www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

August 12, 1991
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgage Letter 91-39
    TO:        ALL APPROVED MORTGAGEES
    SUBJECT:   Change in Maximum Interest Rates
 
          The Housing and Urban Recovery Act of 1983 established
    Negotiated Interest Rates for all single-family and multifamily
    programs, except for Section 235 and Section 232 (loans to finance
    purchase and installation of fire safety equipment).  However,
    Section 429(e)(2) of the Housing and Community Development Act of
    1987 (Public Law 100-242, approved February 5, 1988) amended the
    National Housing Act to provide that interest on fire safety
    equipment loans under Section 232(i) of the Act will be "at such
    rate as may be agreed upon by the mortgagor and the mortgagee."
    Accordingly, these loans, like most other National Housing
    Act-authorized insured loans, now have their interest rates determined
    by negotiation.  Accordingly, this announcement of a change in
    interest rate ceilings for FHA-insured mortgages is limited to the
    Section 235 Program.
 
          HUD regulations have been changed to decrease the maximum rate
    of interest on Section 235 loans from 9.5 to 9.0 percent.
 
          Mortgagee Letter 84-21 on the Section 235 Program states that
    reprocessing will be required by HUD on any case in which a mortgagee
    wishes to close at an interest rate higher than the rate shown
    on the firm commitment.  To avoid unnecessary processing, HUD will
    only accept requests for reprocessing where a clear final inspection
    has been obtained.  Mortgagees must submit this information
    with their request to have their case reprocessed at the higher
    rate.
 
          This change is effective August 12, 1991.
 
                                   Sincerely,
 
                                   Arthur J. Hill
                                   Assistant Secretary for
                                     Housing-Federal Housing
                                     Commissioner