www.hudclips.org 


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

August 24, 1990
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 90-32
       TO:  ALL APPROVED MORTGAGEES
       SUBJECT:  Payment of Multifamily Claims by Issuance of
                    Debentures
 
            HUD's regulations at 24 CFR Section 207.259(a), as
       incorporated by reference into other program regulations,
       provide that, under many of HUD's multifamily insurance
       programs, the Commissioner may settle insurance claims in
       cash, debentures, or a combination of both, as determined
       at the time of payment.  Until now, HUD has, through the
       issuance of Mortgagee Letters, announced in advance its
       intention as to the method of payment.
 
            Effective immediately, with respect to both current and
       future loans insured under the programs listed below, FHA
       will determine the method of payment at the time of the
       payment, and thus will no longer announce in advance its
       intention as to the method of payment.  The determination
       will be based on a comparison of the applicable debenture
       interest rate with the Treasury borrowing rate, and may also
       take into account administrative factors.  If HUD has paid a
       partial settlement in cash prior to the date of this
       Mortgagee Letter, or makes a partial settlement in cash
       thereafter, the final settlement will also be made in cash.
 
            This letter is applicable only to those Multifamily
       insurance programs under which the Commissioner has the
       option to determine the method of payment.  Those programs
       are as follows:
 
       Program                       Regulation
 
       Section 207                   207.259(a)
       Section 213                   213.251
       Section 232                   232.251
       Section 234                   234.751
       Section 241                   241.261 (Supplemental Loans
                                                endorsed prior to
                                                July 15, 1978)
       Section 242                   242.251 (Except as provided in
                                                242.260)
 
_____________________________________________________________________
 
                                                                    2
 
       Section 608                   210.251
       Section 803                   225.265
       Section 810                   227.251
       Title X                       205.251
       Title XI                      224.251
 
            This Mortgagee Letter does not apply to mortgages with
       respect to which HUD enters into, or has entered into, a
       Debenture Lock agreement.
 
                                       Very sincerely yours,
 
                                       Arthur J. Hill
                                       Acting Assistant Secretary
                                         for Housing-Federal Housing
                                         Commissioner