www.hudclips.org 


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

January 4, 1996
MORTGAGEE LETTER 96-1
TO:  ALL APPROVED MORTGAGEES
 
ATTENTION:  SERVICING MANAGERS (SINGLE FAMILY)
 
SUBJECT:  Mortgagors Affected by the Federal Budget Impasse
 
     The Department is encouraging all approved mortgagees
servicing insured mortgages to provide relief to mortgagors who
have been affected by the budget impasse.  Many individuals will
experience substantial economic hardships due to the absence of
an approved federal budget or a continuing resolution.  In this
regard, the Department strongly encourages the following
 
servicing actions to be used:
     - Special written forbearance agreement which can result in
       reduced payments,
 
     - Waiving all late charges beginning with the January 1996
       installment,
 
     - Suspension of reporting delinquencies to credit bureaus.
 
     Mortgagees should follow outstanding instructions with
regard to the processing of assignment requests.  Mortgagors with
FHA insured mortgages must call or write the local HUD office
within 15 days upon receipt of the required "Second Notice to
Mortgagor" (ref. HUD Handbook 4530.2, Mortgage Assignment and
Processing Secretary Held Servicing).  HUD's reply to these
requests cannot be prepared and sent to mortgagors until after
the Department reopens.  Accordingly, foreclosure should not be
pursued in such situations until HUD becomes operational, and the
mortgagor receives a HUD determination.
 
     Ginnie Mae approved issuers should review Ginnie Mae All
Participants Letters 96-1, dated January 2, 1996.
 
     Your cooperation, understanding and patience regarding this
matter are certainly appreciated.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner
 
.