U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
                             WASHINGTON, D.C. 20410-8000
                                 July 22, 1986

OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
                                                                TI- 376
   MEMORANDUM FOR:  ALL TITLE I LENDING INSTITUTIONS
                    ATTN:  Installment Loan Department
   SUBJECT:  Subordination of Security
 
        This is in reference to Section 201.24(d) of the regulations,
   which authorizes the Secretary to approve a subordination of
   security.  Written approval of the Secretary to subordinate a
   Title I property improvement loan will not be required when a
   borrower is simply refinancing the first mortgage to take
   advantage of a lower interest rate or to extend the term of the
   mortgage, provided that the amount of the new mortgage does not
   exceed the outstanding balance of the prior mortgage, plus
   reasonable financing and closing costs.
 
        In the case of a subordination of security for any other
   reason, prior written approval of the Secretary will be required
   to assure that the security value of the Title I loan will not be
   impaired or reduced.
 
        If you have any questions concerning this matter, please call
   Robert J. Coyle, Acting Director, Title I Insurance Division,
   Washington, D.C., at (202) 755-6880.
 
                                Very sincerely yours,
 
                                Silvio J. DeBartolomeis
                                General Deputy Assistant Secretary