In a new mortgagee letter (2010-27) dated August 30, 2010, HUD has renewed special the Department’s policy for the eligibility of projects for Mortgage insurance where Construction has started. The temporary authority granted under Mortgagee Letter ML 2009-26 expired on February 26, 2010, and the purpose of this Mortgagee Letter is to renew this authority for a period of one year from the date of the new Mortgagee Letter. The Department has determined the renewal authority is still needed because of the lack of available credit and the inability to secure Conventional construction loans. All policy and procedures outlined in ML 2009-26 and H 2009-12 remain in effect with the exception of the following amended procedures:

  • The ML and Notice now requires participation in a concept meeting and application submission under two stage processing as prescribed in Mortgagee Letter 2010-21, HUD Multifamily Risk Mitigation.

  • Evidence that alternative financing cannot be obtained will require a certification to be signed by both the Borrower and the proposed FHA Lender, and should state the rates and terms that did not make it possible to receive viable financial funding for the project.

  • Any project that was originally subject to Davis-Bacon requirements, prior to application for FHA insurance, will be evaluated on a case-by-case basis as to any additional steps that may be required to proceed with FHA insurance.

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