The FHA 203(b) Loan Program - STM Partners

New Construction, Continued
Lender
Required
Documents,
(continued)
Pre-Approval/
Early Start
Letters
Builder
Certification
Reference: See HUD Specifications For Pre-Approval, Inspections and
Documentation previously presented in this topic for information concerning
Mortgagee Letter 2001-27
• Regardless of the process used, the lender must certify that the property is 100%
complete (both on site and off site improvements) and that the property meets
HUD's minimum property standards. This certification is on the Addendum to the
Uniform Residential Loan Application (Form HUD 92900-A) on page 3.
• Builders that wish to begin construction before the appraisal is completed or the
lender issues the Statement of Appraised Value must have “Pre-approval” in order
to permit a borrower to obtain greater than 90% financing in areas not issuing
Building Permits (or their equivalent).
• Pre-approval is defined as either a lender issued Early Start Letter (COR 0462) or
a Building Permit (or its equivalent) issued by a local jurisdiction prior to
construction.
• Upon review and analysis of the plans and specs, Early Start Letters are typically
issued by a lender’s DE Underwriter.
• If a builder is providing a HUD approved ten (10) year warranty on the subject
property an Early Start Letter is not required.
• If the local jurisdiction issues both a Building Permit and a Certificate of
Occupancy, then neither an Early Start Letter nor a HUD approved ten (10) year
warranty is required.
Note: This definition of pre-approval does not apply to condominiums or
manufactured housing.
Reference: See 10 Year Warranties for the HUD Accepted Insured Ten-Year
Protection Plans subsequently presented in this product description for additional
information.
• The builder must complete the applicable sections of the Builder Certification of
Plans, Specs & Site Form (HUD 92451, REV 4/01) for all new construction,
regardless of whether or not a 10-year warranty is offered.
• The Builder Certification of Plans, Specs & Site Form must be completed and
signed within 30 days of the lender’s request for an appraisal.
• The form must be provided to the appraiser who must review the form and note
on the appraisal that he/she has seen the certification. In addition, the appraiser
must comment on the appraisal as to whether or not he/she agrees with the
builder’s findings.
• If the form is not provided to the appraiser, HUD requires the appraiser to return
the appraisal request. If the form is not complete, HUD requires the appraiser to
return the form for completion prior to releasing the appraisal.
Reference: See Builder Certification Procedure subsequently presented in this topic
for additional information.
Continued on next page
Section 2.22 July 27, 2012
FHA 203(b) Loan Program Page 34 of 217
Correspondent Seller Guide