www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

January 11, 1990
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 90-2
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Prepayment of HUD-Insured Mortgage by an Owner of
                        Low-Income Housing
 
     The recent passage of the Housing and Urban
Development Reform Act of 1989 made important changes in
the restrictions applicable to the prepayment of HUD
mortgages financing lower income housing.
 
     Section 201 of the Act amends Title II of the HCD Act
of 1987 to extend its expiration date from February 5, 1990
to September 30, 1990.  The present regulations and
procedures for processing prepayment requests remain in
effect covering mortgages insured, held or assisted under
Section 221(d) (3), 221(d) (5) and 236 of the National
Housing Act.
 
    In addition, Section 202 of the Act amends Title II of
the HCD Act of 1987 to include prohibition of voluntary
termination of mortgage insurance at the request of the
mortgagor and the mortgagee.  Effective immediately the
mortgage insurance contract on mortgages covered under
Title II of the HCD Act of 1987 may he terminated only in
accordance with a plan of action approved by the Secretary
under Title II.  Likewise, with respect to any mortgage
whose prepayment is subject to Section 250(a) of the
National Housing Act, Section 202 provides that HUD may
approve the voluntary termination of mortgage insurance
only after making the determinations set forth in Section
250(a).
 
    Any questions concerning requests for prepayment of
mortgages or termination of mortgage insurance should
continue to be directed to the Department of Housing and
Urban Development, 451 Seventh Street, S.W., Washington,
D.C. 20410-8000, Attention: Office of Multifamily Housing
Management.
 
                              Sincerely yours,
 
                              C. Austin Fitts
                              Assistant Secretary
 
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