TABLE OF CONTENTS

**HANDBOOK 4000.2 REV-3**

FHA MORTGAGEES' HANDBOOK

APPLICATION THROUGH INSURANCE

[FOREWORD iv](#foreword)

[CHAPTER 1 INTRODUCTION 1](#chapter-1-introduction)

[1-1 PURPOSE 1](#__RefHeading___Toc169402002)

[1-2 MORTGAGE INSURANCE PROGRAMS 1](#__RefHeading___Toc169402003)

[1-3 GENERAL PROCESSING STEPS 1](#__RefHeading___Toc169402004)

[1-4 LENDER APPROVAL 2](#__RefHeading___Toc169402005)

[1-5 THE CONTRACT OF MORTGAGE INSURANCE 2](#__RefHeading___Toc169402006)

[1-6 INELIGIBLE BORROWERS 2](#__RefHeading___Toc169402007)

[1-7 PROHIBITION ON PROPERTY FLIPPING 3](#__RefHeading___Toc169402008)

[1-8 MAXIMUM LOAN LIMITS AND MORTGAGE AMOUNTS
5](#__RefHeading___Toc169402009)

[1-9 INTEREST RATE 6](#__RefHeading___Toc169402010)

[1-10 MORTGAGE TERM 6](#__RefHeading___Toc169402011)

[1-11 MORTGAGE INSURANCE PREMIUM (MIP) 6](#__RefHeading___Toc169402012)

[1-12 MORTGAGE NOTE AND SECURITY INSTRUMENT
9](#__RefHeading___Toc169402013)

[1-13 PREPAYMENT PRIVILEGE 9](#__RefHeading___Toc169402014)

[1-14 SECONDARY FINANCING 10](#__RefHeading___Toc169402015)

[1-15 ASSUMPTIONS 10](#__RefHeading___Toc169402016)

[1-16 HUD HANDBOOKS, MORTGAGEE LETTERS, AND OTHER FORMS
10](#__RefHeading___Toc169402017)

[1-17 ORGANIZATION OF HUD 11](#__RefHeading___Toc169402018)

[1-18 CIVIL RIGHTS AND FAIR HOUSING 11](#__RefHeading___Toc169402019)

[1-19 FAIR HOUSING MARKETING 12](#__RefHeading___Toc169402020)

[1-20 REPORTING FRAUD AND ABUSE 13](#__RefHeading___Toc169402021)

[CHAPTER 2 PROPERTY APPRAISAL AND VALUATION
1](#chapter-2-property-appraisal-and-valuation)

[2-1 PURPOSE OF THE APPRAISAL 1](#__RefHeading___Toc169402023)

[2-2 PROPERTY APPRAISAL AND UNDERWRITING PROCESS
1](#__RefHeading___Toc169402024)

[2-3 APPRAISAL REQUIREMENTS 1](#__RefHeading___Toc169402025)

[2-4 APPRAISAL REPORTING REQUIREMENTS 1](#__RefHeading___Toc169402026)

[2-5 CONDOMINIUMS 1](#__RefHeading___Toc169402027)

[2-6 GENERAL ACCEPTABILITY STANDARDS FOR PROPERTY
2](#__RefHeading___Toc169402028)

[2-7 USE OF VA CERTIFICATE OF REASONABLE VALUE (VA-MCRV)
5](#__RefHeading___Toc169402029)

[2-8 REQUESTING AN FHA CASE NUMBER 5](#__RefHeading___Toc169402030)

[2-9 TERM OF APPRAISAL 5](#__RefHeading___Toc169402031)

[2-10 COMPLIANCE INSPECTIONS 6](#__RefHeading___Toc169402032)

[2-11 SATISFYING REPAIR REQUIREMENTS 6](#__RefHeading___Toc169402033)

[2-12 SECTION 223(e) 7](#__RefHeading___Toc169402034)

[2-13 APPRAISAL AND INSPECTION FEES 7](#__RefHeading___Toc169402035)

[2-14 DOCUMENTATION OF APPRAISED VALUE 7](#__RefHeading___Toc169402036)

[CHAPTER 3 MORTGAGE CREDIT ANALYSIS AND BORROWER APPROVAL
1](#chapter-3-mortgage-credit-analysis-and-borrower-approval)

[3-1 PURPOSE OF MORTGAGE CREDIT ANALYSIS
1](#__RefHeading___Toc169402038)

[3-2 EQUAL CREDIT OPPORTUNITY 1](#__RefHeading___Toc169402039)

[3-3 CONFIDENTIAL NATURE OF CREDIT INFORMATION
1](#__RefHeading___Toc169402040)

[3-4 APPLICATION 1](#__RefHeading___Toc169402041)

[3-5 CREDIT REPORT AND VERIFICATIONS 1](#__RefHeading___Toc169402042)

[3-6 BORROWER APPROVAL OR REJECTION 1](#__RefHeading___Toc169402043)

[3-7 INVESTMENT PROPERTIES AND DWELLINGS FOR TWO OR MORE FAMILIES
2](#__RefHeading___Toc169402044)

[CHAPTER 4 CANCELLING CASES AND TRANSFERRING CASE NUMBERS
1](#chapter-4-cancelling-cases-and-transferring-case-numbers)

[4-1 CANCELLING CASES 1](#__RefHeading___Toc169402046)

[4-2 TRANSFERS OF CASE NUMBERS BETWEEN LENDERS
1](#__RefHeading___Toc169402047)

[CHAPTER 5 LOAN CLOSING AND INSURANCE
1](#chapter-5-loan-closing-and-insurance)

[5-1 LOAN CLOSING 1](#__RefHeading___Toc169402049)

[5-2 CLOSING COSTS AND OTHER FEES 1](#__RefHeading___Toc169402050)

[5-3 PROHIBITED PAYMENTS 3](#__RefHeading___Toc169402051)

[5-4 UNIFORM CASE BINDER 3](#__RefHeading___Toc169402052)

[5-5 SUBMISSION OF CLOSING PACKAGE FOR ENDORSEMENT
3](#__RefHeading___Toc169402053)

[5-6 INSURANCE ENDORSEMENT 4](#__RefHeading___Toc169402054)

[5-7 DEFICIENT SUBMISSIONS 4](#__RefHeading___Toc169402055)

[5-8 RETENTION OF LENDER'S ORIGINATION FILE
4](#__RefHeading___Toc169402056)

[5-9 POST-ENDORSEMENT REVIEWS 4](#__RefHeading___Toc169402057)

[CHAPTER 6 HOME MORTGAGE INSURANCE PROGRAMS
1](#chapter-6-home-mortgage-insurance-programs)

[6-1 GENERAL 1](#__RefHeading___Toc169402059)

[6-2 SECTION 203(b) HOME MORTGAGE INSURANCE
1](#__RefHeading___Toc169402060)

[6-3 SECTION 203(h) HOME MORTGAGE INSURANCE FOR DISASTER VICTIMS
2](#__RefHeading___Toc169402061)

[6-4 SECTION 203(i) HOME MORTGAGE INSURANCE FOR OUTLYING AREAS
2](#__RefHeading___Toc169402062)

[6-5 SECTION 203(k) REHABILITATION HOME MORTGAGE INSURANCE
3](#__RefHeading___Toc169402063)

[6-6 SECTION 203(n) SINGLE-FAMILY COOPERATIVE PROGRAM
4](#__RefHeading___Toc169402064)

[6-7 SECTION 220 (d)(3)(A) URBAN RENEWAL MORTGAGE INSURANCE
4](#__RefHeading___Toc169402065)

[6-8 SECTION 220(h) INSURED IMPROVEMENT LOANS-URBAN RENEWAL AREAS
5](#__RefHeading___Toc169402066)

[6-9 SECTION 223(e) MISCELLANEOUS HOUSING INSURANCE
6](#__RefHeading___Toc169402067)

[6-10 SECTION 233 MORTGAGE INSURANCE FOR EXPERIMENTAL HOUSING
6](#__RefHeading___Toc169402068)

[6-11 SECTION 234(c) MORTGAGE INSURANCE FOR CONDOMINIUM UNITS
7](#__RefHeading___Toc169402069)

[6-12 SECTION 238(c) MORTGAGE INSURANCE IN MILITARY IMPACTED AREAS
(MIAs) 7](#__RefHeading___Toc169402070)

[6-13 SECTION 245(a) GPMs AND GEMs 7](#__RefHeading___Toc169402071)

[6-14 SECTION 247 SINGLE-FAMILY MORTGAGE INSURANCE ON HAWAIIAN HOME
LANDS (HHL) \[See 24 CFR 203.43(i)\] 9](#__RefHeading___Toc169402072)

[6-15 SECTION 248 SINGLE-FAMILY MORTGAGE INSURANCE ON INDIAN LANDS (IL)
\[See 24 CFR 203.43(h)\] 9](#__RefHeading___Toc169402073)

[6-16 SECTION 251 ARMs 10](#__RefHeading___Toc169402074)

[6-17 SECTION 255 Home Equity Conversion Mortgage
11](#__RefHeading___Toc169402075)

[APPENDIX I 1](#appendix-i-top)

[APPENDIX II 1](#appendix-ii-top)

[APPENDIX III 1](#appendix-iii-top)

[APPENDIX IV 1](#appendix-iv-top)

[APPENDIX V 1](#appendix-v-top)

[APPENDIX VI 1](#appendix-vitop)

[APPENDIX VII 1](#appendix-vii-top)

## FOREWORD

This Handbook describes the general policies and procedures to be used
by lenders to prepare and submit home mortgage insurance applications to
the Federal Housing Administration (FHA) and provides a general
description of all of FHA's active single-family home mortgage insurance
programs. When applicable, references are made to US Department of
Housing and Urban Development (HUD) Handbooks where specific policy and
procedural information may be obtained about the subject.

Questions not addressed in the text should be directed to the
appropriate Home Ownership Center (HOC) or the Director, Office of
Single-Family Program Development, HUD Headquarters, 451 Seventh St.,
SW, Washington, DC 20410-8000.

The following are highlights and major changes to the previous edition
of this handbook.

Chapter 1: Paragraph 1-5 explains that FHA may reject a mortgage for
insurance if FHA determines that any certification or required document
is false, misleading or constitutes fraud or misrepresentation on the
part of any party. Paragraph 1-7 updates information about FHA maximum
loan limits. Paragraph 1-11 updates information about mortgage insurance
premiums (MIP) and includes the new upfront MIP (UFMIP) refund
schedules. Paragraph 1-17 describes HUD's new organizational structure
and Home Ownership Centers (HOCs).

Chapter 2: Outdated information about FHA Subdivision Approval
Processing and FHA Conditional and Firm Commitment processing have been
removed. Also, detailed information about appraisal processing has been
removed because it duplicates information found in other HUD Handbooks.

Chapter 3: Detailed information about mortgage credit processing has
been removed because it duplicates information in other HUD Handbooks.

Chapter 4: Outdated information related to FHA Conditional and Firm
Commitment processing has been removed.

Chapter 5: Paragraph 5-3 has been expanded to allow lenders to collect
any Automated Underwriting System (AUS) fee, notary fee and to clarify
the buyer broker fee (when the buyer independently engages a real estate
broker). Paragraph 5-9 clarifies that loan origination documents may be
stored in electronic form.

Chapter 6: The information for each active single-family mortgage
insurance program has been updated entirely. Terminated or inactive
programs have been deleted.

Appendix I: Single-Family HOC Jurisdictions

Appendix II: Case Number Prefixes

Appendix III: Home Mortgage Automated Data Processing (ADP) Codes

Appendix IV: States with Low and High Average Closing Costs

Appendix V: Program Identification Codes

Appendix VI: Extended Lending Areas for Loan Origination

Appendix VII: Suggested Format for Request for Mortgage Insurance
Certificate (MIC) Correction

References:

  ------ ---------- -------------------------------------------------------
  1\.    4000.4     Single-Family Direct Endorsement Program

  2\.    4060.1     Mortgagee Approval Handbook

  3\.    4135.1     Procedures for Approval of Single-Family Proposed
                    Construction Applications in New Subdivisions

  4\.    4140.1     Land Planning Principles for Home Mortgage Insurance

  5\.    4145.1     Architectural Processing and Inspections for Home
                    Mortgage Insurance

  6\.    4150.1     Valuation Analysis for Home Mortgage Insurance

  7\.    4150.2     Valuation Analysis for Single-Family One- to Four- Unit
                    Dwellings

  8\.    4155.1     Mortgage Credit Analysis for Mortgage Insurance, One-
                    to Four-Family Properties

  9\.    4165.1     Endorsement for Insurance for Home Mortgage Programs
                    (Single-Family)

  10\.   4235.1     Home Equity Conversion Mortgages

  11\.   4240.1     Section 203(h), Home Mortgage Insurance for Disaster
                    Victims

  12\.   4240.2     The Graduated Payment Mortgage Program

  13\.   4240.3     Application Through Insurance (Single-Family) Section
                    203(n)

  14\.   4240.4     203(k), Rehabilitation Home Mortgage Insurance

  15\.   4245.1     Section 220(d)(3)(A) and Section 220(h) Rehabilitation
                    and Neighborhood Conservation Housing Insurance Program

  16\.   4260.1     Section 223(a), (e), and (d), Miscellaneous Type Home
                    Mortgage Insurance

  17\.   4265.1     Section 234(c), Home Mortgage Insurance Condominium
                    Units

  18\.   4290.1     Section 233, Mortgages Involving Experimental Housing
                    for Home Mortgage Insurance

  19\.   4905.1     Requirements for Existing Housing One- to Four-Family
                    Living Units

  20\.   4910.1     Minimum Property Standards for Housing, 1994 Edition

  21\.   CFR        Code of Federal Regulations, Title 24 (24 CFR).
                    Codifies the general and permanent rules of the
                    Department.
  ------ ---------- -------------------------------------------------------

FORMS RELEVANT TO HANDBOOK 4000.2

  ----------------- ------------------------------------- ----------------
  Form \#           Form Name                             OMB Approval
                                                          Number

  FEMA Form 81-31   Elevation Certificate                 3067-0077

  HUD 1             Settlement Statement                  2502-0265

  HUD 59100         Mortgage Insurance                    N/A
                    Certificate/Non-Endorsement Notice    

  HUD 91322.1       Master Appraisal Report               2502-0111

  HUD 92051         Compliance Inspection Report          2502-0189

  HUD 92300         Mortgagee Assurance of Completion     2502-0189

  HUD 92561         Borrower's Contract with Respect to   2502-0059
                    Hotel and Transient Use of Property   

  HUD 92577         Request for Acceptance of Changes in  2502-0117
                    Approved Drawings and Specifications  

  HUD 92800.5B      Conditional Commitment-DE Statement   2502-0494
                    of Appraised Value                    

  HUD 92900-B       Interest Rate Disclosure Statement    N/A

  HUD 92900-PUR     Mortgage Credit Analysis Worksheet    2502-0059
                    Purchase Money Mortgage               

  HUD 92900-WS      Mortgage Credit Analysis Worksheet    2502-0059

  URAR (FNMA        Uniform Residential Appraisal Report  N/A
  1004/FHLMC 70)                                          

  HUD 92564-VC      Notice to the Lender                  2502-0538

  HUD 92564-HS      Notice to Homebuyer                   2502-0538

  VA 26-1843a       Master Certificate of Reasonable      []{.mark}
                    Value                                 

  VA-NOV            Veterans Affairs- Notice of Value     2900-0045
  ----------------- ------------------------------------- ----------------

# CHAPTER 1 INTRODUCTION

[]{#__RefHeading___Toc169402002 .anchor}**1-1 PURPOSE**.
[\<TOP\>](#_top) This handbook describes general policies and procedures
required of lenders participating in the Federal Housing
Administration's (FHA) single-family mortgage insurance programs under
Title II of the National Housing Act.

[]{#__RefHeading___Toc169402003 .anchor}**1-2 MORTGAGE INSURANCE
PROGRAMS**. [\<TOP\>](#_top) Under these programs, FHA insures approved
lenders against losses on mortgage loans. The acronyms HUD (U.S.
Department of Housing and Urban Development) and FHA are often used
interchangeably. For ease of reading, we have chosen to use "lender" in
lieu of "mortgagee" throughout this handbook. However, lender is to be
interpreted as a FHA-approved mortgagee as described in 24 CFR § 202.10.

FHA-insured mortgages may be used to purchase homes, to improve homes,
and to refinance existing debts. The programs differ from one another
primarily in terms of what types of properties and financing are
eligible. The single-family programs are generally limited to dwellings
with one- to four-family units.

All of FHA\'s single-family programs are authorized by the enabling
legislation of the National Housing Act, and each program is generally
referred to by its particular section of that Act. For example, Section
203(b) (the basic program), Section 251 (Adjustable Rate Mortgages
(ARMs)), Section 234(c) (condominiums), etc. The regulations
implementing the individual programs are contained in the Code of
Federal Regulations (CFR), Title 24 (24 CFR). The CFR codifies the
general and permanent rules of the Department, and is updated by
publishing changes to regulations in the Federal Register.

HUD Handbooks and Mortgagee Letters provide detailed processing
instructions, and they advise the mortgage industry of major changes to
FHA programs and procedures. In addition to the section of the Act that
authorizes each single-family mortgage insurance program, various
characteristics of each program will reflect the particular insurance
fund under which it is insured. There are three mortgage insurance
funds:

A. Mutual Mortgage Insurance (MMI) Fund. The MMI fund covers most
programs, including most of the programs authorized under Section
203(b).

B. General Insurance (GI) Fund. The GI fund covers, among other
programs, Section 203(k) and condominiums under Section 234(c).

Special Risk Insurance (SRI) Fund. The SRI fund covers\
Section 223(e) and several others.

[]{#__RefHeading___Toc169402004 .anchor}**1-3 GENERAL PROCESSING
STEPS**. [\<TOP\>](#_top) All single-family mortgage insurance programs
(except streamline refinances) involve three steps: (1) property
evaluation and underwriting, (2) mortgage credit analysis, and (3)
insurance endorsement. Except as noted below, all processing and
underwriting must be performed by approved lenders under the Direct
Endorsement (DE) program.

A. Direct Endorsement. Under the DE program, approved lenders underwrite
and close mortgage loans without prior FHA review or approval. This
includes all aspects of the mortgage loan application, the property
analysis, and borrower underwriting. All FHA mortgage insurance programs
described in this handbook are eligible for DE processing except for
Section 203(n) (Cooperative Units) and Section 233 (Experimental
Housing). HUD Handbook 4000.4 provides detailed information on the DE
program.

B. FHA Processing. An exception to the DE program is made for HUD
employees. Lenders process the loan and submit a complete loan package
underwritten up to the point of approval to FHA. FHA reviews the loan
package and approves or rejects loans requested by HUD employees.
However, for streamline refinances only, any HUD employee or member of
their household (spouse, parent, child) may have their streamline
refinance processed by a DE lender.

[]{#__RefHeading___Toc169402005 .anchor}**1-4 LENDER APPROVAL**.
[\<TOP\>](#_top) The procedures for obtaining approval to participate in
FHA mortgage insurance programs are contained in 24 CFR 202.10 et seq.
Handbook 4060.1, Mortgage Approval, provides additional guidance for
these regulations with specific procedures for obtaining approval.
Program details are available on HUD's Web site at
[www.hud.gov](http://www.hud.gov/) or from the Office of Lender
Activities and Program Compliance.

[]{#__RefHeading___Toc169402006 .anchor}**1-5 THE CONTRACT OF MORTGAGE
INSURANCE**. [\<TOP\>](#_top) If a mortgage loan meets all applicable
regulations and instructions, FHA will endorse the mortgage for
insurance. FHA\'s endorsement of the mortgage and issuance of an
electronic Mortgage Insurance Certificate (MIC) creates a contract of
mortgage insurance subject to the regulations in effect at that time.
Before insuring a mortgage under the DE program, FHA may determine if
there is any information indicating that any certification or required
document is false, misleading, or constitutes fraud or misrepresentation
on the part of any party or that the mortgage fails to meet a statutory
or regulatory requirement. If the mortgage is determined to be eligible
following this review, FHA will endorse the mortgage for insurance. If
FHA determines that any information, document, or certification is
false, misleading, or constitutes fraud or misrepresentation, it may
reject the mortgage for insurance.

[]{#__RefHeading___Toc169402007 .anchor}**1-6 INELIGIBLE BORROWERS**.
[\<TOP\>](#_top)

A. Mandatory Rejection. A borrower must be rejected if the following
conditions apply:

1\. HUD Limited Denial of Participation (LDP) and Federal Lists. A
borrower suspended, debarred, or otherwise excluded from participation
in the Department's programs is not eligible for a FHA-insured mortgage.
The lender must examine HUD's LDP list and the government-wide General
Services Administration's (GSA's) "List of Parties Excluded from Federal
Procurement or Nonprocurement Programs" and document this review on the
HUD-92900-WS/92900-PUR. If the name of any party to the transaction
appears on either list, the application is not eligible for mortgage
insurance. A lender may check HUD's LDP list by going to
[www.hud.gov](http://www.hud.gov/) and the Federal government's list of
excluded parties by going to https://epls.arnet.gov. (An exception may
be made when a seller appears on the LDP list and the property being
sold is the seller's principal residence.)

2\. Delinquent Federal Debts. If the borrower is presently delinquent on
any Federal debt (e.g., Veterans Affairs (VA)-guaranteed mortgage, Title
I loan, Federal student loan, Small Business Administration loan,
delinquent Federal taxes, etc.) or has a lien, including taxes, placed
against his or her property for a debt owed to the U.S., the borrower is
not eligible until the delinquent account is brought current, paid,
otherwise satisfied, or a satisfactory repayment plan is made between
the borrower and the Federal agency owed. This plan must be verified in
writing. Tax liens may remain unpaid provided the lien holder
subordinates the tax lien to the FHA-insured mortgage. If any regular
payments are to be made, they must be included in the qualifying ratios.
Tax liens may be eligible for inclusion in a refinance in some cases.
See HUD Handbook 4155.1 Chapter 1 for additional information.

B. Past Delinquencies and Defaults on FHA-Insured Loans.

The three-year waiting period to regain eligibility for another FHA
insured mortgage begins when FHA pays the initial claim to the lender;
this includes deeds-in-lieu of foreclosure, as well as judicial and
other forms of foreclosures. Information regarding the date the claim
was paid, date of initial default, etc., may be obtained through the
appropriate Home Ownership Center (HOC),i.e., the HOC having
jurisdiction where the property subject to the default is located.

Although eligibility for an FHA-insured mortgage may be established by
performing the actions described above, the overall analysis of the
creditworthiness must include consideration of a borrower\'s previous
failure to make payments to the Federal agency in the agreed-to manner.

C. Source of Information. Lenders must screen all borrowers using HUD's
Credit Alert Interactive Voice Response System (CAIVRS) (except on
streamline refinances). If CAIVRS indicates the borrower is presently
delinquent or has had a claim paid within the previous three years on a
loan made or insured by FHA on his or her behalf, the borrower is not
eligible. When lenders apply for FHA insurance via FHA Connection,
CAIVRS is automatically checked to ensure that there are no Federal
delinquencies or debts. Lenders also may check CAIVRS by accessing FHA
Connection at <https://entp.hud.gov/clas/> or by calling 301-344-4000 on
a touch-tone telephone, entering their FHA-assigned lender
identification number, and entering all borrowers\' social security
numbers (SSNs). Lenders must write the CAIVRS authorization code for
each borrower on the HUD-92900-WS/92900-PUR.

If the lender has reason to believe the CAIVRS message is erroneous or
must establish the date of claim payment, the lender must contact the
appropriate HOC for instructions or documentation to support the
borrower\'s eligibility. The appropriate HOC can provide information
regarding if the three-year waiting period has passed or the SSN in
CAIVRS is erroneous. The appropriate HOC also can provide instructions
to lenders regarding processing requirements for other HUD-related
defaults and claims (e.g., Title I loans).

FHA cannot alter or delete CAIVRS information reported from other
Federal agencies, such as the Department of Education, VA, etc. The
borrower and/or the lender must contact those agencies to correct or to
remove erroneous or outdated information. We do not require a \"clear\"
CAIVRS access number as a condition for mortgage endorsement, but the
lender must document and justify its approval based on the exceptions
described above. See HUD Handbook 4155.1 for additional information
about CAIVRS procedures.

[]{#__RefHeading___Toc169402008 .anchor}**1-7 PROHIBITION ON PROPERTY
FLIPPING**. [\<TOP\>](#_top) Property flipping is a practice whereby
recently acquired property is resold for a considerable profit with an
artificially inflated value, often abetted by a lenders' collusion with
the appraiser.

Sale by Owner of Record. To be eligible for a mortgage insured by FHA,
the property must be purchased from the owner of record and the
transaction may not involve any sale or assignment of the sales
contract. This requirement applies to all FHA purchase money mortgages
regardless of the time between re-sales. The mortgage lender must obtain
documentation verifying that the seller is the owner of record and
submit this to HUD as part of the insurance endorsement binder. This
documentation may include but is not limited to, a property sales
history report, a copy of the recorded deed from the seller, or other
documentation such as a copy of a property tax bill, title commitment or
binder, demonstrating the seller's ownership of the property and the
date it was acquired.

Appraiser Determines Date of Property Acquisition. To be in compliance
with updated Standard Rule 1-5 of the Uniform Standards of Professional
Appraisal Practice (USPAP), appraisers are required to analyze any prior
sales of the subject property in the previous three years for
one-to-four family residential properties. Mortgage lenders may rely on
the information provided by the appraiser in the Uniform Residential
Appraisal Report (URAR) describing the Date, Price and Data for Prior
Sales for the subject property within the last three years.

Re-sales Occurring 90 Days or Less Following Acquisition. A property
acquired by the seller is not eligible for a mortgage to be insured by
FHA for the buyer unless the seller has owned that property for at least
90 days. If a property is re-sold 90 days or fewer following the date of
acquisition by the seller, the property is not eligible for a mortgage
insured by FHA. FHA defines the seller's date of acquisition as the date
of settlement on the seller's purchase of that property. The re-sale
date is the date of execution of the sales contract by a buyer intending
to finance the property with an FHA-insured loan.

Re-sales Occurring Between 91 and 180 Days Following Acquisition. If the
re-sale date is between 91 and 180 days following acquisition by the
seller, the lender is required to obtain a second appraisal made by
another appraiser if the resale price is 100 percent or more over the
price paid by the seller when the property was acquired. The cost of the
second appraisal may not be charged to the homebuyer. FHA reserves the
right to revise the re-sale percentage level at which this second
appraisal is required by publishing a notice in the Federal Register.

As an example, if a property is re-sold for \$80,000 within six months
of the seller's acquisition of that property for \$40,000, the mortgage
lender must obtain a second independent appraisal supporting the
\$80,000 sales price. The mortgage lender may also provide documentation
showing the costs and extent of rehabilitation that went into the
property resulting in the increased value but must still obtain the
second appraisal.

E. Exceptions to the 90-Day Restriction. The HOCs do not have the
authority

to waive these requirements. The following are the only exceptions to
the

90-day restriction permitted:

Properties acquired by an employer or relocation agency in connection
with the relocation of an employee.

Re-sales by HUD under its Real Estate Owned (REO) program are not
subject to the time restriction. However, any subsequent re-sale of such
a property must meet the 90-day threshold in order for the mortgage to
be eligible as security for FHA insurance.

[]{#__RefHeading___Toc169402009 .anchor}**1-8 MAXIMUM LOAN LIMITS AND
MORTGAGE AMOUNTS**. [\<TOP\>](#_top) Under most programs, the maximum
insurable mortgage is the lesser of: (1) the statutory loan limit for
the area or (2) a percentage of the lesser of the appraised value or
sales price.

A. Loan Limits. The statutory provisions of the National Housing Act
establish the maximum loan limits and mortgage amounts for all programs.
The maximum loan limits will vary depending upon the specific program
under which the loan will be insured, the number of units within the
dwelling (one to four units) and the geographic location of the
property. The specific loan limits for each county in the United States,
Guam and the Virgin Islands are listed on HUD's Web site at
[www.hud.gov](http://www.hud.gov/). See HUD Handbook 4155.1 for detailed
instructions on calculating the maximum mortgage amounts and maximum
loan-to-value (LTV) ratios.

1\. Basic Nationwide Loan Limits. FHA\'s single-family mortgage limits
are set by county and are tied to increases in the loan limits
established by the Federal Home Loan Mortgage Corporation (Freddie Mac)
in accordance with Section 203(b)(2)(A) of the National Housing Act, as
amended (12 U.S.C 1709).

The National Housing Act specifies the maximum mortgage amount for each
program. Under Section 203(b), the nationwide basic mortgage limits
(\"the floor\") may not be less than 48% of the dollar amount limitation
of the Federal Home Loan Mortgage Corporation Act.

2\. Loan Limits for High Cost Areas. Section 203(b)(2)(A) of the
National Housing Act also states that mortgage limits in high cost areas
(\"the ceiling\") may increase to 87% of the dollar amount limitation as
determined under Section 305(a)(2) of the Federal Home Loan Mortgage
Corporation Act for a residence of applicable size. In these high cost
areas, the loan limit will be equal to the lesser of 95% of the area
median house price or the statutory ceiling for the high cost areas.
Section 214 of the National Housing Act provides that mortgage limits
for Alaska, Hawaii, Guam, and the Virgin Islands may be adjusted up to
150% of the new FHA ceilings.

3\. Appeals for Higher Loan Limits. Anyone may appeal for a higher loan
limit for a county within a Metropolitan Statistical Area (MSA) or a
non-metro county not part of an MSA. FHA will not consider appeals for
areas smaller than a county. It should be noted that legislation enacted
in 1998 provided that the county with the highest median house price in
an MSA will determine the mortgage limits of all counties in that MSA.
Any request for an increase must be accompanied by sufficient housing
sales price data to justify higher limits. The sales price data
submitted to support an increase must be a listing of all one-family
properties sold in the area for a period of time that will vary
depending on the volume of sales. Contact the local Homeownership Center
(HOC) for additional information on appeals to FHA mortgage limits.

B. Maximum LTV Ratios. The mortgage cannot exceed a certain percentage
of value. The maximum LTV ratios vary by type of borrower, type of
transaction (purchase or refinance); and stage of construction. Detailed
loan-to-value instructions are contained in HUD Handbook 4155.1.

[]{#__RefHeading___Toc169402010 .anchor}**1-9 INTEREST RATE**.
[\<TOP\>](#_top) Under all currently active single-family mortgage
insurance programs, the interest rate and any discount points are
negotiated between the borrower and the lender.

A. Lock-Ins or Rate Locks. Lenders are permitted to charge a commitment
fee to guarantee, in writing, the interest rate and discount points for
a specific period of time or to limit the extent they may change. The
minimum time for lock-ins or rate locks is 15 days. The loan may close
in less than 15 days at the convenience of the borrower, and the lock-in
fees may still be earned. Lenders are expected to honor all such
commitments.

B. Disclosure. The lender must give a HUD Interest Rate Disclosure
Statement, Form HUD-92900-B, to the borrower(s) explaining that the loan
terms are negotiable.

C. Reprocessing. Any increase in the discount points or in the interest
rate triggers the requirement that the borrower(s) be requalified.

[]{#__RefHeading___Toc169402011 .anchor}**1-10 MORTGAGE TERM**.
[\<TOP\>](#_top) The term may not exceed 30 years from the date
amortization begins and, in the case of adjustable rate mortgages, must
be for 30 years. Some programs require a shorter term, including certain
streamline refinances made without appraisals. Handbook 4155.1 provides
details. FHA does not require that loan terms be in five year multiples.

[]{#__RefHeading___Toc169402012 .anchor}**1-11 MORTGAGE INSURANCE
PREMIUM (MIP)**. [\<TOP\>](#_top) In most of the FHA mortgage insurance
programs, HUD collects an UFMIP and an annual premium (collected on a
monthly basis). The UFMIP fee is currently 1.50% of the base loan amount
(loan amount excluding UFMIP).

A. UFMIP. The UFMIP must be paid to HUD in a lump sum within the number
of days prescribed by FHA after the loan is closed for mortgages subject
to a UFMIP. A late charge (and interest charges, if received 30 or more
days after closing) will be assessed. See Charts 2A and 2B below for
additional information.

The mortgage amount may be rounded down to a multiple of \$1, regardless
of whether the UFMIP is financed. If financed in the mortgage, the UFMIP
is subject to neither the statutory loan amount limits nor the LTV
limits. In these cases, the UFMIP may be added to the mortgage amount,
regardless of the maximum mortgage limitation. See HUD Handbook 4155.1
for additional information.

Refund of UFMIP. Borrowers may be entitled to a refund of a portion of
the UFMIP. Borrowers with loans closed on or after January 1, 2001,
paying off (or refinancing) their FHA loans within five years from the
date of closing, are entitled to a partial refund of the UFMIP paid at
closing. Borrowers with loans closed on or after January 1, 1994, but
before January 1, 2001, paying off (or refinancing) their FHA loans
within seven years from the date of closing, are entitled to a partial
refund of the UFMIP paid at closing. See Charts 1A and 1B below for
specific factors.

[]{.mark}

[]{.mark}

Chart 1A: The following is a five-year refund schedule:

[]{.mark}

<table style="width:100%;">
<colgroup>
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13">FHA MMI FUND</td>
</tr>
<tr class="even">
<td colspan="13">UPFRONT PREMIUM EARNING FACTORS</td>
</tr>
<tr class="odd">
<td colspan="13"><p>FOR ALL MORTGAGE TERMINATIONS AND REFINANCES</p>
<p>CLOSED ON OR AFTER JANUARY 1, 2001</p></td>
</tr>
<tr class="even">
<td> </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td> </td>
</tr>
<tr class="odd">
<td> </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td> </td>
</tr>
<tr class="even">
<td> </td>
<td colspan="12">Month of Year</td>
</tr>
<tr class="odd">
<td>Year</td>
<td>1</td>
<td>2</td>
<td>3</td>
<td>4</td>
<td>5</td>
<td>6</td>
<td>7</td>
<td>8</td>
<td>9</td>
<td>10</td>
<td>11</td>
<td>12</td>
</tr>
<tr class="even">
<td>1</td>
<td>0.9750</td>
<td>0.9500</td>
<td>0.9250</td>
<td>0.9000</td>
<td>0.8750</td>
<td>0.8500</td>
<td>0.8333</td>
<td>0.8167</td>
<td>0.8000</td>
<td>0.7833</td>
<td>0.7667</td>
<td>0.7500</td>
</tr>
<tr class="odd">
<td>2</td>
<td>0.7333</td>
<td>0.7167</td>
<td>0.7000</td>
<td>0.6833</td>
<td>0.6667</td>
<td>0.6500</td>
<td>0.6333</td>
<td>0.6167</td>
<td>0.6000</td>
<td>0.5833</td>
<td>0.5667</td>
<td>0.5500</td>
</tr>
<tr class="even">
<td>3</td>
<td>0.5333</td>
<td>0.5167</td>
<td>0.5000</td>
<td>0.4833</td>
<td>0.4667</td>
<td>0.4500</td>
<td>0.4333</td>
<td>0.4167</td>
<td>0.4000</td>
<td>0.3833</td>
<td>0.3667</td>
<td>0.3500</td>
</tr>
<tr class="odd">
<td>4</td>
<td>0.3333</td>
<td>0.3167</td>
<td>0.3000</td>
<td>0.2833</td>
<td>0.2667</td>
<td>0.2500</td>
<td>0.2375</td>
<td>0.2250</td>
<td>0.2125</td>
<td>0.2000</td>
<td>0.1875</td>
<td>0.1750</td>
</tr>
<tr class="even">
<td>5</td>
<td>0.1625</td>
<td>0.1500</td>
<td>0.1375</td>
<td>0.1250</td>
<td>0.1125</td>
<td>0.1000</td>
<td>0.0833</td>
<td>0.0667</td>
<td>0.0500</td>
<td>0.0333</td>
<td>0.0167</td>
<td>0.0000</td>
</tr>
</tbody>
</table>

[]{.mark}

Chart 1B: The following is a seven-year refund schedule:

<table style="width:100%;">
<colgroup>
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13">FHA MMI FUND</td>
</tr>
<tr class="even">
<td colspan="13">UPFRONT PREMIUM EARNING FACTORS</td>
</tr>
<tr class="odd">
<td colspan="13"><p>FOR ALL MORTGAGE TERMINATIONS AND REFINANCES</p>
<p>CLOSED ON OR AFTER JANUARY 1, 1994 TO DECEMBER 31, 2000</p></td>
</tr>
<tr class="even">
<td> </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td> </td>
</tr>
<tr class="odd">
<td> </td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td> </td>
</tr>
<tr class="even">
<td> </td>
<td colspan="12">Month of Year</td>
</tr>
<tr class="odd">
<td>Year</td>
<td>1</td>
<td>2</td>
<td>3</td>
<td>4</td>
<td>5</td>
<td>6</td>
<td>7</td>
<td>8</td>
<td>9</td>
<td>10</td>
<td>11</td>
<td>12</td>
</tr>
<tr class="even">
<td>1</td>
<td>0.9917</td>
<td>0.9833</td>
<td>0.9750</td>
<td>0.9667</td>
<td>0.9583</td>
<td>0.9500</td>
<td>0.9417</td>
<td>0.9333</td>
<td>0.9250</td>
<td>0.9167</td>
<td>0.9083</td>
<td>0.9000</td>
</tr>
<tr class="odd">
<td>2</td>
<td>0.8917</td>
<td>0.8833</td>
<td>0.8750</td>
<td>0.8687</td>
<td>0.8583</td>
<td>0.8500</td>
<td>0.8417</td>
<td>0.8333</td>
<td>0.8250</td>
<td>0.8167</td>
<td>0.8083</td>
<td>0.8000</td>
</tr>
<tr class="even">
<td>3</td>
<td>0.7835</td>
<td>0.7870</td>
<td>0.7505</td>
<td>0.7340</td>
<td>0.7175</td>
<td>0.7010</td>
<td>0.6845</td>
<td>0.6680</td>
<td>0.6515</td>
<td>0.6350</td>
<td>0.6185</td>
<td>0.6020</td>
</tr>
<tr class="odd">
<td>4</td>
<td>0.5840</td>
<td>0.5660</td>
<td>0.5480</td>
<td>0.5300</td>
<td>0.5120</td>
<td>0.4940</td>
<td>0.4760</td>
<td>0.4580</td>
<td>0.4400</td>
<td>0.4220</td>
<td>0.4040</td>
<td>0.3860</td>
</tr>
<tr class="even">
<td>5</td>
<td>0.3720</td>
<td>0.3580</td>
<td>0.3440</td>
<td>0.3300</td>
<td>0.3160</td>
<td>0.3020</td>
<td>0.2880</td>
<td>0.2740</td>
<td>0.2600</td>
<td>0.2450</td>
<td>0.2320</td>
<td>0.2188</td>
</tr>
<tr class="odd">
<td>6</td>
<td>0.2068</td>
<td>0.1967</td>
<td>0.1845</td>
<td>0.1733</td>
<td>0.1622</td>
<td>0.1510</td>
<td>0.1398</td>
<td>0.1287</td>
<td>0.1175</td>
<td>0.1083</td>
<td>0.0952</td>
<td>0.0840</td>
</tr>
<tr class="even">
<td>7</td>
<td>0.0770</td>
<td>0.0700</td>
<td>0.0630</td>
<td>0.0560</td>
<td>0.0490</td>
<td>0.0420</td>
<td>0.0350</td>
<td>0.0280</td>
<td>0.0210</td>
<td>0.0140</td>
<td>0.0070</td>
<td>0.0000</td>
</tr>
</tbody>
</table>

B. Annual MIP. In addition to the UFMIP, certain mortgages require the
payment of an annual premium. The percentage amount of the annual
premium is based upon the LTV and the term of the mortgage. For programs
that require a monthly MIP, HUD must receive payment by the 10th of the
month. A late charge (and interest charges, if received 30 or more days
after closing) will be assessed. See Charts 2A and 2B below for
additional information on UFMIP and annual MIP amounts.

C. Cancellation of Annual MIP. For loans closed on or after January 1,
2001, FHA\'s annual MIP will be automatically canceled under the
following conditions:

1\. For mortgages with terms more than 15 years, the annual MIP will be
canceled when the LTV ratio reaches 78%, provided the borrower has paid
the annual MIP for at least five years.

2\. For mortgages with terms 15 years and less and with LTV ratios 90%
and greater, the annual MIP will be canceled when the LTV ratio reaches
78%, irrespective of the length of time the borrower has paid the annual
MIP.

3\. Mortgages with terms 15 years and less and with LTV ratios of 89.99%
and less will not be charged an annual MIP.

Although the annual MIP will be canceled as described, the contract of
insurance will remain in force for the loan\'s full term. This MIP
cancellation provision only applies to loans with an UFMIP.

FHA will determine when a borrower has reached the 78% LTV ratio based
on the lesser of the sales price or appraised value at origination. New
appraised values will not be considered. For example, if the lesser of
the sales price or the appraised value at origination was \$100,000,
when the loan amount reaches \$78,000, HUD will no longer collect annual
MIP on the loan. Cancellation of the annual MIP will normally be based
on the scheduled amortization of the loan. However, in cases where the
loan payments have been accelerated or modified, cancellation can be
based on the actual amortization of the loan as provided to FHA by the
servicing lender.

Chart 2A

  ----------------- ----------------- ----------------- -----------------
  REFERENCE CHART                                       
  FOR UPFRONT AND                                       
  ANNUAL MIP FOR                                        
  MORTGAGES WITH                                        
  TERMS MORE THAN                                       
  15 YEARS                                              

  Upfront           LTV Ratio         Premium           Years

  1.50%             All LTVs          .50%              \*

  \*Years will be                                       
  determined when                                       
  the loan balance                                      
  equals 78%,                                           
  provided the                                          
  borrower has paid                                     
  the annual MIP                                        
  for at least 5                                        
  years (scheduled                                      
  or actual).                                           
  ----------------- ----------------- ----------------- -----------------

Chart 2B

  ----------------- ----------------- ----------------- -----------------
  REFERENCE CHART                                       
  FOR UPFRONT AND                                       
  ANNUAL MIP FOR                                        
  MORTGAGES WITH                                        
  TERMS 15 YEARS                                        
  AND LESS                                              

  Upfront           LTV Ratio         Premium           Years

  1.50%             89.99 and under   None              N/A

  1.50%             90.00 and over    .25%              \*\*

  \*\* Years will                                       
  be determined                                         
  when the loan                                         
  balance equals                                        
  78% (scheduled or                                     
  actual).                                              
  ----------------- ----------------- ----------------- -----------------

D. Monthly MIP. For mortgages insured under other sections of the
National Housing Act that do not require UFMIP, the premium is collected
in monthly installments. The monthly premium varies by program and
outstanding principal balance.

[]{#__RefHeading___Toc169402013 .anchor}**1-12 MORTGAGE NOTE AND
SECURITY INSTRUMENT**. [\<TOP\>](#_top) The note and security instrument
(mortgage, deed of trust, or security deed) must meet the requirements
of FHA. FHA may prescribe complete mortgage instruments. For each case
in which FHA does not prescribe the complete mortgage instrument, FHA
may require the use of FHA-approved uniform language. See HUD Handbook
4165.1 for additional information.

[]{#__RefHeading___Toc169402014 .anchor}**1-13 PREPAYMENT PRIVILEGE**.
[\<TOP\>](#_top) The borrower may prepay the mortgage in whole or in
part on the first of any month. If the mortgage was insured before
August 2, 1985, the borrower must give 30 days written notice to the
lender or be charged one extra month\'s interest; the payment must also
reach the lender by the first of the month. For mortgages insured on or
after August 2, 1985, there is no advance notice requirement. If payment
is received after the first of the month, the lender may, at its option,
collect the remainder of the month\'s interest.

Neither prepayment penalties nor due-on-sale clauses are permitted,
except for cases in which FHA approves a due-on-sale clause in
connection with tax exempt bond financing by State or local governments
or to implement statutory restrictions on assumptions.

Mortgage insurance may be terminated via payment-in-full, conveyance for
insurance benefits, and voluntary termination upon agreement between the
borrower and lender.

[]{#__RefHeading___Toc169402015 .anchor}**1-14 SECONDARY FINANCING**.
[\<TOP\>](#_top) The information listed below is an overview of
permitted secondary financing arrangements. See HUD Handbook 4155.1 for
additional information.

A. By Government Agencies. FHA will insure a first mortgage loan on a
property that has a second mortgage or lien held by a Federal, State, or
local government agency. The monthly payments under the insured mortgage
and second lien, plus other housing expenses and other recurring
charges, cannot exceed the borrowers' ability to pay.

B. By Nonprofit Organizations. With advance approval, FHA will insure a
first mortgage loan on a property that has a second mortgage held by an
approved nonprofit agency. The monthly payments under the insured
mortgage and second lien, plus other housing expenses and other
recurring charges cannot exceed the borrowers' ability to pay.

C. By Private Individuals or Other Organizations. With advance approval,
FHA will insure a first mortgage loan on a property that has a second
mortgage or lien held by an individual or company, provided: (1) the
required minimum cash investment was not financed; (2) the first and
second mortgage together do not exceed FHA mortgage limits; (3) the
borrower can afford the total amount of the payments; (4) any periodic
payments are level and monthly; (5) there is no balloon payment during
the first ten years; and (6) there is no prepayment penalty. The
secondary financing must be disclosed at the time of application.

D. Borrowers 60 Years of Age or Older. With advance approval, borrowers
60 and older may borrow the required cash investment for purchasing a
principal residence under certain circumstances.

E. By Family Members. FHA permits family member lending on a secured or
unsecured basis, up to 100% of the homebuyer's required cash investment.
This lending may include the downpayment, closing costs, prepaid
expenses and discount points. If the money lent by the family member is
secured against the subject property, whether borrowed from an
acceptable source or from the family member's own savings, only the
family member provider(s) may be the note holder. FHA will not approve
any form of securitization of the note that results in any entity other
than the family member being the note holder, whether at loan settlement
or at any time during the mortgage life cycle.

[]{#__RefHeading___Toc169402016 .anchor}**1-15 ASSUMPTIONS**.
[\<TOP\>](#_top) FHA-insured mortgages originated before December 1,
1986 generally contain no restrictions on assumability. For mortgages
originated after that date, the loan may be assumable under certain
conditions. See HUD Handbook 4155.1 for additional information.

This requirement applies whenever there is a transfer of a borrower\'s
interest, other than by devise, descent, or operation of law. Failure to
satisfy FHA\'s conditions may be grounds for acceleration of the
mortgage, subject to FHA approval.

[]{#__RefHeading___Toc169402017 .anchor}**1-16 HUD HANDBOOKS, MORTGAGEE
LETTERS, AND OTHER FORMS**. [\<TOP\>](#_top)

[]{.mark}

A. HUD Headquarters. HUD Handbooks, Mortgagee Letters, and sample HUD
forms are available on HUD's Web site at
[www.hudclips.org](http://www.hudclips.org/).

[]{.mark}

B. HOCs. The HOCs issue Circular Letters, conduct seminars, lead
industry meetings, and distribute other program information.
HOC-specific information can be accessed on HUD's Web site at
[www.hud.gov](http://www.hud.gov/).

[]{#__RefHeading___Toc169402018 .anchor}**1-17 ORGANIZATION OF HUD**.
[\<TOP\>](#_top)

[]{.mark}

A. HUD Headquarters.

1\. The Assistant Secretary for Housing-Federal Housing Commissioner
administers all housing programs, both single-family and multifamily,
for the Department.

a\. The Deputy Assistant Secretary for Single-Family Housing administers
all single-family housing programs.

\(1\) The Office of Program Development is responsible for the programs,
policies, and procedures relating to the origination, underwriting, and
insuring of single-family mortgages.

\(2\) The Office of Asset Management is responsible for the programs,
policies and procedures relating to the servicing of single-family
mortgages and the sale of foreclosed properties \[Real Estate Owned
(REO)\].

\(3\) The Office of Lender Activities and Program Compliance is
responsible for the approval and recertification of lenders and lender
monitoring.

B. HUD Field Operations -- HOCs.

1\. There are four HOCs located across the country in Philadelphia, PA;
Atlanta, GA; Denver, CO; and Santa Ana, CA. These HOCs are responsible
for administering all single-family activities in their respective
jurisdictions. See Appendix I for a list of the states within each HOC
jurisdiction.

2\. The Single-Family Servicing Center is located in Oklahoma City, OK,
and is responsible for administering the FHA Loss Mitigation and
Loan-Servicing Programs.

[]{#__RefHeading___Toc169402019 .anchor}**1-18 CIVIL RIGHTS AND FAIR
HOUSING**. [\<TOP\>](#_top) The following statutes and regulations on
civil rights and fair housing apply to single-family mortgage insurance
programs:

A. Title VIII of the Civil Rights Act of 1968, as amended (Public Law
90-284).

B. Executive Order 11063, as amended by Executive Order 12259.

C. Section 527 of the National Housing Act prohibits denial of a
federal-related mortgage loan on the basis of sex.

D. The Equal Credit Opportunity Act (15 U.S.C. 1601 et. seq.) and
Regulation B of the Board of Governors of the Federal Reserve System.

E. The Fair Housing Amendments Act of 1988 (see 24 CFR Part 14). This
act prohibits discrimination in residential real estate-related
transactions by individuals or entities whose business includes engaging
in the making of loans or in the provision of other financial
assistance, or in the selling, brokering, or appraising of residential
real estate.

These prohibitions include:

1\. Discrimination in the Making of Loans and in the Provision of other
Financial Assistance. Prohibited practices include, but are not limited
to, failing or refusing to provide information regarding the
availability of loans or other financial assistance, application
requirements, procedures or standards for the review and approval of
loans or financial assistance, or providing information which is
inaccurate or different from that provided others, because of race,
color, religion, sex, handicap, familial status, or national origin.

2\. Discrimination in the Terms and Conditions for Making Available
Loans or other Financial Assistance. Unlawful conduct includes:

a\. Using different policies, practices, or procedures in evaluating or
in determining creditworthiness of any person in connection with the
provision of any loan or other financial assistance secured by
residential real estate.

OR

b\. Determining the type of loan or other financial assistance to be
provided, or fixing the amount, interest rate, duration or other terms
for a loan or other financial assistance, because of race, color,
religion, sex, handicap, familial status, or national origin.

3\. Unlawful Practices in the Selling, Brokering, or Appraising of
Residential Real Property.

a\. It is unlawful for any person or entity whose business includes
engaging in the selling, brokering, or appraising of residential real
property to discriminate in making available such services, or in the
performance of such services, because of race, color, religion, sex,
handicap, familial status, or national origin.

b\. Additional unlawful practices include, but are not limited to, using
an appraisal on residential real property in connection with the
financing of any dwelling where the person knows or reasonably should
know that the appraisal improperly takes into consideration race, color,
religion, sex, handicap, familial status, or national origin.

[]{#__RefHeading___Toc169402020 .anchor}**1-19 FAIR HOUSING MARKETING**.
[\<TOP\>](#_top) FHA\'s regulations on Affirmative Fair Housing
Marketing (24 CFR Part 200, Subpart M) apply to single-family mortgage
insurance programs. Homebuilders building five or more units per year
must comply with the following:

A. Hiring Policy. Applicants must maintain a non-discriminatory policy
in hiring sales staff and instruct all employees on the laws and
philosophy of fair housing. Applicant must submit an Equal Employment
Opportunity (EEO) Certification to FHA.

B. Logo. Applicants must display the Equal Housing Opportunity
statement, logotype, and slogan on all advertising, brochures, site
signs, and other materials.

C. Affirmative Fair Housing Marketing Plan. Single-family homebuilders
are required to provide information to the Department on their
affirmative fair housing marketing activities. These activities, among
other things, are intended to inform everyone of the availability of
housing opportunities regardless of race, color, religion, sex,
handicap, familial status or national origin.

[]{#__RefHeading___Toc169402021 .anchor}**1-20 REPORTING FRAUD AND
ABUSE**. [\<TOP\>](#_top) Any violation of law or regulation, or any
false statements or program abuses detected by a lender or any of its
employees, should be reported immediately to HUD. A report may be
submitted in one of four ways:

A. Email. On the Internet via an email form at
[www.hud.gov](http://www.hud.gov/).

B. Phone.

1\. Call toll-free: 1-800-347-3735

2\. TDD: 202-708-2451

C. Fax. 202-708-4829

D. U.S. Mail.

US Department of Housing & Urban Development

Office of Inspector General Hotline

Assistant Inspector General for Investigations

451 7th Street, S.W., Room 8270

Washington, DC 20410

# CHAPTER 2 PROPERTY APPRAISAL AND VALUATION

[]{#__RefHeading___Toc169402023 .anchor}**2-1 PURPOSE OF THE
APPRAISAL**. [\<TOP\>](#_top) The appraisal serves two main purposes:

A. Condition/Location. Appraisals determine eligibility for mortgage
insurance based on the condition and location of the property.

B. Value. Appraisals estimate the value of the property for mortgage
insurance purposes.

[]{#__RefHeading___Toc169402024 .anchor}**2-2 PROPERTY APPRAISAL AND
UNDERWRITING PROCESS**. [\<TOP\>](#_top) The property appraisal and
underwriting process varies by the stage of construction and type of
processing.

FHA's appraisal handbook is 4150.2.

[]{#__RefHeading___Toc169402025 .anchor}**2-3 APPRAISAL REQUIREMENTS**.
[\<TOP\>](#_top) Except for certain streamline refinance transactions,
FHA requires an appraisal of the property to establish an estimated
value for mortgage insurance purposes. All individual properties,
whether proposed construction, under construction, or existing
construction, must meet specific FHA appraisal requirements and
standards.

See HUD Handbooks 4140.1, 4150.1, and 4150.2 for additional information
about the appraisal requirements for individual properties.

Only one- to four-unit properties are eligible for mortgage insurance,
except for mortgages insured under Section 220 of the National Housing
Act. See Chapter 6 of this handbook for additional information on the
Section 220 program.

[]{#__RefHeading___Toc169402026 .anchor}**2-4 APPRAISAL REPORTING
REQUIREMENTS**. [\<TOP\>](#_top) An appraisal performed for FHA purposes
requires the reporting of the three part Comprehensive Evaluation
Package. Details on requirements for completion of this package are
contained in HUD Handbook 4150.2. The Comprehensive Evaluation Package
consists of the following:

A. Uniform Residential Appraisal Report -- URAR (Fannie Mae Form 1004)
is required. However, appraisals written on the Individual Condominium
Unit Appraisal Report (Fannie Mae Form 1073) or the Small Residential
Income Property Appraisal Report (Fannie Mae Form 1025) forms are also
acceptable, as to applicable property types, to the Department for
FHA-insured mortgages.

B. Notice to the Lender -- Valuation Conditions (Form HUD 92564-VC)

C. Notice to the Homebuyer -- Homebuyer Summary

(Form HUD 92564-HS).

[]{#__RefHeading___Toc169402027 .anchor}**2-5 CONDOMINIUMS**.
[\<TOP\>](#_top) A condominium is a multi-unit project with individually
owned units that may be attached in one or more structures, or detached
from each other. Its use, for FHA purposes, is essentially residential.
A condominium regime is created by state or local law and is
characterized by fee simple ownership of a unit (as defined in the
condominium documents), together with common areas. The property
interest in these areas is both common and undivided on the part of all
unit owners, each of whom belongs to the HOA that typically maintains
the property and collects assessments or dues from each unit owner for
that purpose. See HUD Handbooks 4150.1 and 4265.1 for additional
information including condominium project approval requirements.

In addition, condominium projects must be approved by FHA before a
mortgage on an individual condominium unit in the condominium project
can be insured. In specific circumstances, a loan on a single unit in an
unapproved condominium project, known as a "spot loan," may qualify for
mortgage insurance. The lender must certify that a project satisfies the
eligibility criteria for a spot loan condominium project that has not
been approved by FHA.

See HUD Handbooks 4150.2 and 4265.1 for additional information including
condominium project approval requirements.

[]{#__RefHeading___Toc169402028 .anchor}**2-6 GENERAL ACCEPTABILITY
STANDARDS FOR PROPERTY**. [\<TOP\>](#_top) There are minimum property
standards for existing and proposed construction. A property is
considered \"existing construction\" if it was completed more than one
year prior to application. See HUD Handbooks 4905.1 and 4910.1 for
additional information on existing and proposed construction,
respectively.

Underwriters bear primary responsibility for determining eligibility of
a property for FHA mortgage insurance. However, the FHA appraiser is the
on-site representative for the Mortgagee and provides preliminary
verification that these standards have been met. The "Notice to the
Lender" requires the FHA appraiser to report the physical conditions
that are readily observable on the date of the site visit and to detail
the repairs needed to establish and/or maintain the marketability of the
property, protect the health and safety of the occupants, and protect
the security of the property. These criteria must be addressed by the
Mortgagee before closing.

When examination of existing construction reveals noncompliance with the
General Acceptability Criteria, an appropriate specific condition to
correct the deficiency is required if correction is feasible. If
correction is not feasible and only major repairs or alterations can
effect compliance, the Mortgagee will reject the property.

The following is a general outline of the minimum property standards:

A. Eligible Houses. Detached, semi-detached, row houses, multiplex and
individual condominium dwellings are eligible. If it is not detached,
the dwelling must be separated from an adjoining dwelling by a party or
lot line wall extending the full height of the building. Each living
unit must be individually accessible for use and maintenance without
trespass on adjoining properties.

B. Eligible Manufactured Homes. The following requirements apply to all
manufactured homes:

1\. At least 400 square feet minimum floor area

2\. Built after June 15, 1976, to the Federal Manufactured Home
Construction and Safety Standards (MHCSS) as evidenced by an affixed
certification label

3\. Property is classified and taxed as real estate and is designed to

be used as a dwelling with a permanent foundation built to FHA
requirements

4\. Built and remains on a permanent chassis

5\. Mortgage covers both the unit and its site, and has a term of not
more than 30 years from date that amortization begins

6\. Finished grade beneath home is at or above the 100-year flood
elevation

See HUD Handbooks 4145.1 and 4150.2 for additional information.

C. Site Conditions. The property must be free of health and safety
hazards.

D. Flood Hazard Areas. The Mortgagee is responsible for determining the
eligibility of properties in flood hazard areas and relies upon the FHA
appraiser's notation on the URAR form.

1\. Proposed and New Construction. If any portion of the property
improvements (the dwelling and related structures/equipment essential to
the value of the property and subject to flood damage) is located within
a special flood hazard area (SFHA) designated by the Federal Emergency
Management Agency (FEMA), the property is not eligible for FHA mortgage
insurance unless: (1) a final Letter of Map Amendment (LOMA) or final
Letter of Map Revision (LOMR) that removed the property from the SFHA
location is obtained from FEMA or (2) if the property is not removed
from the SFHA location by a LOMA or LOMR, the lender obtains a FEMA
National Flood Insurance Program Elevation Certificate (form FEMA 81-31)
("flood elevation certificate") documenting that the lowest floor
(including the basement) of the residential building and related
improvements to the property is built at or above the 100 year flood
elevation in compliance with the National Flood Insurance program
criteria (see 44 CFR 60.3 through 60.6). National flood insurance is not
required if a LOMA or LOMR is obtained but is required when a flood
elevation certificate documents that the property remains located within
the SFHA. The LOMA, LOMR, or flood elevation certificate must be
submitted with the case for endorsement.

If the lender is uncertain about whether the property is located within
a SFHA, it may require a flood elevation certificate. In addition, the
lender has discretion to require national flood insurance even if the
residential building and related improvements to the property are not
located within the SFHA, but the lender has reason to believe that the
building and related improvements to the property may be vulnerable to
damage from flooding.

2\. Existing Construction. Flood insurance must be obtained and
maintained for an existing property with any portion of the residential
buildings located in a special flood hazard area.

3\. Insurance Amount Required. National flood insurance must be
maintained in an amount equal to the least of the following: (1) the
cost of the improved property (less estimated land costs); (2) the
maximum limit of coverage made under the National Flood Insurance Act of
1968; or (3) the outstanding principal balance of the loan. Flood
insurance is required for the term of the loan. If the buildings are
located within a special flood hazard area (SFHA) and insurance under
the National Flood Insurance Program is not available within a
community, the property is not eligible for FHA mortgage insurance. See
HUD Handbooks 4150.1 and 4150.2 for additional information.

Condominium. The Homeowners' Association (HOA), not the individual
owner, is responsible for maintaining flood insurance on buildings
located within the special flood hazard area. If the FHA appraiser
reports that buildings in a condominium project are located within a
FEMA-designated SFHA, the lender is

responsible for ensuring that the HOA obtains and maintains national
flood insurance on buildings located within the SFHA. The lender is not
permitted to submit a LOMA, LOMR or elevation certification for any
specific dwelling unit located within a newly constructed condominium
project less than one year old.

5\. Manufactured Homes. If any portion of the property improvements for
both new and existing manufactured home properties are located within a
SFHA, the property is not eligible for FHA mortgage insurance
without: 1) a FEMA issued LOMA or LOMR, or 2) an elevation certification
prepared by a licensed engineer or surveyor on the finished construction
indication the ground beneath the manufactured home is at or above the
100 year flood plain. When utilizing an elevation certification, the
property is still in the SFHA and the loan will require flood insurance.

[]{.mark}

E. Lead-Based Paint Hazard. If the property was built before 1978, the
seller must disclose known information on lead-based paint and
lead-based paint hazards before selling the house. Sales contracts must
include a disclosure form about lead-based paint. Buyers have up to 10
days to check for lead. HUD may insure a mortgage on a house even with
lead-based paint if defective paint surfaces are treated. HUD will not
pay the cost to have the lead-based paint removed, treated, or repaired.

F. Services and Facilities. Utilities and other facilities should be
independent for each unit and must include:

1\. A continuing supply of safe, potable water

2\. Sanitary facilities and a safe method of sewage disposal

3\. Heating adequate for health and comfort

4\. Domestic hot water, and

5\. Electricity for lighting and equipment

G. Access. There must be vehicular access to the property by means of an
abutting all-weather public or private street. If private, there must be
a permanent easement and provisions for permanent maintenance. Each
property must have access to its rear yard.

H. Non-Residential Use. Non-residential use must be subordinate to the
property\'s residential use and character, and it may not exceed 25% of
the total floor area. The following are ineligible for mortgage
insurance:

Commercial enterprises

Boarding houses

Hotels/motels

Tourist houses

Private clubs

Bed and Breakfast establishments

Fraternity/sorority houses

[]{#__RefHeading___Toc169402029 .anchor}**2-7 USE OF VA CERTIFICATE OF
REASONABLE VALUE (VA-MCRV)**. [\<TOP\>](#_top) A Department of Veterans
Affairs VA-CRV or a VA Notice of Value (NOV) form may be used as
acceptable evidence of a property\'s eligibility, unless:

A. Property has an outstanding FHA conditional commitment (HUD employees
only)

B. Property or site is known to be unacceptable (for example, subject to
periodic flooding)

C. Property or site was previously rejected by FHA

D. The VA-MCRV or VA-NOV expired before the sales contract was signed

E. Case is being processed under the DE program and property does not
qualify as proposed construction. See HUD Handbook 4000.4, paragraph 1-2
for additional information on using a VA-MCRV in the DE program.

F. Property is a unit in a condominium project that does not meet FHA
criteria

The appraiser who performed the appraisal for the VA-MCRV or

VA-NOV must currently be on the FHA appraiser roster. The HUD/FHA forms
"Notice to the Lender" and "Notice to the Homebuyer" are also required.

[]{#__RefHeading___Toc169402030 .anchor}**2-8 REQUESTING AN FHA CASE
NUMBER**. [\<TOP\>](#_top) Lenders request and obtain FHA case numbers
using FHA Connection or its functional equivalent. Any additional FHA
information on the property will also be transmitted over the FHA
Connection.

[]{#__RefHeading___Toc169402031 .anchor}**2-9 TERM OF APPRAISAL**.
[\<TOP\>](#_top)

A. Term. The appraisal has a term of six months for existing
construction and 12 months for proposed construction. However, if the
appropriate HOC determines that soft market conditions exist in certain
areas or markets, it may shorten the term of appraisals for proposed
construction and substantial rehabilitation to a period of less than 12
months upon advance notice to lenders. The term of the appraisal begins
on the day the home is inspected by the FHA appraiser and this date
appears on the URAR.

B. Re-Use. Appraisals cannot be re-used after the mortgage for which the
appraisal was ordered has closed. For example, an appraisal used for the
purchase of a property cannot be used again for a subsequent refinance,
even if six months has not passed. A new appraisal is required for each
refinance transaction requiring an appraisal.

C. Extensions. If a borrower signs a valid sales contract or is approved
for a loan prior to the expiration date of the appraisal, the term of
the appraisal may be extended, at the option of the lender, for 30 days
to allow for the approval of the borrower and closing of the loan.
Approval of the borrower occurs when the lender's DE underwriter signs
the Mortgage Credit Analysis Worksheet, Form HUD-92900-WS/92900-PUR.

[]{#__RefHeading___Toc169402032 .anchor}**2-10 COMPLIANCE INSPECTIONS**.
[\<TOP\>](#_top) Compliance inspections may be required for:

A. Proposed construction or properties under construction

B. Properties undergoing substantial rehabilitation, and

C. Existing properties requiring repairs to major systems (structural,
etc.).

The number and timing of inspections depends upon the stage of
construction (proposed, rehabilitation, etc.), coverage by an acceptable
10-year warranty plan, acceptability of inspections by the local
community, and the type of construction (stick built or manufactured
home). A clear final inspection or, in certain cases, a Certificate of
Occupancy will be required before FHA will insure the mortgage. See HUD
Handbooks 4145.1, 4150.1 and 4150.2 for additional information.

[]{#__RefHeading___Toc169402033 .anchor}**2-11 SATISFYING REPAIR
REQUIREMENTS**. [\<TOP\>](#_top) Repair requirements outstanding on the
appraisal report must be satisfied before the mortgage is submitted for
endorsement. Satisfaction of repair requirements can take one of the
following three forms.

A. Compliance Inspection Report (Form HUD-92051). A Compliance
Inspection Report, prepared by an appraiser or inspector, certifies that
the repairs have been completed satisfactorily.

Generally, since an appraiser places the repair requirements, the same
appraiser would be able to determine whether the repair has been made.
For inspections that require architectural expertise (structural or
basic system repairs), an inspector must complete Form
[HUD-92051](http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=HSGH&s1=4000.2&op1=AND&l=100&SECT1=TXT_HITS&SECT5=HEHB&u=./pdfforms/92051.pdf).
A FHA fee inspector must complete the report. A FHA-approved inspector
list is available via FHA Connection located at
<https://entp.hud.gov/clas/>. In addition to the appraiser or inspector,
a professionally licensed, bonded, registered engineer, licensed home
inspector or appropriately registered/licensed trades person, as
applicable, can provide the documentation to support that all
deficiencies noted by the FHA appraiser have been acceptably corrected.
The report must be reviewed by FHA or the lender\'s underwriter, as
appropriate.

B. Mortgagee Certification. Mortgagee certification (that the conditions
have been satisfied) is acceptable in instances in which the required
repair items are minor and uncomplicated. If the homeowner could
complete the work himself or herself as normal maintenance, FHA
considers the work minor.

C. Escrow of Funds. If adverse weather conditions prevent completion of
the repairs, it is not always necessary to complete all new construction
items (for example, landscaping) or required repairs (such as exterior
painting) before submitting the mortgage for insurance endorsement. In
certain situations, funds may be escrowed, and FHA will accept a
Mortgagee\'s Assurance of Completion, Form HUD-92300, at the time of
endorsement.

This procedure may be used only when the following conditions apply:

1\. The dwelling is habitable, safe, and essentially complete

2\. The deferred work cannot be acceptably completed prior to loan
closing, but will be completed within six months

3\. All other conditions of the appraisal have been satisfied by
compliance inspections or by an acceptable Mortgagee\'s Assurance of
Completion, and

4\. The lender has not been denied the privilege of using a Mortgagee\'s
Assurance of Completion due to poor follow-up or non-satisfaction of
outstanding escrows

The lender assumes the obligation to satisfactorily complete the
improvements, regardless of the adequacy of the funds reserved by escrow
or letter of credit. An appraiser or an inspector appearing on FHA\'s
Appraiser Roster or FHA\'s Panel of Inspectors must confirm that the
work was completed. Lists of these individuals are located on HUD's Web
site at [www.hud.gov](http://www.hud.gov/). Alternately, as mentioned in
paragraph 2-12A of this handbook, a professionally licensed, bonded,
registered engineer; licensed home inspector; or appropriately
registered/licensed trades person, as applicable, can provide the
documentation to support that all deficiencies noted by the appraiser
been acceptably corrected.

See HUD Handbook 4145.1 for additional information on this procedure.

[]{#__RefHeading___Toc169402034 .anchor}**2-12 SECTION 223(e)**.
[\<TOP\>](#_top) A mortgage may be insured pursuant to Section 223(e)
for the repair, rehabilitation, construction, or purchase of properties
in older, declining urban areas. Eligibility under Section 223(e) is to
be determined by the appropriate HOC.

If the case is being processed under DE, the lender must submit the case
binder to the appropriate HOC for prior approval processing and 223(e)
consideration. The case binder must be submitted after the appraiser and
the lender\'s underwriter have determined that the property does not
meet the location eligibility requirements of Section 203(b), but is
located in an older, declining urban area that may qualify for 223(e).
See Chapter 6 of this handbook for additional information.

[]{#__RefHeading___Toc169402035 .anchor}**2-13 APPRAISAL AND INSPECTION
FEES**. [\<TOP\>](#_top) The lender is responsible for collecting fees
and promptly paying appraisers and inspectors.

[]{#__RefHeading___Toc169402036 .anchor}**2-14 DOCUMENTATION OF
APPRAISED VALUE**. [\<TOP\>](#_top) In accordance with the provisions of
the National Housing Act, the lender must provide to the homebuyer a
Statement of Appraised Value. The lender accomplishes this requirement
by giving the borrower a copy of Form HUD-92800.5B. When a VA-MCRV
issued by the VA or a NOV issued by a lender in accordance with VA
requirements is the basis for the estimate of the appraised value, the
lender must provide a copy of the VA-MCRV or NOV to the borrower. If the
borrower requests a copy of the appraisal, the lender must provide it to
the borrower.

# CHAPTER 3 MORTGAGE CREDIT ANALYSIS AND BORROWER APPROVAL

[]{#__RefHeading___Toc169402038 .anchor}**3-1 PURPOSE OF MORTGAGE CREDIT
ANALYSIS**. [\<TOP\>](#_top) Mortgage credit analysis is used to
determine the borrowers credit and capacity to repay the mortgage, and
to limit foreclosures or collection difficulties. See HUD Handbook
4155.1, Chapter 2 for complete mortgage credit underwriting
requirements.

[]{#__RefHeading___Toc169402039 .anchor}**3-2 EQUAL CREDIT
OPPORTUNITY**. [\<TOP\>](#_top) The predetermined standards of
acceptable risks must be applied equally to all borrowers, regardless of
race, color, creed, religion, sex, marital status, age, or physical
handicap.

[]{#__RefHeading___Toc169402040 .anchor}**3-3 CONFIDENTIAL NATURE OF
CREDIT INFORMATION**. [\<TOP\>](#_top) Sources must never be divulged,
except as required by the contract or by law. All personnel with access
to credit information must ensure that the use and disclosure of
information from a credit report complies with the following:

A. Title VIII of the Civil Rights Act of 1968

B. The Fair Credit Reporting Act, Public Law 91-508

C. The Privacy Act, Public Law 93-579

D. The Financial Privacy Act, Public Law 95-630

E. The Equal Credit Opportunity Act, Public Law 94-239

and 12 CFR Part 202

[]{#__RefHeading___Toc169402041 .anchor}**3-4 APPLICATION**.
[\<TOP\>](#_top) All borrowers must complete the loan application and
all additional FHA documents. Except for nonprofit corporations that
provide assistance to low- and moderate-income families, all
applications must be in the name of one or more individuals. An
application from a corporation, partnership, sole proprietorship, or
trust also must name one or more individuals and must be analyzed on the
basis of the individual, as well as the organization.

The lender must ask sufficient questions of the borrower to elicit a
complete picture of the borrower's financial position, source of funds
for the transaction, and intended use of the property. Additionally, the
lender is responsible for verifying the identity of the borrower(s).

[]{#__RefHeading___Toc169402042 .anchor}**3-5 CREDIT REPORT AND
VERIFICATIONS**. [\<TOP\>](#_top) Lenders must obtain and verify
information with as much care as would be used if entirely dependent on
the property as security. The credit report and verification forms must
not pass through the hands of the borrower, a real estate agent, or
other interested third party.

[]{#__RefHeading___Toc169402043 .anchor}**3-6 BORROWER APPROVAL OR
REJECTION**. [\<TOP\>](#_top) The DE underwriter determines the
creditworthiness of the borrower(s).

A. Approved Borrowers. Results of the analysis are recorded on the
Mortgage Credit Analysis Worksheet (Form HUD-92900-WS/92900-PUR).
Modification of the mortgage amount or approval conditions and necessary
explanatory statements are entered under "Remarks."

For HUD employee loans, FHA issues a Firm Commitment to the lender,
which obligates FHA to insure the mortgage, provided all conditions are
met. For DE cases, the lender\'s underwriter approves the borrower and
authorizes closing.

1\. Notice to Borrower. The lender is responsible for notifying the
borrower of the approval, either in writing or verbally, immediately
upon receipt of the underwriter\'s decision.

[]{.mark}

B. Rejection/Disapproval of Borrower. The following notices are required
when an application is rejected:

1\. To Lender on FHA-Processed Cases. FHA issues a Non-Endorsement
Notice, Form HUD-59100, showing all reasons for ineligibility, plus any
counterproposal to effectuate loan approval (e.g., a reduced mortgage
amount).

2\. Notice to Borrower(s). The lender must immediately deliver a copy of
the Non-Endorsement Notice and, when required, an Equal Credit
Opportunity Act Notice to the borrower.

Whenever a borrower is rejected for unacceptable credit characteristics
on the basis of information contained in a credit report, the borrower
must be notified and be given the name, address, and, where available,
the telephone number of the credit reporting agency.

[]{#__RefHeading___Toc169402044 .anchor}**3-7 INVESTMENT PROPERTIES AND
DWELLINGS FOR TWO OR MORE FAMILIES**. [\<TOP\>](#_top) Borrower\'s
Contract with Respect to Hotel and Transient Use of Property, Form
HUD-92561, must be submitted with the request for insurance endorsement
if the loan is on investment property (if permitted) or a dwelling for
two or more families.

A. Seven Unit in Proximity. Qualified investor entities are limited to a
financial interest (i.e., any type of ownership, regardless of type of
financing) in seven rental dwelling units, when the subject property is
part of, adjacent to, or contiguous to a property; subdivision; or group
of properties owned by the investor. Each dwelling unit in two-, three-,
and four-family properties counts toward the seven-unit limitation. The
rental units in an owner-occupied toe-, three-, or four-unit property
also count toward this limitation. The lender is responsible for
assuring compliance with this regulation (see 24 CFR 203.42 for
additional information). See HUD Handbook 4155.1 for additional
information on the seven-unit limitation.

# CHAPTER 4 CANCELLING CASES AND TRANSFERRING CASE NUMBERS

[]{#__RefHeading___Toc169402046 .anchor}**4-1 CANCELLING CASES**.
[\<TOP\>](#_top) The lender must notify the appropriate HOC via FHA
Connection, or its functional equivalent, to close outstanding files and
cancel the FHA case number if the origination and closing of a loan will
not be completed or if FHA mortgage insurance endorsement will not be
sought.

[]{#__RefHeading___Toc169402047 .anchor}**4-2 TRANSFERS OF CASE NUMBERS
BETWEEN LENDERS**. [\<TOP\>](#_top)

A. New Lender. Lenders are expected to cooperate in the transfer of case
numbers. At the request of a borrower, the case number is to be assigned
to the new lender using the Case Transfer function in FHA Connection.
The transferring lender is not entitled to a fee for the transfer of a
streamline refinance case number, regardless of the stage of processing
the loan is in. The transferring lender may be entitled to any lock-in
fee collected from the borrower at the time of application. The
transferring lender is required to provide the new lender with the
appraisal but is not required to provide any processing documents. If
processing documents are transferred, the fee for providing these
documents is to be negotiated between the lenders. No separate charge to
the borrower is authorized for this transfer.

B. New Borrower Using an Existing Appraisal. If the transfer is made for
a new borrower to use an existing appraisal, the new lender is to
collect an appraisal fee from the new borrower. The appraisal fee is
sent to the original lender who, in turn, is to refund the fee to the
original borrower.

C. Rejected Loan. If the transfer involves a rejected loan, the original
lender must complete the Mortgage Credit Reject function in FHA
Connection prior to transferring the loan.

D. Master Appraisal Report (MAR), Form HUD-91322.1. In the case of a
MAR, the transferring lender is only entitled to a pro-rata share of the
cost of the MAR. For example, if the MAR is for 100 units and cost
\$10,000, the new lender would pay the transferring lender \$100. While
a lender may have provided resources to obtain the MAR in anticipation
of capturing most -- if not all -- of the individual mortgage loans, it
may not deny an appraisal assignment request to a borrower who wishes to
use an alternative mortgage lender.

# CHAPTER 5 LOAN CLOSING AND INSURANCE

[]{#__RefHeading___Toc169402049 .anchor}**5-1 LOAN CLOSING**.
[\<TOP\>](#_top) The conditions of the DE lender's approval (FHA\'s
commitment if applicable) should be discussed with the borrower and, if
applicable, the seller or builder.

A. Title Insurance. Title insurance is not required at closing. However,
the lender is responsible for conveying good, marketable title to FHA
when a claim is filed. The one exception to this involves property that
previously had been sold by HUD (REO sale) and FHA has insured the
mortgage financing the sale by HUD. If such a property had a title
defect prior to the original conveyance to FHA, the lender will not be
held responsible for any title defects arising prior to the sale by FHA.
See 24 CFR 203.390 for additional information.

B. Title Objections. Any additional exceptions discovered during the
title search should be reported to the DE underwriter before the loan is
closed, unless the exceptions are covered by the General Waiver. Lenders
should ensure that any conditions of title to the property will be
acceptable to FHA. FHA regulations at 24 CFR 203.389 state that FHA will
not object to title because of common customary easements, restrictions,
and encroachments and provides a general waiver for these title
conditions. These include easements for public utilities, party walls,
driveways, wooden or wire fences and for other similar purposes. Lenders
should review 24 CFR 203.389 for a full description of the general
waiver provisions. Other title matters not covered by this general
waiver must be reviewed by the lender. The lender will make the decision
about other title conditions and whether the title condition will
significantly affect the property's value and/or marketability.

C. Closing Instruments. Forms or language prescribed by FHA must be
used.

D. Date of Closing. The date of closing is defined as the settlement
date as it appears on the HUD-1 Settlement Statement. On refinance
transactions, the date from which the lender must submit any upfront
mortgage insurance premium begins when the lender disburses loan
proceeds.

E. Date from which interest may be collected. The date from which
interest may be collected is the date on which the lender disburses
(relinquishes control of) the loan proceeds. Interim interest for the
period preceding amortization must be computed using a daily factor of
1/365th of the annual rate.

[]{#__RefHeading___Toc169402050 .anchor}**5-2 CLOSING COSTS AND OTHER
FEES**. [\<TOP\>](#_top) Listed below are the customary and reasonable
fees and charges that may be collected from the borrower by the lender
and used to meet the minimum investment requirement for purchases and
added to the existing indebtedness for refinances. The cost for any item
charged to the borrower must not exceed the cost paid by the lender or
charged to the lender by the service provider.

A. Appraisal Fee and Inspection Fee. The borrower may be charged an
appraisal fee. Borrowers may only be charged a pro-rata appraisal fee on
Master CRVs (MCRVs) or MARs since the fee charged by the appraiser is
for all lots covered. This fee may not exceed the actual appraisal fee,
divided by the number of lots covered by the appraisal. Inspection fees
may be collected from the borrower for any inspections that must be
conducted on the property.

B. Credit Reports (Actual Costs). The lender can charge a fee for a
credit report when the loan is manually underwritten, and it also may
charge a fee for Automated Underwriting System (AUS) credit reports.

C. AUS Fee. When the lender uses an AUS that is not the lender's own
system or a system directly/indirectly owned by the lender, the lender
may collect from the borrower the underwriting fee charged to the lender
by the AUS. The lender can collect only one AUS underwriting fee from
the borrower.

D. Verification Charges. The borrower may be charged only the actual
charges imposed by the depository institution, employer, or property
management firm, etc.

E. Origination Fee. The borrower may be charged an origination fee in
accordance with 24 CFR 203.27. HUD is reviewing this regulation for
possible amendment.

F. Home Inspection Fees. Home inspection fees up to \$300, or the actual
cost, may be included as closing costs in meeting the borrower's minimum
investment.

G. Document Preparation Fees. Document preparation fees may be charged
only if the documents are prepared by a third-party and are not
controlled by the lender. The lender may not charge these fees if it
prepares documents itself.

H. Property Survey Fees. The borrower may be charged property survey
fees, although they are not required by FHA.

I. Title Examination and Title Insurance Fees. The borrower may be
charged title examination and title insurance fees, although they are
not required by FHA.

J. Attorney\'s Fees. The borrower may be charged attorney\'s fees, only
if the attorney is not an employee of the lender.

K. Settlement Fees. The borrower may be charged settlement fees, only if
the closing agent is not an employee of the lender. A fee may be charged
if the settlement agent is an independent company or a subsidiary that
regularly closes loans for several different lenders.

L. Real Estate Broker\'s Fees (Buyer Broker). The borrower may be
charged real estate broker\'s fees, only if the borrower engages the
broker independently and the fees are reasonable and customary. However,
if the broker is not independently engaged, no fees may be charged to
the borrower. See HUD Handbook 4155.1 for additional information.

M. Recording Fees and Taxes. The borrower may be charged recording fees
and taxes that are customary or required in the area.

N. Test or Treatment Fees. The borrower may be charged test or treatment
fees that are required by FHA or the lender. These fees include tests of
water supplies, soil percolation tests for individual septic systems, or
testing for or treating insect infestation.

O. Courier/Wire/Notary Fees. Courier fees and wire fees may be charged
only on refinances and only for delivery of the mortgage payoff
statement to the lien holder and for closing documents to the settlement
agent. The borrower must agree in writing to pay for the courier and
wire fees, prior to loan closing. Notary fees may be charged if
notarization is required by state law and is performed by a notary who
is not employed by the lender.

P. Other Fees and Charges. Other fees and charges that may be assessed,
but are not considered "closing costs" include:

1\. Discount Points. Discount points charged by the lender on a purchase
transaction may be charged to the buyer but may not be financed into the
mortgage amount. On refinance transactions, reasonable discount points
may be financed into the mortgage amount subject to equity requirements
and other restrictions applied to refinances.

2\. Lock-Ins/Rate Locks. A written guarantee that ensures the loan terms
will not change for a definite period of time (not less than 15 days) or
that limits the extent to which the terms may change. See paragraph 1-9
of this handbook for additional information.

The appropriate HOC may authorize or reject any other charge or the
amount of any charge, based on what is reasonable and customary in the
area.

[]{#__RefHeading___Toc169402051 .anchor}**5-3 PROHIBITED PAYMENTS**.
[\<TOP\>](#_top)

A. Unearned Fees. A lender is not permitted to pay any fee,
compensation, or thing of value:

1\. Other than for services actually performed.

2\. That is a kickback.

3\. Above that actually paid for the service.

4\. To any party for referring the loan (a finder\'s fee).

To a party that has or will receive other payment for the service,
except in the case of a commission for selling a hazard insurance policy
at the request of the borrower.

6\. That is prohibited by the Real Estate Settlement Procedures Act
(RESPA).

B. Advances. Advancing funds in anticipation of commissions on sales to
be financed with FHA-insured mortgages is prohibited.

C. Loans. A lender may not make below-market or no-interest loans to a
real estate broker, real estate agent, mortgage broker, packager,
builder, or any other party from whom the lender accepts proposals
involving FHA-insured mortgages.

[]{#__RefHeading___Toc169402052 .anchor}**5-4 UNIFORM CASE BINDER**.
[\<TOP\>](#_top) Lenders must prepare and submit a uniform case binder
to the appropriate HOC. The case binder must be purchased from private
sources, meet FHA specifications, and contain documents arranged as
prescribed by FHA. HUD Handbook 4165.1 provides detailed information on
assembling the case binder for insurance submission purposes, including
the required stacking order of the documents.

[]{#__RefHeading___Toc169402053 .anchor}**5-5 SUBMISSION OF CLOSING
PACKAGE FOR ENDORSEMENT**. [\<TOP\>](#_top) Following mortgage closing,
the lender must submit the case binder to the appropriate HOC for
endorsement.

A. Timing of Submission. The case should be submitted for endorsement
within 60 days after mortgage loan settlement or funds disbursement,
whichever is later.

B. Delays in Submission. When there is a delay in submitting the case
binder or a delay in closing the loan, the lender must submit additional
documentation and comply with FHA\'s late endorsement policy to obtain a
MIC. See Mortgagee Letter 2004-14 for additional information.

[]{#__RefHeading___Toc169402054 .anchor}**5-6 INSURANCE ENDORSEMENT**.
[\<TOP\>](#_top) If the closing package is acceptable, FHA provides an
electronic acknowledgement that FHA has insured the mortgage. Mortgagees
may download the electronic MIC from the FHA Connection for their
records.

[]{#__RefHeading___Toc169402055 .anchor}**5-7 DEFICIENT SUBMISSIONS**.
[\<TOP\>](#_top) Requests for insurance endorsement that are deficient
and do not meet our guidelines will be issued a Non-Endorsement Notice,
Form HUD-59100 and the case binder will be returned to the lender.

[]{#__RefHeading___Toc169402056 .anchor}**5-8 RETENTION OF LENDER'S
ORIGINATION FILE**. [\<TOP\>](#_top) The originating lender must retain
the entire case file pertaining to loan origination, either in hard copy
or electronic form, for at least two years from the date of insurance
endorsement for auditing purposes. Upon request, the lender must make
legible hard copies of the material available to HUD staff.

A. Documents to be Retained.

1\. The original mortgage note, and mortgage (or deed of trust and deed
of trust note) must be preserved for all FHA-insured mortgages.

2\. The remaining documents must be retained either in hard copy form or
any electronic form. If the lender elects to retain the documents in
electronic form, all documents (including notes to the file, forms and
records) must be retained in this format.

B. Sale or Transfer of Servicing. Upon sale or transfer of servicing,
the entire origination file, whether electronic or not, must accompany
the transfer. Either the holding or servicing lender, by arrangement
between them, retains the file for the life of the insurance, plus two
years, whether the mortgage has been satisfied by payment-in-full,
voluntary termination, or a claim for insurance benefits.

[]{#__RefHeading___Toc169402057 .anchor}**5-9 POST-ENDORSEMENT
REVIEWS**. [\<TOP\>](#_top) To ensure that lenders understand and comply
with FHA\'s requirements, selected case binders are reviewed after
insurance endorsement.

A. DE Cases. The post-endorsement review includes a technical review of
the appraisal report, mortgage credit analysis, underwriting decisions,
and the closing documents.

B. FHA-Processed Cases. A sampling of cases are fully reviewed after
insurance endorsement to assure compliance with FHA\'s closing
conditions and regulations.

# CHAPTER 6 HOME MORTGAGE INSURANCE PROGRAMS

[]{#__RefHeading___Toc169402059 .anchor}**6-1 GENERAL**.
[\<TOP\>](#_top) This chapter gives a brief description of all of FHA\'s
single-family mortgage insurance programs. Unless otherwise stated,
FHA\'s single-family programs are limited to primary residences only.
Section numbers refer to the section of the National Housing Act
authorizing that program.

[]{#__RefHeading___Toc169402060 .anchor}**6-2 SECTION 203(b) HOME
MORTGAGE INSURANCE**. [\<TOP\>](#_top) Section 203(b) Home Mortgage
Insurance insures lenders against losses on mortgage loans used to
finance the purchase of proposed, under construction, or existing one-
to four-family dwellings or manufactured homes, as well as to refinance
indebtedness on existing housing.

A. Maximum Insurable Mortgage-Purchase Transactions. Determined by the
lesser of the statutory maximum loan limit or the applicable LTV ratio.
Statutory limits may be 50% higher in Alaska, Hawaii, Guam, and the
Virgin Islands. Dollar limitations may be increased by up to 20% if the
increase is directly attributable to the cost and installation of a
solar energy system in the property.

1\. Statutory Loan Limits. Limits in high-cost areas are based upon
median sales prices in the area. The statutory loan limits can be found
on the HUD Web site at [www.hud.gov](http://www.hud.gov/) or by
accessing FHA Connection at https://entp.hud.gov/clas/.

2\. Maximum LTV Ratios. The maximum LTV for a property will depend upon
its stage of construction (proposed construction, under construction, or
existing home), its appraised value and sales price, and whether it is
located in a state with high closing costs or low closing costs. The
maximum LTVs are as follows:

Maximum Loan-to-Value Percentages

Low Closing Costs States

98.75 percent: For properties with values/sales price equal to or less
than \$50,000.

97.65 percent: For properties with values/sales prices in excess of
\$50,000 up to \$125,000.

97.15 percent: For properties with values/sales prices in excess of
\$125,000.

High Closing Costs States

98.75 percent: For properties with values/sales prices equal to or less
than \$50,000.

97.75 percent: For properties with values/sales prices in excess of
\$50,000.

Although the UFMIP may be financed, it is not considered part of the
loan amount when applying these ratios. See HUD Handbook 4155.1 for
additional information on maximum LTVs for properties in different
stages of construction and for refinance transactions.

B. Minimum Investment. Borrowers are required to invest the difference
between the total acquisition cost (sales price, cost of any required
repairs paid for by the borrower, and total closing costs to be paid by
the borrower), and the amount of the mortgage to be insured. The
borrower\'s minimum investment must be:

1\. Principal Residence. Not less than 3% of the sales price.

2\. Occupant Borrowers at Least 60 Years Old. Occupant borrowers at
least 60 years old may borrow all or part of the required downpayment
from a relative, employer, or humanitarian organization. The amount
borrowed, when added to the mortgage amount, cannot exceed the total of
appraised value, plus prepaid expenses and closing costs. The interest
rate on the borrowed downpayment cannot exceed the mortgage interest
rate, and the mortgaged property cannot be used as security for the
downpayment loan. Evidence that these conditions are met must accompany
the application.

C. Mortgage Term. Up to 30 years.

[]{#__RefHeading___Toc169402061 .anchor}**6-3 SECTION 203(h) HOME
MORTGAGE INSURANCE FOR DISASTER VICTIMS**. [\<TOP\>](#_top) Section
203(h) Home Mortgage Insurance for Disaster Victims insures lenders
against losses on mortgage loans on principal residences of borrowers
who are disaster victims. See HUD Handbook 4240.1 and 24 CFR 203.18(e)
for additional information.

A. Eligibility Requirements.

1\. Purchasing or reconstructing a one-family dwelling. If purchasing a
new home, the home need not be located in the area where the previous
home was located.

2\. Previous home (owned or rented) was in an area the President has
declared a major disaster and was destroyed or damaged to such an extent
that reconstruction or replacement is necessary. Documentation attesting
to the damage must accompany the loan application.

3\. Application must be submitted within one year of the President\'s
declaration.

B. Maximum Insurable Mortgage. Same statutory loan limits as Section
203(b). LTV ratio is 100%.

Closing Costs and Prepaid Expenses. These must be paid by the borrower
in cash or paid through premium pricing.

Minimum Investment. None required.

E. Mortgage Term. Same as Section 203(b).

F. MIP. UFMIP and monthly.

G. Refinancing. Permitted in conjunction with rehabilitation.

[]{#__RefHeading___Toc169402062 .anchor}**6-4 SECTION 203(i) HOME
MORTGAGE INSURANCE FOR OUTLYING AREAS**. [\<TOP\>](#_top) Section 203(i)
Home Mortgage Insurance for Outlying Areas insures lenders against
losses on mortgage loans used to purchase a proposed, under
construction, or existing one-family dwelling (or manufactured home), or
to refinance a mortgage on an existing one-family dwelling in a rural
area or a farm home located on 2.5 or more acres of land adjacent to an
all-weather public road. See HUD Handbook 4240.1 and 24 CFR 203.18(d)
for additional information.

A. Maximum Insurable Mortgage. Determined by the lesser of the statutory
loan limit or the applicable LTV ratio.

1\. Statutory Loan Limit. 75% of the amount available under Section
203(b). Loan limits may be increased by up to 20% if the increase is
directly attributable to the cost and installation of a solar energy
system in the property. Statutory loan limits are available on HUD's Web
site at [www.hud.gov](http://www.hud.gov/).

2\. LTV. Same as Section 203(b).

B. Minimum Investment. Same as Section 203(b). However, the borrower,
under certain conditions, may borrow the required cash investment. See
HUD Handbook 4240.1 for additional information.

C. Mortgage Term. Same as Section 203(b).

D. MIP. UFMIP and monthly.

E. Refinancing. Same as Section 203(b).

[]{#__RefHeading___Toc169402063 .anchor}**6-5 SECTION 203(k)
REHABILITATION HOME MORTGAGE INSURANCE**. [\<TOP\>](#_top) Section
203(k) Rehabilitation Home Mortgage Insurance insures lenders against
losses on mortgage loans used to: 1) purchase and rehabilitate an
existing one- to four-family dwelling (completed for more than one year)
that will be used for residential purposes, 2) refinance and
rehabilitate such a structure and refinance the outstanding
indebtedness, and 3) rehabilitate a dwelling after it has been moved
from another site to a new foundation.

Section 203(k) should not be used unless the rehabilitation or
improvement costs total a minimum of \$5,000. See HUD Handbook 4240.4
and 24 CFR 203.50 for additional information.

A. Eligible Improvements. Eligible improvements include items such as
structural alterations, additions, reconstruction, remodeling, new
siding, plumbing, painting, decking, heating, air conditioning,
electrical systems, roofing, flooring, carpeting, energy conservation
improvements, and major landscape work. All health, safety, and
energy-conservation items must be addresses prior to completing general
home improvements.

B. Required Documentation. The application package must include drawings
and specifications of the proposed improvements and the rehabilitation
cost estimate. The work write-up must show that, when the property is
completed, it will meet FHA's minimum property standards or, if more
stringent, the local codes.

C. Maximum Insurable Mortgage. To assure that the mortgage is adequately
supported by the property value, the maximum 203(k) mortgage amount must
be based on the least of the following:

1\. The \"as-is\" value, plus the cost of repairs (and improvements). If
an "as-is" appraisal is not performed, use the contract sales price on a
purchase transaction, plus the repairs costs, or

2\. The existing debt on a refinance plus the repair costs, or

3\. 110% of the "after improved" value.

D. Minimum Investment. Same as Section 203(b).

E. Mortgage Term. Same as Section 203(b).

F. MIP. Monthly.

G. Refinancing. Permitted in conjunction with rehabilitation.

H. 203 (k) Mortgage. A 203(k) mortgage is eligible for insurance before
rehabilitation begins, provided that the mortgage proceeds allocated for
the rehabilitation go into a Rehabilitation Escrow Account at closing
and will be disbursed as work progresses.

1\. Appraisal Fee. In some cases, a Section 203(k) mortgage requires two
appraisals: one on the "as-is" value of the property, and a second on
the estimated market value when the work is complete.

2\. Supplemental Origination Fee. When the Section 203(k) mortgage
involves insurance of advances and partial disbursements of the rehab
escrow account, the lender may collect from the borrower a supplemental
origination fee. This fee compensates the lender for the additional cost
of disbursements and inspections of the work. The fee is 1.5% of the
portion of the mortgage allocated to rehabilitation or \$350, whichever
is greater.

[]{#__RefHeading___Toc169402064 .anchor}**6-6 SECTION 203(n)
SINGLE-FAMILY COOPERATIVE PROGRAM**. [\<TOP\>](#_top) Section 203(n)
Single-Family Cooperative Program insures lenders against losses on
mortgage loans used to acquire corporate certificates (stock or
membership) and occupancy certificates in a cooperative housing project
covered by a blanket mortgage insured under the National Housing Act.
See HUD Handbook 4240.3 and 24 CFR 203.43c for additional information.
This program is not eligible for Direct Endorsement processing.

A. Occupancy. Purchaser must intend to occupy the unit and will be
responsible for his or her share of common expenses or assessments and
charges.

B. Maximum Insurable Mortgage. The maximum mortgage amount is the
remaining balance of the amount calculated per instructions for Section
203(b) relating to owner-occupants minus the portion of the unpaid
balance of the blanket mortgage which is attributable to the dwelling
unit.

C. Minimum Investment. Same as Section 203(b).

D. Mortgage Term. The mortgage term is not to exceed 30 years, the
remaining term of the blanket mortgage, or three-fourths of the
remaining economic life of the building improvements, whichever is less.

E. MIP. UFMIP and monthly MIP.

F. Refinancing. Not available.

[]{#__RefHeading___Toc169402065 .anchor}**6-7 SECTION 220 (d)(3)(A)
URBAN RENEWAL MORTGAGE INSURANCE**. [\<TOP\>](#_top) Section 220
(d)(3)(A) Urban Renewal Mortgage Insurance insures lenders against
losses on mortgage loans used to rehabilitate one- to eleven-family
dwellings or to build new ones in redevelopment areas. See HUD Handbook
4245.1 for additional information.

A. Area Eligibility. This program is limited to:

1\. Urban renewal or code enforcement areas

2\. Areas designated by local government (and approved by FHA) for
concentrated housing, physical development, and public service
activities under a locally developed comprehensive strategy to upgrade
and stabilize the area.

B. Maximum Insurable Mortgage. Determined by the lesser of the statutory
loan limit or the appropriate LTV ratio, using the cost of
rehabilitation or construction instead of market value.

1\. Statutory Limits.

a\. One- to Four-Family Structures. Same as Section 203(b).

b\. Five- to Eleven-Family Structures. The applicable Section 203(b)
limit for a four-family dwelling, plus \$9,165 for each additional
family unit over four.

2\. LTV Ratios.

a\. Principal Residences. Same as Section 203(b).

b\. Refinancing. Refinancing is permitted, except on proposed
construction. The maximum mortgage is the sum of the following, plus
closing costs:

\(1\) FHA\'s estimated cost of the rehabilitation, and

\(2\) The lesser of: "as-is" value or amount required to refinance the
existing debt

C. Minimum Downpayment. Same as Section 203(b).

D. Mortgage Term. Same as Section 203(b).

E. MIP. Annual MIP.

F. Refinancing. Permitted in conjunction with rehabilitation.

[]{#__RefHeading___Toc169402066 .anchor}**6-8 SECTION 220(h) INSURED
IMPROVEMENT LOANS-URBAN RENEWAL AREAS**. [\<TOP\>](#_top) Section 220(h)
Insured Improvement Loans-Urban Renewal Areas insures lenders against
losses on mortgage loans used for alterations, repairs, or improvements
to existing one- to eleven-family dwellings in a redevelopment area. See
paragraph 6-7 of this handbook for additional information. Cost
certifications are required for five- to eleven-family dwellings. See
HUD Handbook 4245.1 for additional information.

A. Property Eligibility. The property must have been completed not less
than 10 years before the date of application, unless the loan will be
used primarily for:

1\. Major structural improvements

2\. Correcting defects not apparent at completion

3\. Correcting defects caused by fire, flood, or other casualty

B. Maximum Insurable Mortgage. The amount cannot exceed the difference
between any existing debt on the property and the Section 220(d)(3)(A)
loan limit for that size structure. Within this limit, the maximum
insurable mortgage is the least of:

1\. FHA\'s estimate of the cost of improvements

2\. \$40,000

3\. \$12,000 per family unit (\$17,400 in high-cost areas)

C. Minimum investment. None required.

D. Mortgage Term. 10, 15, or 20 years.

E. MIP. Monthly.

F. Refinancing. Not available.

[]{#__RefHeading___Toc169402067 .anchor}**6-9 SECTION 223(e)
MISCELLANEOUS HOUSING INSURANCE**. [\<TOP\>](#_top) Section 223(e)
Miscellaneous Housing Insurance insures lenders against losses on
mortgage loans used to finance repair, rehabilitate, construct, or
purchase property in an older, declining urban area. See HUD Handbook
4260.1 and 24 CFR 203.43a for additional information.

A. Property Eligibility. Area must be reasonably viable, and property
cannot qualify for other single-family programs. Initial determination
of properties subject to Section 223(e) will be made by the appraiser.

B. Maximum Insurable Mortgage. Same as appropriate section.

C. Minimum Investment. Same as appropriate section.

D. Maximum Term. Same as appropriate section.

E. MIP. Monthly.

[]{#__RefHeading___Toc169402068 .anchor}**6-10 SECTION 233 MORTGAGE
INSURANCE FOR EXPERIMENTAL HOUSING**. [\<TOP\>](#_top) Section 233
Mortgage Insurance for Experimental Housing insures lenders against
losses on mortgage loans used to build or rehabilitate one- to
four-family dwellings (or one- to eleven-family dwellings meeting the
requirements of Section 203(b), Section 220(d)(3)(A), or Section 220(h))
using: (1) advanced technology in housing design, material or
construction, or (2) experimental property standards for neighborhood
design. See HUD Handbook 4290.1 and 24 CFR 233 for additional
information.

A. Property Eligibility. The property must be approved for insurance
before construction, repair, rehabilitation, or improvement can begin.

B. Maximum Insurable Mortgage. The requirements of the applicable
program, Sections 203(b), 220(d)(3)(A), 220(h), or 234(c), must be met
(except that LTV ratios are applied to the estimated replacement cost,
rather than value, for new construction or to the estimated
rehabilitation cost, using, in either case, conventional or advanced
methods, whichever is less).

C. Minimum Investment. Same as appropriate section.

D. Mortgage Term. Same as appropriate section.

E. MIP. Monthly.

[]{#__RefHeading___Toc169402069 .anchor}**6-11 SECTION 234(c) MORTGAGE
INSURANCE FOR CONDOMINIUM UNITS**. [\<TOP\>](#_top) Section 234(c)
Mortgage Insurance for Condominium Units insures lenders against losses
on mortgage loans used to purchase or refinance individual units in
eligible condominium projects. See HUD Handbook 4150.1 and 24 CFR 234
for additional information.

A. Project Eligibility. The condominium project must be on FHA\'s
approved list. See HUD's Web site at [www.hud.gov](http://www.hud.gov/)
for the list of approved condominium projects. In specific
circumstances, a loan on a single unit in an unapproved condominium
project, known as a "spot loan," may qualify for mortgage insurance. The
lender must certify that a project satisfies the eligibility criteria
for a spot loan condominium project that has not been approved by FHA.
See Mortgagee Letter 96-41 for more information.

B. Borrower Eligibility. Same as Section 203(b).

C. Maximum Insurable Mortgage. Same as Section 203(b).

D. Minimum Investment. Same as Section 203(b).

E. Mortgage Term. Same as Section 203(b).

F. MIP. Upfront and monthly.

G. Refinancing. Same as Section 203(b).

[]{#__RefHeading___Toc169402070 .anchor}**6-12 SECTION 238(c) MORTGAGE
INSURANCE IN MILITARY IMPACTED AREAS (MIAs)**. [\<TOP\>](#_top) Section
238(c) MIAs insures lenders against losses on mortgage loans financing
construction, repair, rehabilitation, or purchase of property near any
military installation in federally impacted areas. See 24 CFR 203.43e
for additional information.

A. Area Eligibility. The Secretary of Defense must have certified that
there is a need for additional housing in the area and that there are no
plans to close or relocate the military base during the five years
following the certification.

B. Application Eligibility. Same as appropriate section.

C. MIP. Monthly

[]{#__RefHeading___Toc169402071 .anchor}**6-13 SECTION 245(a) GPMs AND
GEMs**. [\<TOP\>](#_top) Section 245(a) Graduated Payment Mortgages
(GPM) and Growing Equity Mortgages (GEM) insures lenders against loss on
mortgage loans that involve increasing or graduated mortgage payments.

A. GPMs. This program facilitates early homeownership for households
that expect their incomes to rise. Initially, monthly payments are
smaller than payments in a level-payment mortgage. Later, the payments
gradually increase. The program is limited to principal residences. Only
one-family dwellings are eligible.

Five plans are available, varying in duration and rate of payment
increase. Higher downpayments are required under some plans. Mortgages
are insured under Section 203(b) or 234(c), pursuant to Section 245(a).
Requirements of the applicable section must be met. See HUD Handbook
4240.2 and 24 CFR 203.45 for additional information.

1\. Maximum Insurable Mortgage. The principal amount of the mortgage
cannot exceed the least of:

a\. Section 203(b) statutory loan limit for the area

b\. Applicable 203(b) LTV ratio , or

c\. An amount which, when added to the deferred interest that will be
added to the principal, does not exceed 97% of value

2\. Mortgage Term. Same as Section 203(b).

3\. MIP. Same as appropriate section.

4\. Authorized Plans. Monthly payments increase annually. Starting in
the 6th year (for the 5-year plans) or the 11th year (for the 10-year
plans), the monthly payments will be level for the remaining term. The
annual increases for the various plans are:

a\. Plan I (Code A): 2.5% each year for 5 years.

b\. Plan II (Code B): 5% each year for 5 years.

c\. Plan III (Code C): 7.5% each year for 5 years.

d\. Plan IV (Code D): 2% each year for 10 years.

e\. Plan V (Code E): 3% each year for 10 years.

5\. Refinancing.

a\. Section 245(a) cannot be used to draw equity out of property owned
by the borrower, or if the present financing does not contain a
mandatory prepayment clause. Refinancing an existing mortgage is only
permitted when:

\(1\) Owner is required to pay-in-full a conventional mortgage used to
purchase the home, and the mortgage required a balloon payment within 3
to 5 years.

\(2\) Borrower has contracted to have a home built and, when
construction is complete, the construction loan must be paid-in-full.

\(3\) Borrower purchased a home on a land contract or contract for deed.

b\. Borrowers with a GPM may refinance at any time to a level-payment
mortgage:

\(1\) If the borrower is eligible for a streamline refinance, without an
appraisal, or

\(2\) If the unpaid balance, including the negative amortization, does
not exceed the appropriate LTV ratio, based on a new appraisal.

B. GEMs. There is no interest deferral or negative amortization with a
GEM. Scheduled increases in monthly payments are applied to reduce the
principal, resulting in a shorter term and lower total cost to the
borrower.

Mortgages are insured under Section 203(b), 203(k), or 234(c), pursuant
to Section 245(a). Requirements of the appropriate section must be met.
See 24 CFR 203.47 for additional information.

1\. Maximum Insurable Mortgage. Same as Section 203(b).

2\. Minimum Investment. Same as Section 203(b).

3\. Mortgage Term. Varies with each plan and the mortgage interest rate.

4\. MIP. Same as appropriate section.

5\. Five Specific Plans are Authorized. Each plan has an annual increase
in the monthly payments for the life of the loan. For the initial year,
the monthly payments to principal and interest are based on a 30-year
level-payment amortization schedule. Thereafter, monthly payments
increase by one of the following fixed percentages each year for the
life of the loan:

a\. Plan I (Code L): 1% each year.

b\. Plan II (Code M): 2% each year.

c\. Plan III (Code N): 3% each year.

d\. Plan IV (Code O): 4% each year.

e\. Plan V (Code P): 5% each year.

6\. Refinancing. Same as appropriate section.

[]{#__RefHeading___Toc169402072 .anchor}**6-14 SECTION 247 SINGLE-FAMILY
MORTGAGE INSURANCE ON HAWAIIAN HOME LANDS (HHL) \[See 24 CFR
203.43(i)\]**. [\<TOP\>](#_top)

A. Property Eligibility. Covers one- to four-family dwellings in Hawaii
that are under a homestead lease.

B. Borrower Eligibility. Limited to owner-occupants who are native
Hawaiians. (Requires a certificate of eligibility issued by the
Department of Hawaiian Home Lands.)

C. MIP. One-time MIP only.

[]{#__RefHeading___Toc169402073 .anchor}**6-15 SECTION 248 SINGLE-FAMILY
MORTGAGE INSURANCE ON INDIAN LANDS (IL) \[See 24 CFR 203.43(h)\]**.
[\<TOP\>](#_top)

A. Property Eligibility. Covers one- to four-family dwellings on Indian
lands (on trust lands or otherwise restricted lands).

B. Borrower Eligibility. Borrower must be a member of an Indian tribe or
the tribe itself.

C. Other. Tribe must have adopted eviction procedures acceptable to FHA.

D. MIP. Monthly.

[]{#__RefHeading___Toc169402074 .anchor}**6-16 SECTION 251 ARMs**.
[\<TOP\>](#_top) Section 251 ARMs insures lenders against loss on
variable rate mortgages. Mortgages are insured under Section 203(b),
203(h), 203(k), or 234(c), pursuant to Section 251. Requirements of the
appropriate section must be met.

A. Property Eligibility. One- to four-family dwellings and condominium
units.

B. Insurance Authority. The number of ARMs that FHA may insure in a year
is limited to 30% of the total number of mortgages insured under Title
II during the preceding fiscal year.

C. Maximum Insurable Mortgage. Same as appropriate section.

D. Minimum Investment. Same as appropriate section.

E. Mortgage Term. Only 30-year mortgages are permitted.

F. MIP. Same as appropriate section. NOTE: The monthly MIP is calculated
on initial interest rate for term of loan.

G. Interest Rate Adjustments.

1\. Index. Weekly average yield on U.S. Treasury Securities, adjusted to
a constant maturity of one year (published in the Federal Reserve
Board\'s Statistical Release H.15(519)), which is available on the
Federal Reserve System Web site at
[www.federalreserve.gov](http://www.federalreserve.gov/). The rate must
be the one effective 30 calendar days before the Change Date. See
Mortgagee Letter 2004-10 for more information.

2\. Interest Rate Caps.

a\. The 1-, 3-, and 5-year ARMs allow a one percentage point annual
interest rate adjustment after the initial fixed interest rate period
and a five percentage point interest rate cap over the life of the loan.

b.  The 7-, and 10-year ARMs allow a two percentage point annual
    interest rate adjustment after the initial fixed interest rate
    period and a six percentage point interest rate cap over the life of
    the loan.

Frequency.

Interest rate adjustments occur on an annual basis, except that the
first adjustment will occur no sooner than:

1-year ARMs - no sooner than 12 months nor later than 18 months

3-year ARMs -- no sooner than 36 months nor later than 42 months

5-year ARMs -- no sooner than 60 months nor later than 66 months

7-year ARMs -- no sooner than 84 months nor later than 90 months

10-year ARMs -- no sooner than 120 months nor later than 126 months

The date of the first adjustment to the interest rate and the frequency
of adjustments must be specified in the mortgage documents.

H. Required Disclosures.

1\. At Application. Before signing the application, the borrower must
receive and sign an ARM disclosure statement prescribed by the Federal
Reserve Board.

2\. Annually. The lender must send the borrower a notice at least 25
days before the change date (i.e., 25 days before the new payment amount
is due). The notice must include the following:

a\. Prior year\'s interest rate, monthly payments, and governing index,

b\. Current value of the index, loan margin, new interest rate, and new
monthly payments.

c\. An explanation of how the new interest rate was calculated.

I. Refinancing. Owner-occupants may refinance any loan to an FHA ARM.
See HUD Handbook 4155.1 for underwriting details.

[]{#__RefHeading___Toc169402075 .anchor}**6-17 SECTION 255 Home Equity
Conversion Mortgage**. [\<TOP\>](#_top) Section 255 HECM insures lenders
against loss on reverse mortgages, which convert equity into monthly
income or lines of credit. See HUD Handbook 4235.1 for complete
programmatic instructions.

A. Borrower Eligibility. Homeowners must be 62 years of age and older.
Only one-family dwellings are eligible.

B. Plans. Line of credit and/or monthly payments for a term (fixed
period) or tenure (life). Interest rates may be fixed or variable.

C. MIP. Two percent of the maximum claim amount prior to insurance
endorsement; thereafter, a monthly MIP based on the outstanding balance.

## APPENDIX I [\<TOP\>](#_top)

SINGLE-FAMILY HOMEOWNERSHIP CENTER JURISDICTIONS

**Philadelphia** **Atlanta**

Connecticut Alabama

Delaware Florida

District of Columbia Georgia

Maine Illinois

Maryland Indiana

Massachusetts Kentucky

Michigan Mississippi

New Hampshire North Carolina

New Jersey Puerto Rico

New York South Carolina

Ohio Tennessee

Pennsylvania Virgin Islands

Rhode Island

Vermont

Virginia

West Virginia

**Denver** **Santa Ana**

Arkansas Alaska

Colorado Arizona

Iowa California

Kansas Guam

Louisiana Hawaii

Minnesota Idaho

Missouri Nevada

Montana Oregon

Nebraska Washington

New Mexico

North Dakota

Oklahoma

South Dakota

Texas

Utah

Wisconsin

Wyoming

## APPENDIX II [\<TOP\>](#_top)

CASE NUMBER PREFIXES

Note: Lender Option prefix codes are no longer available for use but the
list

is included for informational purposes only.

  ----------------------------------------------------------------------------
  Case Number  State                 Field Office   Field       HOC
  Prefix                             Name           Office Code 
  ------------ --------------------- -------------- ----------- --------------
  011          AL - Alabama          Birmingham     0409        Atlanta

  021          AZ - Arizona          Phoenix        0920        Santa Ana
  (retired)                                                     

  022          AZ - Arizona          Tucson         0945        Santa Ana

  023          AZ - Arizona          Phoenix        0920        Santa Ana

  031          AR - Arkansas         Little Rock    0637        Denver

  032          AR - Arkansas         Memphis        0440        Atlanta

  033          AR - Arkansas         Jackson        0426        Atlanta

  041          CA - California       Los Angeles    0916        Santa Ana
  (retired)                                                     

  042          CA - California       San Francisco  0939        Santa Ana

  043          CA - California       Sacramento     0930        Santa Ana

  044          CA - California       San Diego      0933        Santa Ana

  045          CA - California       Fresno         0905        Santa Ana

  046          CA - California       Santa Ana      0943        Santa Ana
  (retired)                                                     

  048          CA - California       Santa Ana      0943        Santa Ana

  051          CO - Colorado         Denver         0806        Denver
  (retired)                                                     

  052          CO - Colorado         Denver         0806        Denver

  061          CT - Connecticut      Hartford       0126        Philadelphia

  071          DE - Delaware         Wilmington     0344        Philadelphia

  081          DC - District of      Washington     0339        Philadelphia
               Columbia                                         

  091          FL - Florida          Jacksonville   0429        Atlanta

  092          FL - Florida          Coral Gables   0414        Atlanta

  095          FL -- Florida         Coral Gables   0414        Atlanta

  093          FL - Florida          Tampa          0450        Atlanta

  094          FL - Florida          Orlando        0444        Atlanta

  098          FL - Florida          Tampa          0450        Atlanta

  099          FL - Florida          Birmingham     0409        Atlanta

  124          ID - Idaho            Salt Lake City 0830        Denver

  131          IL - Illinois         Chicago        0506        Atlanta
  (retired)                                                     

  132          IL - Illinois         Springfield    0550        Atlanta

  133          IL - Illinois         St. Louis      0736        Denver

  134          IL - Illinois         Des Moines     0705        Denver

  135          IL - Illinois         Des Moines     0705        Denver

  136          IL - Illinois         Indianapolis   0536        Atlanta

  137          IL - Illinois         Chicago        0506        Atlanta

  141          HI - Hawaii           Honolulu       0908        Santa Ana

  151          IN - Indiana          Indianapolis   0536        Atlanta

  152          IN - Indiana          Indianapolis   0536        Atlanta
  (retired)                                                     

  153          IN - Indiana          Louisville     0436        Atlanta

  154          IN - Indiana          Cincinnati     0510        Philadelphia

  161          IA - Iowa             Des Moines     0705        Denver

  162          IA - Iowa             Omaha          0726        Denver

  163          IA - Iowa             Sioux Falls    0835        Denver

  169          IA - Iowa             Omaha          0726        Denver

  171          TX - Texas            Shreveport     0662        Denver

  172          TX - Texas            Little Rock    0637        Denver

  173          TX - Texas            Shreveport     0662        Denver

  181          KS - Kansas           Topeka         0740        Denver

  182          KS - Kansas           Kansas City    0716        Denver

  183          KS - Kansas           Kansas City    0716        Denver

  192          CA - California       Reno           0925        Santa Ana

  193          CA - California       Reno           0925        Santa Ana

  196          CA - California       Fresno         0905        Santa Ana

  197          CA - California       Los Angeles    0916        Santa Ana

  201          KY - Kentucky         Louisville     0436        Atlanta

  202          KY - Kentucky         Cincinnati     0510        Philadelphia

  203          KY - Kentucky         Charleston     0315        Philadelphia

  204          KY - Kentucky         Knoxville      0437        Atlanta

  205          KY - Kentucky         Nashville      0443        Atlanta

  221          LA - Louisiana        New Orleans    0648        Denver

  222          LA - Louisiana        Shreveport     0662        Denver

  223          LA - Louisiana        Jackson        0426        Atlanta

  231          ME - Maine            Bangor         0102        Philadelphia

  232          ME - Maine            Manchester     0136        Philadelphia

  241          MD - Maryland         Baltimore      0306        Philadelphia

  242          MD - Maryland         Wilmington     0344        Philadelphia

  243          MD - Maryland         Washington     0339        Philadelphia

  249          MD - Maryland         Washington     0339        Philadelphia

  251          MA - Massachusetts    Boston         0106        Philadelphia

  252          MA - Massachusetts    Albany         0202        Philadelphia

  253          MA - Massachusetts    Hartford       0126        Philadelphia

  261          MI - Michigan         Detroit        0528        Philadelphia

  262          MI - Michigan         Flint          0544        Philadelphia

  263          MI - Michigan         Grand Rapids   0533        Philadelphia

  271          MN - Minnesota        Minneapolis    0546        Denver

  272          MN - Minnesota        Fargo          0815        Denver

  273          MN - Minnesota        Sioux Falls    0835        Denver

  281          MS - Mississippi      Jackson        0426        Atlanta

  282          MS - Mississippi      Little Rock    0637        Denver

  283          MS - Mississippi      Memphis        0440        Atlanta

  284          MS - Mississippi      Birmingham     0409        Atlanta

  291          MO - Missouri         Kansas City    0716        Denver

  292          MO - Missouri         St. Louis      0736        Denver

  293          MO - Missouri         Memphis        0440        Atlanta

  311          MT - Montana          Helena         0820        Denver

  312          MT - Montana          Spokane        1025        Santa Ana

  321          NE - Nebraska         Omaha          0726        Denver

  331          NV - Nevada           Reno           0925        Santa Ana

  332          NV - Nevada           Las Vegas      0944        Santa Ana

  333          NV - Nevada           Boise          1008        Santa Ana

  334          NV - Nevada           Salt Lake City 0830        Denver

  341          NH - New Hampshire    Manchester     0136        Philadelphia

  351          NJ - New Jersey       Camden         0216        Philadelphia

  352          NJ - New Jersey       Newark         0239        Philadelphia

  361          NM - New Mexico       Albuquerque    0602        Denver

  371          NY - New York         Albany         0202        Philadelphia

  372          NY - New York         Buffalo        0206        Philadelphia

  373          NY - New York         New York       0236        Philadelphia
  (retired)                                                     

  374          NY - New York         New York       0236        Philadelphia

  378          NY - New York         Burlington     0110        Philadelphia

  381          NC - North Carolina   Greensboro     0419        Atlanta

  382          NC - North Carolina   Knoxville      0437        Atlanta

  383          NC - North Carolina   Columbia       0416        Atlanta

  401          ND - North Dakota     Fargo          0815        Denver

  411          OH - Ohio             Cincinnati     0510        Philadelphia

  412          OH - Ohio             Cleveland      0512        Philadelphia

  413          OH - Ohio             Columbus       0516        Philadelphia

  414          OH - Ohio             Charleston     0315        Philadelphia

  421          OK - Oklahoma         Oklahoma City  0656        Denver

  422          OK - Oklahoma         Tulsa          0670        Denver

  431          OR - Oregon           Portland       1016        Santa Ana

  432          OR - Oregon           Boise          1008        Santa Ana

  441          PA - Pennsylvania     Philadelphia   0326        Philadelphia

  442          PA - Pennsylvania     Pittsburgh     0328        Philadelphia

  443          PA - Pennsylvania     Buffalo        0206        Philadelphia

  444          PA - Pennsylvania     Baltimore      0306        Philadelphia

  451          RI - Rhode Island     Providence     0143        Philadelphia

  461          SC - South Carolina   Columbia       0416        Atlanta

  471          SD - South Dakota     Sioux Falls    0835        Denver

  472          SD - South Dakota     Fargo          0815        Denver

  481          TN - Tennessee        Knoxville      0437        Atlanta

  482          TN - Tennessee        Memphis        0440        Atlanta

  483          TN - Tennessee        Nashville      0443        Atlanta

  491          TX - Texas            Dallas         0616        Denver

  492          TX - Texas            Fort Worth     0621        Denver

  493          TX - Texas            Houston        0624        Denver

  494          TX - Texas            Lubbock        0641        Denver

  495          TX - Texas            San Antonio    0659        Denver

  497          TX - Texas            Lubbock        0641        Denver
  (retired)                                                     

  498          TX - Texas            Shreveport     0662        Denver

  499          TX - Texas            Little Rock    0637        Denver

  501          PR - Puerto Rico      Caribbean      0446        Atlanta

  521          UT - Utah             Salt Lake City 0830        Denver

  522          UT - Utah             Las Vegas      0944        Santa Ana

  531          VT - Vermont          Burlington     0110        Philadelphia

  532          VT - Vermont          Albany         0202        Philadelphia

  533          VT - Vermont          Manchester     0136        Philadelphia

  541          VA - Virginia         Richmond       0336        Philadelphia

  542          VA - Virginia         Richmond       0336        Philadelphia
  (retired)                                                     

  543          VA - Virginia         Washington     0339        Philadelphia

  545          VA - Virginia         Greensboro     0419        Atlanta

  546          VA - Virginia         Knoxville      0437        Atlanta

  547          VA - Virginia         Charleston     0315        Philadelphia

  548          VA - Virginia         Washington     0339        Philadelphia

  561          WA - Washington       Seattle        1019        Santa Ana

  562          WA - Washington       Spokane        1025        Santa Ana

  565          WA - Washington       Portland       1016        Santa Ana

  569          WA - Washington       Portland       1016        Santa Ana

  571          WV - West Virginia    Charleston     0315        Philadelphia

  572          WV - West Virginia    Baltimore      0306        Philadelphia

  573          WV - West Virginia    Pittsburgh     0328        Philadelphia

  581          WI - Wisconsin        Milwaukee      0539        Denver

  582          WI - Wisconsin        Minneapolis    0546        Denver

  591          WY - Wyoming          Casper         0805        Denver

  593          WY - Wyoming          Salt Lake City 0830        Denver

  821          VI - Virgin Islands   Caribbean      0446        Atlanta

  831          GU - Guam             Honolulu       0908        Santa Ana

  861          AS - American Samoa   Honolulu       0908        Santa Ana

  871          MP - Mariana Islands  Honolulu       0908        Santa Ana
  ----------------------------------------------------------------------------

Source: FHA Connection -- FHA Approvals Lists

## APPENDIX III [\<TOP\>](#_top)

HOME MORTGAGE ADP CODES

Commonly Used Home Mortgage ADP Codes. This appendix provides
information on commonly used ADP codes in processing FHA-insured home
mortgages. They are presented according to the Section of the National
Housing Act under which FHA loans are insured. Additional information
about the ADP code categories and FHA insurance funds is included in the
Notes section of this appendix.

  ----------------------------------------------------------------------------------------
  Section of the Act     Description               ADP Code  ADP Code  ADP Code   ADP Code
                                                   for DE    for       if         for HUD
                                                             VA-CRV    pursuant   
                                                                       to 223(e)  
  ---------------------- ------------------------- --------- --------- ---------- --------
  203(b)                 Basic Home Mortgage       703       503       303        203
                         Insurance                                                

  203(b)                 Federal National Mortgage \--       550       \--        250
                         Association (FNMA) Direct                                
                         Financing                                                

  203(b)                 ARM                       729       529       \--        229

  203(b)                 223(e) ARM                829       \--       \--        \--

  203(b)                 VA-CRV 223(e) Mortgage    792       \--       392        \--

  203(b)                 HHL                       759       \--       \--        259

  203(b)                 HHL/ARM                   780       \--       \--        280

  203(b)                 HHL/Interest Buy-Down     811       \--       \--        411
                         (IBD)                                                    

  203(b)                 IL                        783       583       \--        283

  203(b)                 IL/ARM                    788       588       \--        288

  203(b)                 IL (Salamanca, NY)        \--       591       \--        291

  203(b)/238(c)          MIA                       774       574       374        274

  203(b)/238(c)/245(a)   MIA/GPM                   776       576       \--        276

  203(b)/238(c)          MIA/Alternate GPM         \--       568       \--        268

  203(b)/245(a)          GPM                       770       570       \--        270

  203(b)/245(a)          GPM/GEM                   741       541       341        241

  203(b)/245(a)          GPM/IBD                   763       563       \--        263

  203(b)/245(a)          GPM/IL                    787       587       \--        287

  203(b)/245(a)          GPM/IL/GEM                782       582       \--        282

  203(b)/245(a)          GPM/HHL                   793       \--       \--        293

  203(b)                 Alternate GPM             761       561       \--        261

                                                                                  

  203(k)                 Rehabilitation Home       702       502       302        202
                         Mortgage Insurance                                       

  203(k)                 223(e)/DE                 802       \--       \--        \--

  203(k)                 Second Lien               753       553       353        253

  203(k)                 ARM                       730       530       \--        230

  203(k)/245(a)          GPM/GEM                   754       554       \--        254

  203(k)                 Escrow Commitment         707       \--       \--        207

  203(k)                 Energy Efficiency         807       507       307        \--
                         Mortgage (EEM)                                           

  203(k)                 HHL                       808       \--       \--        408

  203(k)                 HHL/IBD                   805       \--       \--        405

  203(k)                 IL                        801       \--       \--        401

  203(k)                 Condominium               804       \--       \--        404

  203(k)                 Condominium/ARM           815       \--       \--        415

  203(k)                 Condominium/IBD           812       \--       \--        412

  203(k)                 IBD                       813       \--       \--        413

                                                                                  

  203(n)                 Cooperative - Individual  \--       560       360        260
                         Unit                                                     

  203(n)/245(a)          GPM/GEM                   \--       547       \--        247

                                                                                  

  213                    Cooperative - Sales -     \--       513       313        213
                         Type Releases                                            

                                                                                  

  220(d)(3)              Urban Renewal             720       520       320        220

  220(h)                 Improvements              719       519       \--        219

                                                                                  

  234(c)                 Condominium               734       534       334        234

  234(c)                 ARM                       731       531       \--        231

  234(c)/238(c)/245(a)   MIA/GPM                   777       577       \--        277

  234(c)/238(c)          MIA/Alternate GPM         \--       569       \--        269

  234(c)/245(a)          GPM                       771       571       \--        271

  234(c)/245(a)          GPM/GEM                   742       542       342        242

  234(c)                 Alternate GPM             762       562       \--        262

  235(r) REV             Homeownership             765       \--       \--        165
                         Assistance/Refinance                                     

  235(r) REV             Refinance\                755       \--       \--        155
                         (Special Allocation No.                                  
                         1)                                                       

  235(r) REV             Refinance (Recap/Special  756       \--       \--        156
                         Allocation No. 1)                                        

  235(r) REV             Refinance (Recap/Other    766       \--       \--        166
                         than Special Allocation                                  
                         No. 1)                                                   

  235(r) REV             Refinance of Ten-Year     746       \--       \--        146
                         Subsidy Mortgage                                         

                                                                                  

  240                    Fee Simple Title          740       540       \--        240

                                                                                  

  255                    HECM Assignment/Fixed     951       \--       \--        911

  255                    HECM-Assignment/ARM       952       \--       \--        912

  255                    HECM-Shared Premium/Fixed 953       \--       \--        913

  255                    HECM-Shared Premium/ARM   954       \--       \--        914

  255                    HECM-Shared               955       \--       \--        915
                         Appreciation/Fixed                                       

  255                    HECM-Shared               956       \--       \--        916
                         Appreciation/ARM                                         

  255                    HECM-Condominium/Fixed    957       \--       \--        917

  255                    HECM-Condominium/ARM      958       \--       \--        918

                                                                                  

  Other Sections-MIA                               779       579       379        279

  All MMI Sections-3%                              748       548       348        248
  Down Payment Program                                                            
  (3% DPMT)                                                                       

  All GI Sections-3%                               749       549       349        249
  DPMT                                                                            

  All MMI Sections-IBD                             796       596       \--        296
  excluding 245(a)                                                                

  All GI Sections-IBD                              797       597       \--        297

  All SRI Sections-IBD                             798       598       398        298
  ----------------------------------------------------------------------------------------

NOTE:

  ----- -----------------------------------------------------------------
  1\.   ADP Code if pursuant to 223(3): All mortgages insured pursuant to
        Section 223(e) are obligations of the Special Risk Insurance
        (SRI) Fund.

  2\.   ADP Code for HUD: FHA-processed cases.
  ----- -----------------------------------------------------------------

Revised: February 22, 2002

## APPENDIX IV [\<TOP\>](#_top)

######## STATES WITH LOW AND HIGH AVERAGE CLOSING COSTS

+-----------------+---------------+-----------------+---+---------------+
| ## Lo           |               | **High Closing  |   |               |
| w Closing Costs |               | Costs**         |   |               |
+-----------------+---------------+-----------------+---+---------------+
| Arizona         |               | Alabama         |   | Mississippi   |
+-----------------+---------------+-----------------+---+---------------+
| California      |               | Alaska          |   | Montana       |
+-----------------+---------------+-----------------+---+---------------+
| Colorado        |               | Arkansas        |   | North         |
|                 |               |                 |   | Carolina      |
+-----------------+---------------+-----------------+---+---------------+
| Guam            |               | Connecticut     |   | North Dakota  |
+-----------------+---------------+-----------------+---+---------------+
| Idaho           |               | District of     |   | Nebraska      |
|                 |               | Columbia        |   |               |
+-----------------+---------------+-----------------+---+---------------+
| Illinois        |               | Delaware        |   | New Hampshire |
+-----------------+---------------+-----------------+---+---------------+
| Indiana         |               | Florida         |   | New Jersey    |
+-----------------+---------------+-----------------+---+---------------+
| New Mexico      |               | Georgia         |   | New York      |
+-----------------+---------------+-----------------+---+---------------+
| Nevada          |               | Hawaii          |   | Ohio          |
+-----------------+---------------+-----------------+---+---------------+
| Oregon          |               | Iowa            |   | Oklahoma      |
+-----------------+---------------+-----------------+---+---------------+
| Utah            |               | Kansas          |   | Pennsylvania  |
+-----------------+---------------+-----------------+---+---------------+
| Virgin Islands  |               | Kentucky        |   | Puerto Rico   |
+-----------------+---------------+-----------------+---+---------------+
| Washington      |               | Louisiana       |   | Rhode Island  |
+-----------------+---------------+-----------------+---+---------------+
| Wisconsin       |               | Massachusetts   |   | South         |
|                 |               |                 |   | Carolina      |
+-----------------+---------------+-----------------+---+---------------+
| Wyoming         |               | Maryland        |   | South Dakota  |
+-----------------+---------------+-----------------+---+---------------+
|                 |               | Maine           |   | Tennessee     |
+-----------------+---------------+-----------------+---+---------------+
|                 |               | Michigan        |   | Texas         |
+-----------------+---------------+-----------------+---+---------------+
|                 |               | Missouri        |   | Vermont       |
+-----------------+---------------+-----------------+---+---------------+
|                 |               | Minnesota       |   | Virginia      |
+-----------------+---------------+-----------------+---+---------------+
|                 |               |                 |   | West Virginia |
+-----------------+---------------+-----------------+---+---------------+

## APPENDIX V [\<TOP\>](#_top)

## PROGRAM IDENTIFICATION CODES

Program Identification Codes to Identify Special Programs. Codes also
apply when insurance is pursuant to Section 223(e), VA-CRV and DE cases.

  -----------------------------------------------------------------------
  Code    Program              Explanation
  ------- -------------------- ------------------------------------------
  01      Section 203(b)(9)    Housing for the elderly

  02      Section 203(h)       Disaster housing

  03      Sections 203(i) &    Low-cost housing in suburban area
          222                  (Obsolete)

  04      Section 203 (i)      Farm homes on 5 or more acres (Obsolete)

  05                           Reserved for inactive program

  06                           Reserved for inactive program

  07      All home mortgage    Inactive
          transactions         
          pursuant to Section  
          223(a) involving     
          public housing       
          properties sold by   
          Federal, State, or   
          local governments or 
          agencies thereof     

  08      All home mortgage    
          and home improvement 
          loan transactions    
          involving properties 
          located in           
          redevelopment or     
          urban renewal areas  

  09      Section 809          Cases not guaranteed by the military (Code
                               00 will be applicable for guaranteed
                               cases) (Inactive)

  10      Sections 203(b) (2)  Housing for veterans
          & 234(c)             

  11      Section 809          Special veteran provision, guaranteed
                               (Inactive)

  12      Section 809          Special veteran provision, not guaranteed
                               (Inactive)

  13      Sections 220(d)(3)   Special veteran provision

  14      Sections 203, 220, & Veteran in urban renewal area (Inactive)
          809                  

  15      Sections 203, 220, & Veteran in model city area (Inactive)
          809                  

  16      Sections 203, 220, & Veteran in model city area in urban
          809                  renewal area (Inactive)

  17      Sections 203, 220, & Veteran in periphery of model city area
          809                  (Inactive)

  18      Sections 203, 220, & Veteran in periphery of model city area in
          809                  urban renewal area (Inactive)

  19      All home mortgage,   Located in model city area (Inactive)
          home improvement,    
          and fee simple title 
          loan transactions    

  20      All home mortgage,   Veteran in periphery of model city area in
          home improvement,    urban renewal area (Inactive)
          and fee simple title 
          loan transactions    

  21      All home mortgage,   Veteran in periphery of model city area
          home improvement,    (Inactive)
          and fee simple title 
          loan transactions    

  22      All home mortgage,   Veteran in periphery of model city area in
          home improvement,    urban renewal area (Inactive)
          and fee simple title 
          loan transactions    

  23      Sections 235(i) &    Family unit in condominium
          235(i) REV           

  24      Sections 235(i) &    Family unit in condominium in urban
          235(i) REV           renewal area (Inactive)

  25      Sections 235(i) &    Family unit in condominium in model city
          235(i) REV           area (Inactive)

  26      Sections 235(i) &    Family unit in condominium in model city
          235(i) REV           area in urban renewal area (Inactive)

  27      Sections 235(i) &    Family unit in condominium in periphery of
          235(i) REV           model city area (Inactive)

  28      Sections 235(i) &    Family unit in condominium in periphery of
          235(i) REV           model city area in urban renewal area
                               (Inactive)

  29      Section 235(i) REV   Family unit in a cooperative project

  30      Section 234(c)       Resale of a conventionally financed unit
                               -- veteran (Inactive)

  31      Section 234(c)       Resale of a conventionally financed unit
                               -- non-veteran (Inactive)

  35      Sections 235(i) &    Cases originated by Department of
          235(i) REV           Agriculture

  36      All home mortgage    
          transactions         
          involving            
          construction/perm    
          properties           

  40      All home mortgage    Secretary-held sale-substantial
          sections             rehabilitation

  46      All home mortgage    Indian claims area
          sections             

  48      Sections 203(b),     Indian Reservations (Obsolete: Section of
          203(b) -- ARM,       the Act ADP Codes now apply)
          203(b)/245(a),       
          203(k) ,203(k) -     
          ARM, & 203(k)/245(a) 

  50      Sections 203(b),     Solar Energy dwelling for veterans
          203(k), 203(n), 233, 
          244, & 245           

  51      Sections 203(b),     Solar Energy dwelling for non-veterans
          203(k), 203(n), 233, 
          244, 245, & 809      

  52      All home mortgage    IBD provision
          sections             

  53      All home mortgage    State-purchase property mortgages-formerly
          sections             Secretary-held (Inactive)

  60      All home mortgage    Subject to Second Trust
          sections             

  65      All home mortgage    Shared Equity mortgages
          sections except 222  
          & 235                

  70      Section 245(a)       Obsolete: Section of the Act ADP Codes now
                               apply.

  77      All home mortgage    GEMs (Obsolete: Section of the Act ADP
          sections             Codes now apply)

  88      Section 8            Section 8 Homeownership Programs

  90      Sections 203(b),     Operative Builder Firm Commitment.
          203(b) - ARM,        
          203(b)/245(a) - GPM, 
          & 203(b)/245(a) -    
          GPM/GEM              

  00      All cases not in     
          program codes shown  
          above                
  -----------------------------------------------------------------------

## APPENDIX VI[\<TOP\>](#_top)

######## EXTENDED LENDING AREAS FOR LOAN ORIGINATION

+-----------------------+----------------------------------------------+
| PRIMARY FIELD OFFICE  | ADDITIONAL FIELD OFFICES                     |
+=======================+==============================================+
| 0202                  | 0206, Buffalo, NY                            |
|                       |                                              |
| Albany, NY            | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0110, Burlington, VT                         |
|                       |                                              |
|                       | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0602                  | 0641, Lubbock, TX                            |
|                       |                                              |
| Albuquerque, NM       |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 1006                  | \*                                           |
|                       |                                              |
| Anchorage, AK         |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0406                  | 0409, Birmingham, AL                         |
|                       |                                              |
| Atlanta, GA           | 0416, Columbia, SC                           |
|                       |                                              |
|                       | 0429, Jacksonville, FL                       |
|                       |                                              |
|                       | 0437, Knoxville, TN                          |
|                       |                                              |
|                       | 0443, Nashville, TN                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0306                  | 0216, Camden, NJ                             |
|                       |                                              |
| Baltimore, MD         | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0328, Pittsburgh, PA                         |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
|                       |                                              |
|                       | 0339, Washington, DC                         |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0102                  | 0106, Boston, MA                             |
|                       |                                              |
| Bangor, ME            | 0110, Burlington, VT                         |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0136, Manchester, NH                         |
+-----------------------+----------------------------------------------+
| 0409                  | 0406, Atlanta, GA                            |
|                       |                                              |
| Birmingham, AL        | 0426, Jackson, MS                            |
|                       |                                              |
|                       | 0437, Knoxville, TN                          |
|                       |                                              |
|                       | 0440, Memphis, TN                            |
|                       |                                              |
|                       | 0443, Nashville, TN                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 1008                  | 0820, Helena, MT                             |
|                       |                                              |
| Boise, ID             |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0106                  | 0202, Albany, NY                             |
|                       |                                              |
| Boston, MA            | 0102, Bangor, ME                             |
|                       |                                              |
|                       | 0110, Burlington, VT                         |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0136, Manchester, NH                         |
|                       |                                              |
|                       | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0143, Providence, RI                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0206                  | 0202, Albany, NY                             |
|                       |                                              |
| Buffalo, NY           | 0512, Cleveland, OH                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0110                  | 0202, Albany, NY                             |
|                       |                                              |
| Burlington, VT        | 0102, Bangor, ME                             |
|                       |                                              |
|                       | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0136, Manchester, NH                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0216                  | 0239, Newark, NJ                             |
|                       |                                              |
| Camden, NJ            | 0202, Albany, NY                             |
|                       |                                              |
|                       | 0306, Baltimore, MD                          |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
|                       |                                              |
|                       | 0339, Washington, DC                         |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
| 0446                  | \*                                           |
|                       |                                              |
| Caribbean             |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0805                  | 0806, Denver, CO                             |
|                       |                                              |
| Casper, WY            |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0315                  | 0306, Baltimore, MD                          |
|                       |                                              |
| Charleston, WV        | 0510, Cincinnati, OH                         |
|                       |                                              |
|                       | 0512, Cleveland, OH                          |
|                       |                                              |
|                       | 0516, Columbus, OH                           |
|                       |                                              |
|                       | 0328, Pittsburgh, PA                         |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
|                       |                                              |
|                       | 0339, Washington, DC                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0506                  | 0550, Springfield, IL                        |
|                       |                                              |
| Chicago, IL           | 0533, Grand Rapids, MI                       |
|                       |                                              |
|                       | 0536, Indianapolis, IN                       |
|                       |                                              |
|                       | 0539, Milwaukee, WI                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0510                  | 0512, Cleveland, OH                          |
|                       |                                              |
| Cincinnati, OH        | 0516, Columbus, OH                           |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0536, Indianapolis, IN                       |
|                       |                                              |
|                       | 0436, Louisville, KY                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0512                  | 0510, Cincinnati, OH                         |
|                       |                                              |
| Cleveland, OH         | 0516, Columbus, OH                           |
|                       |                                              |
|                       | 0206, Buffalo, NY                            |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0528, Detroit, MI                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0416                  | 0406, Atlanta, GA                            |
|                       |                                              |
| Columbia, SC          | 0419, Greensboro, NC                         |
|                       |                                              |
|                       | 0437, Knoxville, TN                          |
+-----------------------+----------------------------------------------+
| 0516                  | 0510, Cincinnati, OH                         |
|                       |                                              |
| Columbus, OH          | 0512, Cleveland, OH                          |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0528, Detroit, MI                            |
|                       |                                              |
|                       | 0536, Indianapolis, IN                       |
|                       |                                              |
|                       | 0328, Pittsburgh, PA                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0414                  | 0429, Jacksonville, FL                       |
|                       |                                              |
| Coral Gables, FL      | 0444, Orlando, FL                            |
|                       |                                              |
|                       | 0450, Tampa, FL                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0616                  | 0621, Ft. Worth, TX                          |
|                       |                                              |
| Dallas, TX            | 0641, Lubbock, TX                            |
|                       |                                              |
|                       | 0624, Houston, TX                            |
|                       |                                              |
|                       | 0659, San Antonio, TX                        |
|                       |                                              |
|                       | 0662, Shreveport, LA                         |
|                       |                                              |
|                       | 0656, Oklahoma City, OK                      |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0806                  | 0805, Casper, WY                             |
|                       |                                              |
| Denver, CO            |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0705                  | 0716, Kansas City, KS                        |
|                       |                                              |
| Des Moines, IA        | 0546, Minneapolis/St. Paul, MN               |
|                       |                                              |
|                       | 0726, Omaha, NE                              |
|                       |                                              |
|                       | 0835, Sioux Falls, SD                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0528                  | 0544, Flint, MI                              |
|                       |                                              |
| Detroit, MI           | 0533, Grand Rapids, MI                       |
|                       |                                              |
|                       | 0512, Cleveland, OH                          |
|                       |                                              |
|                       | 0516, Columbus, OH                           |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0815                  | 0546, Minneapolis/St. Paul, MN               |
|                       |                                              |
| Fargo, ND             | 0835, Sioux Falls, SD                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0544                  | 0528, Detroit, MI                            |
|                       |                                              |
| Flint, MI             | 0533, Grand Rapids, MI                       |
+-----------------------+----------------------------------------------+
| 0905                  | 0916, Los Angeles, CA                        |
|                       |                                              |
| Fresno, CA            | 0930, Sacramento, CA                         |
|                       |                                              |
|                       | 0939, San Francisco, CA                      |
|                       |                                              |
|                       | 0943, Santa Ana, CA                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0621                  | 0616, Dallas, TX                             |
|                       |                                              |
| Ft. Worth, TX         | 0624, Houston, TX                            |
|                       |                                              |
|                       | 0641, Lubbock, TX                            |
|                       |                                              |
|                       | 0659, San Antonio, TX                        |
|                       |                                              |
|                       | 0662, Shreveport, LA                         |
|                       |                                              |
|                       | 0656, Oklahoma City, OK                      |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0533                  | 0528, Detroit, MI                            |
|                       |                                              |
| Grand Rapids, MI      | 0544, Flint, MI                              |
|                       |                                              |
|                       | 0506, Chicago, IL                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0419                  | 0416, Columbia, SC                           |
|                       |                                              |
| Greensboro, NC        | 0437, Knoxville, TN                          |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0126                  | 0202, Albany, NY                             |
|                       |                                              |
| Hartford, CT          | 0102, Bangor, ME                             |
|                       |                                              |
|                       | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0110, Burlington, VT                         |
|                       |                                              |
|                       | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0136, Manchester, NH                         |
|                       |                                              |
|                       | 0236, New York City                          |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0143, Providence, RI                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0820                  | 1008, Boise, ID                              |
|                       |                                              |
| Helena, MT            |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0908                  | \*                                           |
|                       |                                              |
| Honolulu, HI          |                                              |
+-----------------------+----------------------------------------------+
| 0624                  | 0616, Dallas, TX                             |
|                       |                                              |
| Houston, TX           | 0621, Ft. Worth, TX                          |
|                       |                                              |
|                       | 0659, San Antonio, TX                        |
|                       |                                              |
|                       | 0662, Shreveport, LA                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0536                  | 0506, Chicago, IL                            |
|                       |                                              |
| Indianapolis, IN      | 0510, Cincinnati, OH                         |
|                       |                                              |
|                       | 0436, Louisville, KY                         |
|                       |                                              |
|                       | 0550, Springfield, IL                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0426                  | 0409, Birmingham, AL                         |
|                       |                                              |
| Jackson, MS           | 0637, Little Rock, AR                        |
|                       |                                              |
|                       | 0440, Memphis, TN                            |
|                       |                                              |
|                       | 0648, New Orleans, LA                        |
|                       |                                              |
|                       | 0662, Shreveport, LA                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0429                  | 0414, Coral Gables, FL                       |
|                       |                                              |
| Jacksonville, FL      | 0444, Orlando, FL                            |
|                       |                                              |
|                       | 0450, Tampa, FL                              |
|                       |                                              |
|                       | 0406, Atlanta, GA                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0716                  | 0740, Topeka, KS                             |
|                       |                                              |
| Kansas City, KS       | 0705, Des Moines, IA                         |
|                       |                                              |
|                       | 0726, Omaha, NE                              |
|                       |                                              |
|                       | 0736, St. Louis, MO                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0437                  | 0440, Memphis, TN                            |
|                       |                                              |
| Knoxville, TN         | 0443, Nashville, TN                          |
|                       |                                              |
|                       | 0406, Atlanta, GA                            |
|                       |                                              |
|                       | 0409, Birmingham, AL                         |
|                       |                                              |
|                       | 0416, Columbia, SC                           |
|                       |                                              |
|                       | 0419, Greensboro, NC                         |
|                       |                                              |
|                       | 0436, Louisville, KY                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0944                  | 0916, Los Angeles, CA                        |
|                       |                                              |
| Las Vegas, NV         | 0920, Phoenix, AZ                            |
|                       |                                              |
|                       | 0943, Santa Ana, CA                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0637                  | 0426, Jackson, MS                            |
|                       |                                              |
| Little Rock, AR       | 0440, Memphis, TN                            |
|                       |                                              |
|                       | 0662, Shreveport, LA                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0916                  | 0905, Fresno, CA                             |
|                       |                                              |
| Los Angeles, CA       | 0933, San Diego, CA                          |
|                       |                                              |
|                       | 0943, Santa Ana, CA                          |
|                       |                                              |
|                       | 0944, Las Vegas, NV                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0436                  | 0510, Cincinnati, OH                         |
|                       |                                              |
| Louisville, KY        | 0536, Indianapolis, IN                       |
|                       |                                              |
|                       | 0437, Knoxville, TN                          |
|                       |                                              |
|                       | 0443, Nashville, TN                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0641                  | 0616, Dallas, TX                             |
|                       |                                              |
| Lubbock, TX           | 0621, Ft. Worth, TX                          |
|                       |                                              |
|                       | 0602, Albuquerque, NM                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0136                  | 0102, Bangor, ME                             |
|                       |                                              |
| Manchester, NH        | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0110, Burlington, VT                         |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0143, Providence, RI                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0440                  | 0437, Knoxville, TN                          |
|                       |                                              |
| Memphis, TN           | 0443, Nashville, TN                          |
|                       |                                              |
|                       | 0409, Birmingham, AL                         |
|                       |                                              |
|                       | 0426, Jackson, MS                            |
|                       |                                              |
|                       | 0637, Little Rock, AR                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0539                  | 0506, Chicago, IL                            |
|                       |                                              |
| Milwaukee, WI         | 0550, Springfield, IL                        |
+-----------------------+----------------------------------------------+
| 0546                  | 0705, Des Moines, IA                         |
|                       |                                              |
| Minneapolis/          | 0815, Fargo, ND                              |
|                       |                                              |
| St. Paul, MN          | 0835, Sioux Falls, SD                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0443                  | 0437, Knoxville, TN                          |
|                       |                                              |
| Nashville, TN         | 0440, Memphis, TN                            |
|                       |                                              |
|                       | 0406, Atlanta, GA                            |
|                       |                                              |
|                       | 0409, Birmingham, AL                         |
|                       |                                              |
|                       | 0436, Louisville, KY                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0236                  | 0202, Albany, NY                             |
|                       |                                              |
| New York City, NY     | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0143, Providence, RI                         |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0648                  | 0662, Shreveport, LA                         |
|                       |                                              |
| New Orleans, LA       | 0426, Jackson, MS                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0239                  | 0216, Camden, NJ                             |
|                       |                                              |
| Newark, NJ            | 0202, Albany, NY                             |
|                       |                                              |
|                       | 0306, Baltimore, MD                          |
|                       |                                              |
|                       | 0106, Boston, MA                             |
|                       |                                              |
|                       | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0656                  | 0670, Tulsa, OK                              |
|                       |                                              |
| Oklahoma City, OK     | 0616, Dallas, TX                             |
|                       |                                              |
|                       | 0621, Ft. Worth, TX                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0726                  | 0705, Des Moines, IA                         |
|                       |                                              |
| Omaha, NE             | 0716, Kansas City, KS                        |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0444                  | 0414, Coral Gables, FL                       |
|                       |                                              |
| Orlando, FL           | 0429, Jacksonville, FL                       |
|                       |                                              |
|                       | 0450, Tampa, FL                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0326                  | 0328, Pittsburgh, PA                         |
|                       |                                              |
| Philadelphia, PA      | 0306, Baltimore, MD                          |
|                       |                                              |
|                       | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
|                       |                                              |
|                       | 0339, Washington, DC                         |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0920                  | 0945, Tucson, AZ                             |
|                       |                                              |
| Phoenix, AZ           | 0944, Las Vegas, NV                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0328                  | 0326, Philadelphia, PA                       |
|                       |                                              |
| Pittsburgh, PA        | 0306, Baltimore, MD                          |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0516, Columbus, OH                           |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 1016                  | 1019, Seattle, WA                            |
|                       |                                              |
| Portland, OR          |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0143                  | 0106, Boston, MA                             |
|                       |                                              |
| Providence, RI        | 0126, Hartford, CT                           |
|                       |                                              |
|                       | 0136, Manchester, NH                         |
|                       |                                              |
|                       | 0236, New York City, NY                      |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0925                  | 0905, Fresno, CA                             |
|                       |                                              |
| Reno, NV              | 0930, Sacramento, CA                         |
|                       |                                              |
|                       | 0939, San Francisco, CA                      |
+-----------------------+----------------------------------------------+
| 0336                  | 0306, Baltimore, MD                          |
|                       |                                              |
| Richmond, VA          | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0419, Greensboro, NC                         |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0339, Washington, DC                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0930                  | 0905, Fresno, CA                             |
|                       |                                              |
| Sacramento, CA        | 0939, San Francisco, CA                      |
|                       |                                              |
|                       | 0925, Reno, NV                               |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0830                  | \*                                           |
|                       |                                              |
| Salt Lake City, UT    |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0659                  | 0616, Dallas, TX                             |
|                       |                                              |
| San Antonio, TX       | 0621, Ft. Worth, TX                          |
|                       |                                              |
|                       | 0624, Houston, TX                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0933                  | 0916, Los Angeles, CA                        |
|                       |                                              |
| San Diego, CA         | 0943, Santa Ana, CA                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0939                  | 0905, Fresno, CA                             |
|                       |                                              |
| San Francisco, CA     | 0930, Sacramento, CA                         |
|                       |                                              |
|                       | 0925, Reno, NV                               |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0943                  | 0905, Fresno, CA                             |
|                       |                                              |
| Santa Ana, CA         | 0916, Los Angeles, CA                        |
|                       |                                              |
|                       | 0933, San Diego, CA                          |
|                       |                                              |
|                       | 0944, Las Vegas, NV                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 1019                  | 1025, Spokane, WA                            |
|                       |                                              |
| Seattle, WA           | 1016, Portland, OR                           |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0662                  | 0648, New Orleans, LA                        |
|                       |                                              |
| Shreveport, LA        | 0426, Jackson, MS                            |
|                       |                                              |
|                       | 0616, Dallas, TX                             |
|                       |                                              |
|                       | 0621, Ft. Worth, TX                          |
|                       |                                              |
|                       | 0637, Little Rock, AR                        |
|                       |                                              |
|                       | 0624, Houston, TX                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0835                  | 0815, Fargo, ND                              |
|                       |                                              |
| Sioux Falls, SD       | 0705, Des Moines, IA                         |
|                       |                                              |
|                       | 0546, Minneapolis/St. Paul, MN               |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 1025                  | 1019, Seattle, WA                            |
|                       |                                              |
| Spokane, WA           |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0550                  | 0506, Chicago, IL                            |
|                       |                                              |
| Springfield, IL       | 0536, Indianapolis, IN                       |
|                       |                                              |
|                       | 0539, Milwaukee, WI                          |
|                       |                                              |
|                       | 0736, St. Louis, MO                          |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0736                  | 0716, Kansas City, KS                        |
|                       |                                              |
| St. Louis, MO         | 0550, Springfield, IL                        |
|                       |                                              |
|                       | 0740, Topeka, KS                             |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0450                  | 0414, Coral Gables, FL                       |
|                       |                                              |
| Tampa, FL             | 0429, Jacksonville, FL                       |
|                       |                                              |
|                       | 0444, Orlando, FL                            |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0740                  | 0736, St. Louis, MO                          |
|                       |                                              |
| Topeka, KS            | 0716, Kansas City, KS                        |
|                       |                                              |
|                       | 0726, Omaha, NE                              |
|                       |                                              |
|                       | 0705, Des Moines, IA                         |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0945                  | 0920, Phoenix, AZ                            |
|                       |                                              |
| Tucson, AZ            |                                              |
+-----------------------+----------------------------------------------+
|                       |                                              |
+-----------------------+----------------------------------------------+
| 0670                  | 0656, Oklahoma City, OK                      |
|                       |                                              |
| Tulsa, OK             |                                              |
+-----------------------+----------------------------------------------+
| 0339                  | 0306, Baltimore, MD                          |
|                       |                                              |
| Washington, DC        | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0315, Charleston, WV                         |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0328, Pittsburgh, PA                         |
|                       |                                              |
|                       | 0336, Richmond, VA                           |
|                       |                                              |
|                       | 0344, Wilmington, DE                         |
+-----------------------+----------------------------------------------+
| 0344                  | 0306, Baltimore, MD                          |
|                       |                                              |
| Wilmington, DE        | 0216, Camden, NJ                             |
|                       |                                              |
|                       | 0239, Newark, NJ                             |
|                       |                                              |
|                       | 0236, New York City, NY                      |
|                       |                                              |
|                       | 0326, Philadelphia, PA                       |
|                       |                                              |
|                       | 0339, Washington, DC                         |
+-----------------------+----------------------------------------------+

\*There is no extended lending area for this Field Office jurisdiction

Source: Mortgagee Letter 95-36 as modified by the Office of Lender
Activities and Program Compliance

## APPENDIX VII [\<TOP\>](#_top)

SUGGESTED FORMAT FOR REQUEST FOR MIC CORRECTION

Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

To: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_HOC/(MIC Corrections)

From: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Lender's Name) (Contact Person) (Phone Number)

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

(Lender's ID Number)

Address to send MIC:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

We are requesting a corrected Mortgage Insurance Certificate (MIC) for
FHA Case #: .

The required documentation is provided as indicated below as well as the
original MIC.

Required

Request Correction to: Documentation

  --------------------------------------- ---------------- ---------------
                                          Address          URAR and Note
                                          Correction       (1)

                                          Borrower Name(s) Note. Document
                                                           the reason for
                                                           a COMPLETE name
                                                           change.

                                          \*\*ADP Code     Note. Other
                                                           supporting
                                                           documentation
                                                           (Buydown
                                                           Agreement, 203k
                                                           worksheet etc.)

                                          Maturity Date    Note

                                          First Payment    Note
                                          Date             

                                          P&I              Note, Mortgage
                                                           Credit Analysis
                                                           Worksheet
                                                           (MCAW)

                                          Interest Rate    Note, MCAW

                                          Addition of      Note, URLA,
                                          co-borrower      MCAW

                                          Social Security  Social Security
                                          Number           Card, pay stub,
                                                           W-2, etc

                                          Other (Identify) Appropriate
                                                           Supporting
                                                           Documentation

                                          \(2\) (3)        Note, HUD-1,
                                          Increased        MCAW, and full
                                          Mortgage Amount  payment history
                                          (Check payment   
                                          history for a    
                                          principal        
                                          reduction)       

                                          \(2\) FHA Case   Note, MCAW and
                                          Number           URLA

                                          \(2\) \*\*ADP    Note, MCAW and
                                          Code -- Major    URLA \*\*
                                          Change (703 to   
                                          734, etc.)       
  --------------------------------------- ---------------- ---------------

\(1\) In some states, the Deed of Trust must be submitted. Please
contact the appropriate HOC for additional information.

\(2\) Corrections that require recalled case binders from a Records
Holding Center and will require additional processing time.

\(3\) Requests for an additional mortgage amount require payment of the
difference in UFMIP before correction can be made.

\*\* The LTV cannot be changed (CHUMS computes and will not allow manual
over-ride); 748 ADP code is for purchases only, with value \$50,000 or
less.

INDEX

(Listed by subject and paragraph)

A

Acceptability Standards

Property 2-6

Access 2-6(G)

ADP Codes, App. III

Advances 5-3(B)

Affirmative Fair Housing Marketing Plan 1-19(C)

Appeals for Higher Loan Limits 1-8(A)(3)

Application 3-4

Appraisal

Appraisal Fees 4-2(B), 5-2(A)

Extension 2-9(C)

Purpose 2-1

Requirements 2-4

Re-use 2-9(B)

Term 2-9(A)

URAR 2-4(A)

Assumptions 1-13, 1-15

Attorney\'s Fees 5-2(J)

Automated Underwriting System (AUS) 5-2(C)

B

Basic Nationwide Loan Limits 1-8(A)(1)

Borrower

Approval/Rejection 3-6

Notice to 3-6(B)(2)

Verification 3-5

C

CAIVRS 1-6(C)

Canceling Cases 4-1

Case Binders 5-4

Case Number

Prefix App. II

Transfers 4-2

Civil Rights 1-18, 3-3

Closing Instruments 5-1(C)

Condominiums 2-5, 2-6(D)(4), 6-11

Contract of Mortgage Insurance 1-5

Courier/Wire/Notary Fees 5-2(O)

Credit

History 3-5

Confidentiality of Information 3-3

Credit Report Costs 5-2(B)

D

Date of Closing 5-1(D)

Direct Endorsement (DE) 1-3(A)

Disclosure, Interest Rate 1-9(B)

Discount Points 5-2(P)(1)

Discrimination 1-18(E)

Document Preparation Fees 5-2(G)

E

Eligibility 1-6

Eligible Houses 2-6(A)

Eligible Manufactured Homes 2-6(B)

Equal Credit Opportunity Act (ECOA) 1-18(D)

Escrow 2-11(C)

Existing Construction 2-3, 2-6

Extended Lending Areas App. VI

F

Facilities 2-6(F)

Fair Housing Amendment Act 1-18(E)

Fair Housing Marketing 1-19

Flood Hazard 2-6(D)

Forms 1-16

Fraud 1-20

G

GSA List 1-6(A)(1)

H

High Cost Areas 1-8(A)(2)

Hiring Policy 1-19(A)

HOA 2-5, 2-6(D)(4)

Home Ownership Center (HOC) 1-17(B),\
App. I, App. II

Home Inspection Fees 5-2(F)

HUD

Headquarters 1-16(A), 1-17(A)

Processing 1-3(B)

I

Ineligible Borrowers 1-6

Inspections 2-10, 2-11(A), 6-5(H)(2)

Inspection Fee 5-2(A)

Insurance Amount 2-6(D)(3)

Interest 1-9, 5-1(E)

Investment Properties 3-7

L

LDP List 1-6(A)(1), 1-6(B)

Lead-Based Paint Hazard 2-6(E)

Lender

Approval 1-4

Processing 1-3(A)

Loan Closing 5-1

Lock-Ins 5-2(P)(2)

Logo 1-19(B)

LOMA 2-6(D)(1)

LOMR 2-6(D)(1)

LTV 1-8(A), 1-8(B), 1-11

M

MAR 4-2(D)

Maximum Loan Limits 1-8

Maximum LTV Ratios 1-8(B)

Maximum Mortgage Amount 1-8

Metropolitan Statistical Area (MSA) 1-8(A)(3)

Misrepresentations 1-5

Mortgage Credit Analysis 3-1, 3-6(A)

Mortgage Insurance Certificate (MIC) 1-5, 5-5(B), 5-6, App. VII

Mortgage Insurance Programs 1-2,

Chapter 6

Mortgage Insurance Premiums (MIP)

Annual 1-11(B)

Cancellation 1-11(C)

Monthly 1-11(D)

Upfront (UFMIP) 1-11(A)

Refund Schedule 1-11(A)

Rounding 1-11(A)

Mortgage Note 1-12

Mortgage Term 1-10

N

Non-Residential Use 2-6(H)

O

Origination Fees 5-2(E)

P

Post-Endorsement Review 5-9

Prepayment 1-13

Prohibited Payments 5-3

Property Survey Fees 5-2(H)

Proposed Construction 2-3, 2-6

R

Rate Locks 5-2(P)(2)

Real Estate Brokers Fees 5-2(L)

Recording Fees and Taxes 5-2(M)

Rehabilitation 2-12

Repair Requirements 2-11

Reprocessing 1-9(C)

Retention 5-8

S

Secondary Financing

By Government Agencies 1-14(A)

By Individuals or Companies 1-14(C)

By Non-Profit Organizations 1-14(B)

Section 203(b) Home Mortgage Insurance 6-2, App. III, App. V

Section 203 (h) Disaster Victims 6-3, App. V

Section 203 (i) Outlying Areas 6-4, App. V

Section 203 (k) Rehabilitation 6-5, App. III, App. V

Section 203 (n) Cooperative 6-6, App. III, App. V

Section 220 (d)(3)(A) Urban Renewal 6-7, App. III, App. V

Section 220 (h) Urban Renewal Improvement Loans 6-8, App. III

Section 223 (e) Miscellaneous 6-9, App. III

Section 233 Experimental Housing 6-10, App. V

Section 234 (c) Condominiums 6-11, App. III, App. V

Section 238 (c) Military Impacted Areas 6-12, App. III

Section 245 (a) GPMs and GEMs 6-13, App. III, App. V

Section 247 Hawaiian Homelands 6-14

Section 248 Indian Lands 6-15

Section 251 Adjustable Rate Mortgage Program 6-16

Section 255 Home Equity Conversion Mortgage 6-17, App. III

Security Instrument 1-12

Services 2-6(F)

Settlement Fees 5-2(K)

Seven Units in Proximity 3-7(A)

Site Condition 2-6(C)

Statement of Appraised Value 2-14(A)

Submissions 5-5

Supplemental Origination Fees 6-5(H)(2)

T

Test and Treatment Fees 5-2(N)

Three-Year Waiting Period 1-6(B)

Title Examination and Title Insurance Fees 5-2(I)

Title Insurance 5-1(A)

Title Objections 5-1(B)

U

Underwriting 1-3, 2-2

V

VA-CRV 2-7, 2-14

Verification Charges 5-2(D)