SS Memo 10-01


Date: January 21, 2010

Underwriting Clarifications

A number of questions have been raised since the release of Memorandum 09-09:

  • HUD 184 - AHFC has become aware that none of the automated underwriting systems (AUS) adequately assess HUD 184 guaranteed loans and that either HUD or "direct guarantee" lenders manually underwrite these loans. Therefore, lenders are not required to provide an AUS feedback certificate/findings report for HUD 184 loans.
  • AHELP - The Affordable Housing Enhanced Loan Program allows down payment assistance provided by or administered by a local/state/federal governmental agency; a non-profit agency; or regional housing authority. The assistance may be in the form of a grant, deferred payment(s), a forgivable loan, or a combination. These loans must be reflected in the AUS as having subordinate financing with the appropriate combined loan to value (CLTV).
  • Streamline Refinances - AUS is not required for streamline refinances.
  • Appraisals - regardless of AUS documentation requirements, all loan files must contain an appraisal that meets the criteria set forth in Section 2000 of the Selling Guide.
  • Mortgage Insurance - regardless of AUS requirements, all conventional loans with a loan to value above 80% require mortgage insurance as stipulated in Section 1003.08 of the Selling Guide.


(Section 1005.03, Forms)

AHFC Form UND-3 has been revised to facilitate collection of the total debt ratio. Lenders may begin using the revised form immediately or no later than April 1, 2010. In either case, the total debt ratio must be reflected on the UND-3 for all loans submitted on or after January 25, 2010.

Rural Development

(Section 6001)

In an effort to create some consistency across loan types, Section 6001.04(A) has been revised to eliminate the requirement that the appraised value support a loan amount that has been increased to include the guarantee fee. However, the value must still support the loan amount less the guarantee fee.

Hazardous Wastes

(Section 2001.26)

Guide Section 2001.26 has been changed to the following:


A. Appraisal Considerations for Properties Affected by Environmental Hazards

1. The appraiser must consider any known contaminated sites or hazardous substances that affect the property or the neighborhood in which the property is located. The appraiser must also note the presence of contaminated sites or hazardous substances in the appraisal report and make appropriate adjustments and comments to reflect any adverse effect that the hazard has on the value and marketability.

2. When there is an indication of potential environment problems (e.g., abandoned underground fuel storage tank), the appraisal report must contain a requirement for correction of the problem in accordance with local, state, or federal requirements

B. Contaminated Sites

To be eligible for AHFC financing an existing contaminated site must receive the following:

1. A Site Closure Designation of "Cleanup Complete" or "Cleanup Complete with Institutional Controls(IC)" as defined by DEC under their Contaminated Sites Program, and

2. No significant effect on the value of the subject property as noted on the appraisal report.

This policy does not supersede, but is in addition to, all local ordinances and/or fire standards.

Note: AHFC does not consider the appraiser to be an expert in the field of environmental hazards. The typical residential real estate appraiser is neither expected nor required to be an expert in this specialized filed. However, the appraiser has a responsibility to note in the appraisal report any adverse conditions that were observed during the inspection of the subject property or information that he or she became aware of through the normal research involved in performing an appraisal.

Forms Guide revisions

(Forms are available in PDF)

New/Revised/Deleted Forms

UND-3 New 01/10

ATTACHMENTS (Attachments are available in PDF)