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l. Weatherization (08/02/2018)
The weatherization product permits the Borrower to finance the cost of eligible energy- related weatherization improvements, in conjunction with a purchase or refinance.
i. Eligibility
(A) Eligible Programs and Transaction Types
Weatherization improvements may be financed in conjunction with the following:
• Section 203(b)
o purchase transaction
o no cash-out refinance transaction
• Section 203(h) Mortgage Insurance for Disaster Victims
• Energy Efficient Mortgages (EEM)
For financing of weatherization under the 203(k) Rehabilitation Mortgage Insurance Program, refer to 203(k) Rehabilitation Mortgage Insurance Program.
(B) Eligible Property Types
Weatherization improvements may be used on the following property types:
• existing Properties (one- to four-units)
• condominiums (one unit)
• Manufactured Housing (single unit)
(C) Eligible Weatherization Items
Eligible energy-related weatherization items include the following measures:
• air sealing (including weather-stripping doors, caulking window and plumbing penetrations)
• insulation (attic, floors, walls, basement)
• duct sealing and insulation
• smart thermostats and equipment controls
• windows and doors
• low flow water fixtures
• carbon monoxide monitors and other combustion appliance safety measures
(D) Maximum Dollar Amount
The maximum allowable cost of energy-related weatherization items that can be financed is:
• $2,000 (not to exceed actual cost) without a separate value determination;
• $3,500 (not to exceed actual cost) if supported by a value determination made by an FHA Roster Appraiser; or
• no limit (not to exceed actual cost) if:
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8. Programs and Products - Weatherization (08/02/2018)
o supported by a value determination made by an FHA Roster Appraiser;
and
o a separate on-site inspection is made by an ICC RCI or CI.
(E) Required Documentation
The Mortgagee must document the cost of work including the weatherization materials and labor.
(F) Maximum Mortgage Amount Calculation
When determining the Adjusted Value, the dollar limit of the energy-related weatherization items may be added to both the sales price and the Property Value.
(G) Weatherization Combined with Energy Efficient Mortgage
For existing Properties, energy-related weatherization items may be combined with the EEM.
(H) Cash-Out
The Borrower may not receive cash back from the mortgage transaction. If an excess exists, funds must be applied to the principal Mortgage balance.
(I) Escrows
The Mortgagee must establish an escrow account for the remaining costs of the energy improvements if the installation of weatherization items is not complete by the time of closing for all Mortgages on existing Properties, except 203(k). The Mortgagee must establish an escrow account for the remaining cost of the energy improvements in accordance with the Repair Completion Escrow Requirements.
If the costs of the energy improvements and weatherization items are part of a 203(k) Rehabilitation Mortgage, then the escrowed amounts of the energy improvements and weatherization items must be included in the rehabilitation escrow account.
Escrows may not include costs for labor or work performed by the Borrower (Sweat Equity).
(J) Form HUD-92300, Mortgagee’s Assurance of Completion
When funds to complete weatherization improvements are escrowed, the Mortgagee must execute form HUD-92300, Mortgagee’s Assurance of Completion, to indicate that the escrow for weatherization improvements has been established.
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8. Programs and Products - Weatherization (08/02/2018)
ii. Completion Requirements for Weatherization Measures
(A) Time of Completion
Installation of weatherization improvements must be completed within:
• 30 Days of the mortgage Disbursement; or
• 90 Days of the mortgage Disbursement if the improvements are part of an energy package for an EEM.
The Mortgagee must apply the remaining weatherization escrow funds to a prepayment of the mortgage principal if the work is not completed within the required time frames.
Any funds remaining in the escrow account at the end of the improvement period must be applied to pay down the mortgage principal.
(B) Escrow Closeout Certification
After the repair or rehabilitation escrow account is closed, the Mortgagee must complete the Escrow Closeout Certification screen in FHAC within 30 Days after the escrow account is closed.
(C) Inspection
The Mortgagee or their agent must inspect the weatherization items or obtain evidence from a local authority that the system was installed in accordance with local requirements.
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8. Programs and Products - Solar and Wind Technologies (08/19/2024)