www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 December 08, 1993 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 93-40 TO: ALL APPROVED MORTGAGEES SUBJECT: Prepurchase and Foreclosure-Prevention Counseling Demonstration This Mortgagee Letter supersedes Mortgagee Letter 93-28 , dated September 20, 1993. This Mortgagee Letter contains three lines of text that were omitted during the printing of Mortgagee Letter 93-28. The Department has a congressional mandate under Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) as amended by the National Affordable Housing Act (NAHA) of 1990, to conduct a Prepurchase and Foreclosure-Prevention Counseling Demonstration in three target areas. The Department has selected two sites in Chicago, Illinois, and one site in Atlanta, Georgia, for this demonstration. The three target areas are identified as Englewood/Marquette Park /1 and South Suburban in Chicago, and South DeKalb County in Suburban Atlanta. On September 30, 1992, the Department awarded grants to three HUD-approved counseling agencies to provide counseling for this demonstration. They are the Spanish Coalition for Housing, and the Community and Economic Development Association of Cook County, Incorporated, in Chicago, and the Dekalb/Fulton Housing Counseling Centers, Incorporated, in Atlanta. The purpose of this demonstration is to determine the effectiveness of mandatory prepurchase counseling for first-time home buyers, and foreclosure-prevention counseling for homeowners to avoid and reduce defaults and foreclosures on mortgages insured under the FHA single family mortgage insurance programs. The demonstration is designed to encourage responsible and prudent use of federally insured home mortgages; to assist homeowners with federally insured mortgages in retaining their homes, and promote the availability and expansion of housing opportunities in connection with federally insured home mortgages. This demonstration will end on September 30, 1994, unless otherwise extended. _____________________________ /1 Also includes the Ashburn and Auburn Gresham community areas. _____________________________________________________________________ Mandatory Prepurchase Counseling. Under this portion of the demonstration, an eligible home buyer who intends to purchase a home located in a counseling target area, and who intends to apply for an FHA mortgage to purchase a 1 to 4 family unit home which involves a downpayment of less than 10 percent of the principal obligation of the mortgage, must receive counseling prior to signing a contract to purchase the home. HUD-approved housing counseling agencies participating in this demonstration will provide potential first-time home buyers with a certificate evidencing that they have received prepurchase counseling. The Department's Chicago and Atlanta Regional Offices will hold conferences and issue circulars to the members of their real estate community regarding the requirements of this demonstration. Therefore, to allow the realty industry time to become aware of the requirements of this demonstration, for a period of 90 days from the date of this letter, HUD will continue to insure eligible first-time home buyers in the target areas even if the purchasers signed a sales contract prior to receiving counseling. However, such home buyers must have received counseling from the appropriate agency listed herein prior to the processing of an FHA-insured mortgage application. After this 90-day period, only first-time home buyers who have received counseling prior to signing a contract to purchase will be eligible for an FHA-insured mortgage. Foreclosure-Prevention Counseling. Under this portion of the demonstration, the Department is making housing counseling available to mortgagors who are 60 or more days delinquent with respect to payment under an FHA-insured mortgage on a home located within a counseling target area. The selected counseling agencies must provide counseling with respect to available options, programs, and actions for resolving mortgagors' delinquencies or defaults. As you are aware, Section 577 of the NAHA of 1990, requires mortgage creditors to notify delinquent homeowners of the availability of homeownership counseling services within 45 days of delinquency. Therefore, to assist with this demonstration, the Department is requesting that, to the extent possible, lenders simultaneously send copies of any delinquency notices to the appropriate housing counseling agency when it sends notices to mortgagors residing in the designated target areas. For your convenience, we have listed the target areas, names and addresses of participating counseling agencies, contact persons, and telephone numbers. _____________________________________________________________________ Target Area: Englewood/Marquette Park, II. (includes Ashburn and Auburn Gresham community areas) Ernesto Maldonado, Executive Director Spanish Coalition For Housing 3429 West North Avenue Chicago, Illinois 60647 Telephone number: (312) 342-7575 FAX number: (312) 342-8528 Target Area: South Suburban Chicago, II. Eva I. Booker, Project Manager Community and Economic Development Association of Cook County, Inc. 224 North Des Plaines Street Chicago, Illinois 60661-1195 Telephone number: (312) 207-5444 FAX number: (312) 207-6943 Target Area: South DeKaIb County (Suburban Atlanta), GA. Jimmy Bennett, Executive Director DeKalb/Fulton Housing Counseling Centers, Inc. 233 Mitchell Street Suite 100 Atlanta, Ga. 30303 Telephone Number: (404) 659-6744 FAX number: (404) 508-0967 Attached is a listing of designated zip codes and census tracts representing each of the three target areas for this demonstration. A copy of the legislation authorizing the demonstration is also attached. Sincerely yours, Nicolas P. Retsinas Assistant Secretary for Housing - Federal Housing Commissioner Attachments _____________________________________________________________________ CHICAGO, ILLINOIS * ZIP CODES ** ENGLEWOOD/MARQUETTE PARK ================================= TARGET AREA _________________________________ 60620 _________________________________ 60621 _________________________________ 60629 _________________________________ 60632 _________________________________ 60636 _________________________________ 60652 ================================= Housing Counseling Agency: Spanish Coalition for Housing * ZIP CODES ARE ONLY PROVIDED FOR THE EASE OF IDENTIFICATION AND ARE NOT TO EXTEND BEYOND THE BOUNDARIES OF THE CENSUS TRACTS. ** INCLUDES ASHBURN AND AUBURN GRESHAM COMMUNITY AREAS _____________________________________________________________________ __________________________________________________________________________ CENSUS TRACTS FOR ENGLEWOOD/MARQUETTE PARK TARGET AREA 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BEYOND THE BOUNDARIES OF THE CENSUS TRACTS. _____________________________________________________________________ __________________________________________________________________________ CENSUS TRACTS FOR SOUTH SURBAN CHICAGO TARGET AREA ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ _____________________________________________________________________ ATLANTA, GEORGIA * ZIP CODES ** SUBURBAN ATLANTA ================================= TARGET AREA _________________________________ 30316 _________________________________ 30032 _________________________________ 30034 _________________________________ 30038 _________________________________ 30049 _________________________________ 30317 ================================= Housing Counseling Agency: DeKalb/Fulton Housing Counseling Centers, Inc. * ZIP CODES ARE ONLY PROVIDED FOR THE EASE OF IDENTIFICATION AND ARE NOT TO EXTEND BEYOND THE BOUNDARIES OF THE CENSUS TRACTS. ** ALSO KNOWN AS SOUTH DEKALB COUNTY. _____________________________________________________________________ __________________________________________________________________________ CENSUS TRACTS FOR SOUTH DEKALB COUNTY SUBURBAN ATLANTA TARGET AREA ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ _____________________________________________________________________ Sec. 106 HOUSING COUNSELING 376 ___________________________________________________________________________ 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DOCUMENT OMITTED * * * * * * * * * ******************************************************************** ___________________________________________________________________________ 379 HOUSING COUNSELING Sec. 106 ___________________________________________________________________________ ******************************************************************** * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * ******************************************************************** __________________________________________________________________________ _____________________________________________________________________ Sec. 106 HOUSING COUNSELING 380 __________________________________________________________________________ ******************************************************************** * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * ******************************************************************** ___________________________________________________________________________ 381 HOUSING COUNSELING Sec. 106 ___________________________________________________________________________ ******************************************************************** * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * ******************************************************************** __________________________________________________________________________