ML 97-20: Single-Family Production -- Homeownership Bridal Registry Accounts (05/16/97)
TO: ALL APPROVED MORTGAGEES
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 down payment 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.
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 nonsupervised mortgage banking institutions may pursue the following options:
• | If the lender is a subsidiary of a supervised institution (parent), the account can be set up with the parent. |
• | A lender may utilize an existing relationship with a supervised lender for the purpose of establishing the accounts. |
• | 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 down payment 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.
For more information on the FHA Bridal Registry contact:
Bo Evans OR Rhonda McGough
Bo Evans Realty Iberia Bank Mortgage
334-361-4661 334-799-8061
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