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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410

October 28, 1982
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 82-23
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Refinancing existing HUD-insured mortgages for minimal risk
          applications--occupant mortgagors only
 
     In an effort to accommodate occupant mortgagors who currently
have HUD-insured mortgages and wish to refinance them to obtain a
lower interest rate, the Department has modified mortgage credit
processing to the extent that certain types of applications to
refinance existing mortgages need not contain a standard credit
report and the regular verifications of deposit and employment.
 
     An application to refinance an existing HUD-insured mortgage
involving an owner-occupant may be submitted and processed for credit
acceptability solely on the basis of a certified true copy of the
mortgagor's mortgage payment record, accompanied by the lender's
assurance that payments are current.  This procedure may be used only
when the mortgage payment to principal, interest and mortgage
insurance premium under the new mortgage is less than the payment
under the existing mortgage.  If the transaction requires the
mortgagor to provide additional funds to close the loan, the
mortgagor must provide a certified statement, satisfactory to HUD, as
to the source of those funds.
 
     In preparing the HUD Form 92900 application, the mortgagee
should complete all of the form down to Section II.  Only Block 24 of
Section II, must be completed.  Sections III and V must also be
completed.  Entries on the HUD worksheet by the processor are to be
limited to:  case number, borrower's name, appropriate portions of
Section III, loan-to-value ratio, and final approval.
 
     Other than the instructions noted above, the case should be
processed in accordance with outstanding instructions for refinancing
transactions.  It will continue to be necessary for an appraisal to
be performed and a conditional commitment or VA-CRV to be issued
prior to the application for firm commitment.
 
     An existing mortgage insured under Section 245(a) or (b) may be
refinanced under Section 245(a) or a level payment mortgage; however,
the prohibition against refinancing a level payment mortgage under
Section 245 remains.
 
     Refinance transactions, as described, are to be processed by HUD
staff rather than assigned to fee examiners.
 
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     These revised procedures are designed to assist the industry by
providing additional mortgage credit processing capability through
present field office staff.
 
                                   Sincerely,
 
                                   Philip Abrams
                                   Assistant Secretary
 
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