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April 30, 2025
In This Update
In the November 14, 2024, Email Blast, HUD announced a narrow interpretation of the Section 223(f)(4) statutory phrase “necessary costs of refinancing” as that phrase applies to repair costs in a 232/223(f) transaction. HUD stated that, to be compliant with this statutory language, Lenders could only include:
the cost of repairs that are necessary to comply with requirements related to life, health, and safety of occupants (e.g., installation of smoke detectors and radon mitigation measures), environmental requirements, associated issuance of permits, and/or federal, state and local regulatory requirements.
In the November 14th Blast, HUD stated that it was working on further guidance. HUD did subsequently include more detailed guidance as draft edits to the Section 232 Handbook—draft edits that drew industry comments expressing strong concern.
HUD, through its Federal Housing Administration (FHA), Frank Cassidy announced today, that effective immediately, HUD shall return to its longstanding practice regarding repairs (both critical and noncritical) in Section 232/223(f) transactions, consistent with the currently effective Section 232 Handbook and controlling documents.
Keywords: Repairs
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