www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

December 27, 1988
Mortgagee Letter 89-3
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Additional Requirements of Section 143 of the Internal
            Revenue Code of 1986 Which Affect FHA Assumption Policy
 
     We are aware that lenders must make certain findings to assure
compliance with the requirements set forth in Section 143 of the
Internal Revenue Code (IRC) of 1986.  Section 143 (i)(2)  requires
that the mortgagors on all mortgage revenue bond mortgages, which are
being assumed, meet certain requirements such as principal residence,
income limits, purchase price, and the first-time homeowner
requirement.
 
     HUD takes the position that determining compliance with the
requirements of Section 143 is an inherent responsibility of
processing an assumption on such mortgages and that no additional
compensation to the mortgagee is appropriate.  The Department
believes the fees governing the FHA 2210 and simple assumption
procedures are fair and appropriate compensation for processing
assumptions.  Therefore, HUD will not allow additional fees for those
requirements.  The allowable fees for FHA-insured mortgages are set
forth in Mortgagee Letter 88-9 .
 
     If you have any questions concerning this letter, please contact
the Single Family Insured Servicing Branch at (202) 755-7330.
 
                          Sincerely yours,
                          Thomas T. Demery
                          Assistant Secretary