**U. S. Department of Housing and Urban Development**

**Washington, D.C. 20410-8000**

**January 5, 2000**

**OFFICE OF THE ASSISTANT SECRETARY**

**FOR HOUSING-FEDERAL HOUSING COMMISSIONER**

> **MORTGAGEE LETTER 00-1**

**TO: ALL APPROVED MORTGAGEES**

**SUBJECT: Single Family Loan Production - Impact of New EPA Lead**

**Hazard Regulations on 203(k) Rehabilitation Mortgage**

**Insurance**

This Mortgagee Letter is to advise all HUD-approved lenders that the
Environmental Protection Agency (EPA) has issued new Lead Hazard
regulations effective June 1, 1999. The new EPA regulations require
added disclosure and recordkeeping for construction contractors who
repair or upgrade pre-1978 properties including those financed with
203(k) Rehabilitation Mortgage Insurance.

**Impact on Construction Contractors**

The new EPA regulation, known as the *Pre-Renovation Lead -Information
Rule (Section 406(b) of the Toxic Substances Control Act*), requires
that renovation contractors provide homeowners or occupants of pre-1978
properties with EPA pamphlet, **[Protect Your Family from Lead in Your
Home]{.underline}** (see attachment), obtain a signed acknowledgment of
receipt or certificate of mailing, and maintain a record of the
acknowledgment or certificate for **three years.** Contractors who fail
to provide the pamphlet may be subject to criminal and civil sanctions
under Section 16 of the Toxic Substances Control Act. The regulation
defines 'renovation' as the modification of any existing structure, or
portion thereof, that results in the disturbance of painted surfaces.
The regulation does not require that contractors change their work
practices, if the presence of lead-based paint is suspected. However,
the pamphlet warns homeowners about the health hazards posed by lead
contaminated dust or lead-based paint debris generated during home
renovations. The Department strongly recommends that contractors follow
\"safe work practices\" (avoiding open flame burning or torching,
machine sanding or grinding, abrasive blasting, among others) when
removing lead-based paint.

**Impact on 203(k) Lenders**

The EPA regulation has no direct impact on the lender\'s 203(k) loan
administration responsibilities. However, by assuring that the borrower
receives all required disclosures to

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include the lead-based paint pamphlet, the lender can help make certain
that the contractor has complied with the regulation. The Department has
emphasized how important an active lender role can be in making certain
contractors follow safe work practices, complete work in a timely
manner, and provide quality workmanship (Mortgagee Letter 98-11).

The EPA regulation and pamphlet, **[Protect Your Family from Lead in
Your Home]{.underline}**, are available at the EPA and HUD websites:
www.epa.gov/lead and www.hud.gov/lea. Additionally, at the same website,
the EPA provides an interim edition of a handbook for contractors
outlining their responsibilities. For further information and regulatory
clarification, please contact the National Lead Information Center at
1-800-424-LEAD.

Sincerely,

William C. Apgar

Assistant Secretary for Housing-

Federal Housing Commissioner

Attachment