US Government Bridal Registry Guidelines...





www.hudclips.org 

U. S. Department of Housing and Urban Development

Washington, D.C. 20410-8000

 May 16, 1997

 OFFICE OF THE ASSISTANT SECRETARY

FOR HOUSING-FEDERAL HOUSING COMMISSIONER

 MORTGAGEE LETTER 97-20

 TO:  ALL APPROVED MORTGAGEES

 SUBJECT:  Single Family Production - Homeownership Bridal

          Registry Accounts

 HUD Mortgagee Letter 96-56 , dated October 2, 1996, announced

FHA's Bridal Registry Account initiative.  The intent is to give

couples planning to get married the opportunity to amass monetary

gifts from friends and family for the specific purpose of making

the downpayment on a home.

   Although this initiative emphasizes the use of gifts for the

bridal couple's cash investment, and provides a modified

documentation procedure for verifying receipt of these funds, FHA

recognizes there may be other legitimate occasions where

substantial gifts are typically received by an individual or

individuals that may in turn be applied toward the purchase of a

home.

 Therefore, this initiative is not limited just to couples

that intend to get married, but is available for other situations

where such gifts are typically received by an individual or

individuals.  Regardless of the occasion, the lender must

document the receipt of these gifts under the terms and

conditions outlined here and in Mortgagee Letter 96-56 , dated

October 2, 1996.

  All approved FHA lenders are automatically eligible to take

part in the program.  The list of lenders included with the above

Mortgagee Letter was meant to show industry acceptance of the

idea and not indicative of an approval process.  However, the

Department does request that your institution inform the local

HUD office of its intent to participate so that the lender list

may be updated.

  This list is made available to the public through direct

inquiries and the Internet.

 The Department designed the program to give lenders maximum

flexibility; however, many lenders have requested more procedural

information on implementing this program.

     Generally, couples planning to get married and others will

contact a participating lender in response to its advertising and

promotional material, and request that a bridal registry account

be established in their names. Lenders that are supervised

institutions (FDIC or NCUSIF-insured) can set up the accounts

themselves.  Participating lenders that are non-supervised

mortgage banking institutions may pursue the following options:

     o    If the lender is a subsidiary of a supervised

          institution (parent), the account can be set up with

          the parent.

     o    A lender may utilize an existing relationship with a

          supervised lender for the purpose of establishing the

          accounts.

     o    A lender may inform the potential mortgagors that they

          can open the account with a supervised lender of their

          choice.

     Funds may be deposited by friends and relatives directly

into the Bridal Registry Account, or given by cash or check to

the couples or individuals for deposit.  This account will take

the guesswork out of gift selection.  These gifts can be given

with the assurance that the donors are providing the couples or

individuals with an opportunity to purchase their first home.

     Bridal couples or individuals are not obligated to use the

money in the Bridal Registry Account for a downpayment on a home.

The couples or individuals control how the funds will be used,

and if their plans change, they can simply withdraw the money and

use it for something else.  Also, there is no requirement that

the bridal couple be married prior to closing the mortgage loan.

     The following suggested procedures are intended for lender

guidance in operating the program:

     o    Lenders can provide assistance to the customers in

          setting up the account, and may establish any necessary

          agreements between the mortgagee and the depository

          institution which creates the relationship, procedures

          and rules of the program (e.g., access to account

          information, deposit and withdrawal procedures, etc.).

     o    For administrative convenience, lenders can establish

          one custodial account with a supervised institution for

          bridal registry funds that would be held in trust and

          accounted for on a customer-by-customer basis, if this

          procedure in permitted by state law.

     o    Independent mortgage companies can establish

          relationships with one or more supervised institutions

          in much the same way they select institutions to hold

          the custodial accounts for principal, interest, taxes

          and insurance required by the GNMA mortgage-backed

          securities program.  The depository institutions may be

          located outside the state where the couples or

          individuals are located.

     o    Mortgage companies affiliated with depository

          institutions can place the accounts with their

          affiliates.

     o    Lenders may structure their programs in numerous ways.

          For example, lenders may elect to have the potential

          mortgagors sign over their checks to the lender as

          trustee of the custodial account.  The lenders can then

          deposit the checks directly into the trust account.

          Alternatively, lenders can have them deal with the

          depositories directly in establishing their accounts

          and making deposits.  Couples or individuals may

          receive deposit coupons and envelopes from the mortgage

          lender and mail their deposits directly to the

          depository institution.

     o    Lenders can provide information about the account to

          friends and relatives of the bridal couple or

          individuals by means of letters and/or brochures.

     o    Lenders can provide "gift cards" that reflect the

          gift-givers name and relationship to the bridal couple

          or individuals for the purpose of documenting the

          gifts.  FHA requires only lender and borrower

          certification of the funds.

     o    Lenders can distribute FHA's promotional brochures.

          Copies can be ordered by calling 1-800-767-7468.

          Lenders can also design their own brochures to promote

          bridal registry accounts.

     In summary, participating lenders have great latitude in

creating a viable bridal registry account program.  They can

employ a number of marketing strategies to promote this

initiative within their company, and their creativity and

ingenuity will have a significant impact on assisting newlyweds

and others to become homeowners.

Sincerely yours,

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner