Part of the recent updates to FHA Single Family Handbook 4000.1 includes the addition of the following:
“If a Property is Existing Construction and is located within Runway Clear Zones (also known as Runway Protection Zones) at civil airports or within Clear Zones at military airfields, the Mortgagee must obtain a Borrower’s acknowledgement of the hazard. . . .” (Ibid. Pt. II.A.3[a][ii][S])
A notice and acknowledgement concerning the hazards of owning property within Runway Zones is not new. In 1984, HUD codified several of their existing policies on this matter into 24 C.F.R. Pt. 51 (see 49 FR 877 [1984]), including Ibid. § 51.303(a)(3), which currently states the following:
“Special notification requirements for Runway Clear Zones and Clear Zones. In all cases involving HUD assistance, subsidy, or insurance for the purchase or sale of an existing property in a Runway Clear Zone or Clear Zone, HUD (or the responsible entity or recipient under 24 CFR part 58) shall advise the buyer that the property is in a Runway Clear Zone or Clear Zone, what the implications of such a location are, and that there is a possibility that the property may, at a later date, be acquired by the airport operator. The buyer must sign a statement acknowledging receipt of this information.”
What is new is that the Handbook now specifies that the “Mortgagee” (properly defined) must obtain the borrower’s acknowledgement of the hazard. Prior to this, HUD’s administrative law and handbooks did not reference the mortgagee in relation to this requirement.
For example, Ibid. requires that either HUD or a “responsible entity or recipient” under 24 C.F.R. Pt. 58 (e.g., recipients of housing program funds; see Ibid. § 58.2[a][7]) should provide the buyer with notice of the hazards; it also required that the buyer should sign a statement acknowledging receipt of this information. No mention is made of the mortgagee’s role in this process.
Other HUD handbooks over the decades fail to mention the mortgagee, though they do imply that the mortgagee must be in possession of the acknowledgement, by requiring such acknowledgement to be submitted with the application for firm commitment:
“Existing dwellings more than one year old are acceptable provided the prospective purchaser acknowledges awareness that the property is located in a Runway Clear Zone/Clear Zone. This acknowledgment ‘Notice to Prospective Buyers of Properties Located in Runway Clear Zones and Military Airport Clear Zones’ must be used in every instance where applicable and should be used without change. A signed acknowledgment must accompany the application for firm commitment. . . .” (FHA Single Family Handbook 4150.1 REV-1 ch. 4-26[C][2])
“HUD requires that the buyer of a property located in a Runway Clear Zone/Clear Zone is advised that the property is located in such a zone and of the implications associated with that site. This includes the possibility that the airport operator could acquire the property in the future.” (FHA Single Family Handbook 4150.2, CHG-1 ch. 2-2, H)
To ensure that mortgagees obtain a borrower’s signed acknowledgment concerning the hazards, we are creating new Cx24408, which is based upon sample forms previously published by HUD for 24 C.F.R. § 51.303(a)(3) (see FHA Single Family Handbook 4150.1 REV-1, ch. 4, Exhibit 1 and FHA Single Family Handbook 4310.5 REV-2, App. 13). This new document will print under the following conditions:
- Base Type = FHA
- Loan Purpose = Purchase
- Document Package Type = Closing
- Print Airport Acknowledgement = Yes
This new document will start printing in Production on December 8, 2020, provided the Print Airport Acknowledgement (field 61665) is set to Yes. Questions or concerns about this change may be directed towards Client Support at 1.800.497.3584.
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