www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410 December 7, 1983 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 83-28 TO: ALL APPROVED MORTGAGEES SUBJECT: One-Time Mortgage Insurance Premium - Mortgage Modifications Mortgagee Letter 83-21, dated August 2, 1983, informed you of the implementation of the one-time mortgage insurance premium procedure for mortgages insured under §203(b), 203(i) and 203(n), and graduated payment mortgages under §245. Page 6 of the Mortgagee Letter contained the following statement: In the mortgage or deed of trust, you should delete references to the periodic MIP payments and insert a statement prohibiting acceleration of the debt for nonpayment of the mortgage insurance premium. Appendix 8 contains corrected provisions from the Michigan mortgage form which is used as an example. Since issuance of the Mortgagee Letter, we have received many requests for assistance and/or approval with regard to mortgage amendments for the one-time MIP program. The purpose of this Mortgagee Letter is to provide you with specific guidance as to amendments to mortgage forms for this purpose. As the foregoing quotation from page 6 of Mortgagee Letter 83-21 indicates, provisions relating to periodic MIP payments should be deleted and a statement prohibiting acceleration for nonpayment of the MIP should be inserted. We did not specify the method for making the changes, although Appendix 8 showed them as physical alterations to the Michigan mortgage. This was not intended to preclude mortgage amendments through the use of riders. In some states, such as California, the general provisions of the FHA-approved Deed of Trust are contained in a document already recorded (Fictitious Deed of Trust). In such states, the most practical means of making necessary changes is by the use of a rider, which will be recorded with the first page of the Deed of Trust, containing the specific provisions for each loan. _____________________________________________________________________ 2 Appended hereto is a rider which may be used to amend the relevant provisions of the mortgage to conform to the requirements of the one-time MIP program. The blanks in this rider should be filled in as follows: 1. In the title: Insert the appropriate term describing the security instrument, i.e., mortgage, deed of trust, security deed. 2. In the second line of the introductory paragraph: Insert the same word as is inserted in the title. 3. In the third line of the introductory paragraph: a. In the first blank: Insert the name(s) of the borrower(s). b. In the second blank: Insert the appropriate description of the borrower(s), i. e., mortgagor, trustor, grantor, party of the first part, borrower. Always use the singular form. 4. In the fourth line of the introductory paragraph: a. In the first blank: Insert the name of the second party to the security instrument, i.e., the name of the lender or, if the security instrument is a deed of trust, the name of the trustee(s). b. In the second blank, insert the appropriate description of the second party, i.e., mortgagee, grantee, trustee, party of the second part. 5. In the fifth line of the introductory paragraph: Insert the name and description of the lender if the document being amended is a deed of trust and the lender is named as a third party in the first paragraph of the trust. If there is no third party named in the first paragraph of the Deed of Trust, then delete the fifth line. 6. In Items 1 and 2: Insert the number for the paragraph which corresponds to the Third paragraph in the Michigan mortgage. 7. In Item 3: a. In the first line: Insert the number for the paragraph which corresponds to the Fourth paragraph of the Michigan mortgage. _____________________________________________________________________ 3 b. In the first blank of the third line: Insert the same paragraph number as is used for Items 1 and 2. c. In the second blank of the third line: Insert the description of the lender, i.e., mortgagee, party of the second part, party of the third part, grantee. 8. In Item 4: a. In the first line: Insert the same paragraph number as is used in the first line of Item 3. b. In the third line: Insert the appropriate description of the debt instrument, i.e., note, bond. 9. In Item 5: a. In the first line: Insert the number for the paragraph which corresponds to the Fourteenth paragraph of the Michigan mortgage. b. In the quotation: Insert the same descriptive term as is used in the second blank in the third line of Item 3. 10. Following "IN WITNESS WHEREOF," insert the same name(s) or descriptive term as is used in the third line of the introductory paragraph. If applicable state law requires that contemporaneously executed riders be notarized, the appropriate notarization should be added. The following language is not required by HUD, but may be added to Section 14 of the Texas Deed of Trust if the lender desires or if required by a title insurer: "In the event that any portion of the lien is found not to be valid as against the homestead, all payments under the note shall be first applied to that portion which is declared to be invalid as against the homestead. " Thank you for your cooperation in this matter. Sincerely, W. Calvert Brand Acting Assistant Secretary _____________________________________________________________________ _____________________RIDER This Rider, dated the _____ day of _______________, 19_____, amends the _____________________ of even date by and between __________________________________, the ____________________, and _________________________________, the ____________________, and _________________________________, the ____________________, as follows: 1. Subsection (a) of Paragraph ________ is deleted. 2. Subsection (c)(I) of Paragraph ______ is deleted. 3. In the third sentence of Paragraph ______, the words "all payments made under the provisions of (a) of paragraph ____ hereof which the ___________ has not become obligated to pay to the Secretary of Housing and Urban Development and" are deleted. 4. The fourth sentence of Paragraph _____ is amended by insertion or a period after". . . then remaining unpaid under said _____________" and deletion of the remainder of the sentence. 5. Paragraph ______ is amended by the addition of the following: "This option may not be exercised when the ineligibility for insurance under the National Housing Act is due to the ______________'s failure to remit the mortgage insurance premium to the Department of Housing and Urban Development. " IN WITNESS WHEREOF, _________________________________ has set his hand and seal the day and year first aforesaid. _______________________________ SEAL _______________________________ SEAL Signed, sealed and delivered in the presence of ______________________________