HUD has released Mortgagee Letter 2005-50 replacing, in its entirety, HUD ML 2005-19.  This morgagee letter is designed to encourage home buyers to make repairs and improve their homes, making them more energy efficient.

This Mortgagee Letter contains important changes to the Streamlined (k) program described in Mortgagee Letter 2005-19, including:

·        Additional eligible work items, including lead-based paint stabilization.

·        Increased maximum mortgage amount for repair or rehabilitation costs from $15,000 to $35,000.

·        Elimination of minimum repair cost threshold.

Like the regular Section 203(k) rehabilitation loan program, Streamlined (k) is available for use in conjunction with other Departmental programs and activities.  This Mortgagee Letter introduces some procedural requirements applicable only to Streamlined (k) – including:

·        The availability of Streamlined (k) to pay for lead-based paint stabilization costs above and beyond that paid for by HUD when it sells real estate owned (REO).

·        The option (rather than a requirement) for the mortgagee to establish a contingency reserve of rehabilitation loan proceeds.

In addition, like the regular Section 203(k) program, Streamlined (k) is available:

·        To augment an FHA Energy Efficient Mortgage (EEM),

·        To insure the mortgage on a single-family housing unit sold from the HUD’s REO inventory

·        To insure a mortgage that covers both repairs costs and the refinance of an existing mortgage.

The Streamlined (k) program is intended to facilitate uncomplicated rehabilitation and/or improvements to a home for which plans, consultants, engineers and/or architects are not required.  The Streamlined (k) program includes the discretionary improvements and/or repairs shown below:

            ·        Repair/Replacement of roofs, gutters and downspouts

·        Repair/Replacement/upgrade of existing HVAC systems

·        Repair/Replacement/upgrade of plumbing and electrical systems

·        Repair/Replacement of flooring 

·        Minor remodeling, such as kitchens, which does not involve structural repairs

·        Painting, both exterior and interior

·        Weatherization, including storm windows and doors, insulation, weather stripping, etc.

·        Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

·        Accessibility improvements for persons with disabilities

·        Lead-based paint stabilization or abatement of lead-based paint hazards 

·        Repair/replace/add exterior decks, patios, porches

·        Basement finishing and remodeling, which does not involve structural repairs

·        Basement waterproofing

·        Window and door replacements and exterior wall re-siding

·        Septic system and/or well repair or replacement

To review the complete mortgagee letter, please click the following link: 

HUD ML 2005-50