HUD Updates FHA New Construction Requirements

HUD recently published Mortgagee Letter 2020-36 (ML 2020-36), which updates Federal Housing Administration (FHA) New Construction financing requirements.

The updates include, among others:

• The removal of the Early Start Letter and Pre-Approval requirements;
• The consolidation of the requirements for Site Built Housing and Condominium units and Manufactured Housing, regardless of loan-to-value (LTV);
• The addition of Form HUD-92544 Warranty of Completion as a requirement for all New Construction;
• The provision for alternative inspections options by a third party, who is a registered architect or structural engineer, in the absence of an International Code Council certified Residential Combination Inspector or Combination Inspector; and
• The addition of Form HUD-NPMA-99-B, New Construction Subterranean Termite Service Record, as a requirement when New Construction Property is treated with a Physical Barrier System, as reflected on the HUDNPMA-99-A form.

The guidance provided by ML 2020-36 may be used immediately for existing cases but is mandatory for FHA case numbers assigned on or after January 4, 2021.