year

after the insurance of the mortgage.

In all instances, you will be required to certify that the

defect for which you are claiming assistance did, in fact,

exist at the time you purchased the property using HUD-insured

financing. If you have assumed a HUD mortgage, you may still be

eligible. The official application and certification form is

attached.

If you are seeking reimbursement for the cost of repairs

previously paid for by you, you may also be required to furnish

further information concerning these repairs. This information

may be in the form of paid receipts, cancelled checks, work

contracts, or statements from contractors involved.

Page 3-33 8/81

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CHAPTER 3, FIGURE 3-L

2 Section 518(b) (Cont.)

The following are examples of defects which may be eligible for

assistance if such defects existed at the time of the original HUD

appraisal of the property and if you can demonstrate they seriously

affected use and livability of the property and seriously endangered

life or safety:

\(a\) Defective plumbing, heating, or electrical systems.

\(b\) A structural failure in framing members, floors, or foundations

visibly evident in an accessible area.

\(c\) A worn-out roof.

\(d\) Drainage problems such as surface water in the crawl space or

running against the house.

\(e\) Rotted siding, porches, steps, deteriorated brickwork, or other

seriously deteriorated exterior surfaces which affect the

structural integrity of the dwelling.

\(f\) Defective paint conditions which, as defined, in HUD Regulations

(24 CFR, Part 35), constitute a health hazard; cracking,

scaling, peeling and loose lead-based paint on interior surfaces

and those exterior surfaces, such as stairs, porches, windows

and doors readily accessible to children under seven years of

age. Copies of these regulations will be available upon request

from this office.

Items which are not eligible include:

\(a\) Decorative and cosmetic work of any kind.

\(b\) Carpeting.

\(c\) Cracks in plaster or drywall, unless caused by structural

failure.

\(d\) Defects such as burns, gouges, loosened hardware or doors.

\(e\) Inoperative refrigerator, range, hot water tank, dishwasher,

disposal, exhaust fan, window or central air conditioner or

other such mechanical equipment.

\(f\) Broken glass and broken counterweight cords in windows.

Inoperable windows are not eligible.

8/81 Page 3-34

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CHAPTER 3, FIGURE 3-L

3 Section 518(b) (Cont.)

\(g\) Damages to personal property and damages suffered on account of

personal injury.

\(h\) Rotted window sills and door frames unless they constitute a

threat to the life or safety of the occupants.

\(i\) Defective light fixtures and outlets when the electrical system

is otherwise sound.

\(j\) Minor cracked or broken floor tiles.

\(k\) Cracks in foundation not seriously affecting the structure.

\(l\) Roof leaks when the roof appears acceptable.

\(m\) Plumbing leaks if the basic system is sound.

\(n\) Termite damage unless it seriously affects the structural

integrity of the building.

\(o\) Rotted out gutters and downspouts except where gutters are an

integral part of the roof structure.

\(p\) Defects in detached garages or other outbuildings unless there

is a serious risk of imminent collapse, in which case demolition

only may be eligible.

Even if there is something wrong with your house, you must continue

to make your mortgage payments. If you cannot make the full payment

for any reason, you should let your lender know before the payment is

due. Often an arrangement can be worked out to help you. If your

lender will not offer you assistance, contact the nearest HUD

office. They may be able to help.

If a serious defect was in existence when you purchased the property

as described above, and you can demonstrate it so affects use and

livability as to seriously endanger life or safety, you should make

application to your local office. The existence of serious defects

listed above at the present time does not necessarily mean your claim

is eligible for assistance. All of the statutory requirements for

granting assistance must be present before payment will be

authorized. Decisions rendered by HUD relative to Section 518

eligibility are final and are not subject to judicial review.

Page 3-35 8/81

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CHAPTER 3, FIGURE 3M

Chapter II - Office of Assistant Secretary for Housing

Subpart L\--Correction of (a) The person applying for

Structural Defects in Homes assistance is the owner and

Covered by Mortgage Insurance mortgagor of a one or two family

Under Section 203, 221 or 235 dwelling covered by a mortgage

insured under Section 235 of the

Authority: Sec. 518 (b) and National Housing Act pursuant to

(c), 78 Stat. 783, 84 Stat. a mortgage insurance commitment

1771, 88 Stat. 678, 12 U.S.C. issued when such dwelling was

1735c. more than 1 year old; or, in the

case of a dwelling located in an

200.517 Purpose. older, declining urban area, the

applicant is the owner and mort-

The purpose of this subpart is gagor of a one, two, three or

to specify the terms and four family dwelling covered by

conditions under which the a mortgage insured under Section

Secretary will consider 203 or 221 of the National

affording assistance to Housing Act on or after August

mortgagors under Sections 518(b) 1, 1968, but prior to August 3,

and 518(d) of the National 1976, pursuant to a mortgage

Housing Act. insurance commitment issued when

such dwelling was more than 1

40 FR 8948, Mar 4, 1975, as year old.

amended at 41 FR 42185, Sept. (b) One or more structural or

27, 1976 other defects existed in such

dwelling on the date of the

200.520 Application for issuance of the mortgage

assistance. insurance commitment which: (1)

So seriously affect use and

An application for assistance livability as to create a

in the correction of defects, in serious danger to the life or

a form satisfactory to the safety of the inhabitants of

Secretary, shall be filed by or such dwelling, and (2) were of

on behalf of an eligible such a nature that a proper

mortgagor with the Area or inspection could reasonably be

Insuring Office Director having expected to have disclosed them;

jurisdiction over the area in and

which the property is located. (c) The application for

\(a\) In the case of a dwelling assistance was filed in

covered by a mortgage insured accordance with the provisions

under Section 235 of the of this subpart.

National Housing Act, the

application shall be filed not 41 FR 42185, Sept. 27, 1976

later than one year after the

insurance of the mortgage. 200.527 Consideration for

\(b\) In the case of a dwelling assistance.

located in an older declining

urban area and covered by a Upon a finding by the

mortgage insured under Section Secretary that a mortgagor is

203 or 221 of the National eligible to be considered for

Housing act on or after August assistance under this subpart,

1, 1968, but prior to January 1, the Secretary will, in his sole

1973, the application shall be discretion, determine whether to

filed not later than December 3, afford assistance hereunder by

1976\. direct expenditures to correct

\(c\) In the case of a dwelling defects as defined in

located in an older declining 200.522(b), compensation of a

urban area and covered by a mortgagor who has made such

mortgage insured under Section expenditures himself, or a

203 or 221 of the National combination of both direct

Housing Act on or after January expenditures and compensation of

1, 1973, but prior to August 3, the mortgagor. The Secretary,

1976, the application shall be in determining the form of

filed no later than August 3, assistance and when it will be

1977\. afforded, will consider:

41 FR 42185, Sept. 27, 1976

200.522 Eligibility for

consideration.

The Secretary will consider a

mortgagor elibible for

assistance under this subpart if

the Secretary finds that each of

the following requirements is

fulfilled:

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CHAPTER 3, Figure 3M

\(a\) Whether the defects so seriously

affect use and livability as to create a

serious danger to the life or safety of

the inhabitants;

\(b\) The availability of funds from

which the Secretary is authorized to

make expenditures hereunder; and

\(c\) Such other matters as he deems

material.

36 FR 24467, Dec. 22, 1971, as amended at

38 FR 25994, Sept. 17, 1973; 40 FR 8948,

Mar. 4, 1975

200.533 Right and finality of determina-

tion.

All decisions of the Secretary with

respect to assistance under this sub-

part are final and conclusive and not

subject to judicial review.

SOURCE OF MATERIAL -

24 CFR-1980

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