U.S. Department of Housing and Urban Development
                         Washington, D.C 20410-8000
 
                              March 12, 1991
 
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER                             TI-408
 
        MEMORANDUM FOR:  ALL TITLE I LENDING INSTITUTIONS
                                  Attn:  Installment Loan Department
 
        SUBJECT:        Required Statement to be Included in Notices of
                        Default and Acceleration
 
                For many years, the Department has provided Title I lenders
        with pre-claim collection assistance in the form of a letter sent
        to delinquent borrowers.  The letter reminded the borrower of
        HUD's involvement in the loan transaction and explained the
        possible consequences of not repaying the loan as agreed.
        Because of limited staff resources, we cannot continue offering
        this service, and we will not accept any requests for pre-claim
        assistance letters received after March 29, 1991.
 
                To accomplish the same objective as the pre-claim assistance
        letter, while saving money for both lenders and HUD, we have
        decided to require the following procedure.  Beginning not later
        than April 1, 1991, any notice of default and acceleration sent
        to a delinquent borrower in accordance with 24 CFR 201.50(b)
        shall contain the following statement:
 
        THIS LOAN IS INSURED AGAINST NONPAYMENT BY THE FEDERAL
        GOVERNMENT.  IF YOU DO NOT REPAY THE LOAN AS AGREED, WE
        MAY ASSIGN THE DEBT TO THE U.S. DEPARTMENT OF HOUSING
        AND URBAN DEVELOPMENT (HUD) FOR COLLECTION.  FAILURE TO
        PAY THE DEBT IN ACCORDANCE WITH THE TERMS SET BY HUD
        MAY RESULT IN ANY OR ALL OF THE FOLLOWING ACTIONS:
 
                o       SEIZING YOUR FEDERAL INCOME TAX REFUNDS.
 
                o       GARNISHMENT OF YOUR WAGES IF YOU ARE A FEDERAL EMPLOYEE.
 
                o       REFERRING THE DEBT TO THE U.S. DEPARTMENT OF JUSTICE
                        FOR COLLECTION.
 
                Lenders may use their own discretion in deciding where this
        statement should be placed within the notice.  However, it must
        be capitalized throughout, and must appear in a type size no
        smaller than that used for the other information that the notice
        is required to contain.
 
                                                        2
 
                If you have any questions about this letter, please write to
        Robert J. Coyle, Director, Title I Insurance Division, Room 9158,
        451 Seventh Street, S.W., Washington, D.C. 20410, or call the
        Division toll-free at 1-800-733-HOME (1-800-733-4663).
 
                              Sincerely yours,
 
                                 Arthur J. Hill
                                 Acting Assistant Secretary for
                                 Housing-Federal Housing Commissioner