U.S. Department of Housing and Urban Development
                                        Washington, D.C. 20410-8000
 
                              June 5, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER                             TI-432
 
     TO:  ALL TITLE I LENDING INSTITUTIONS
 
        SUBJECT:        AUTOMATED CLEARING HOUSE (ACH) PROGRAM FOR
                        PAYING TITLE I INSURANCE CHARGES
 
           On March 14, 1995, the Department published a final rule in the
        Federal Register, amending § 201.31(b) of the Title I regulations
        relating to the payment of insurance charges.  This final rule permits
        the Secretary to require Title I lenders to pay loan insurance charges
        through the Automated Clearing House (ACH) program.  A copy of the
        final rule, describing the benefits of the ACH program, is enclosed
        for your information.
 
                The ACH program is designed to electronically process the
        collection of Title I insurance charges and accounting data from the
        lender, rather than using the previous method of sending checks and
        HUD-646 forms by mail.  The program has been operating on a voluntary
        basis since November 1993.
 
                The Department intends to implement the ACH payment program as
        the sole method for the payment of Title I insurance charges as soon
        as possible.  However, lenders with Title I portfolios of fewer than
        200 loans may request extensions of up to 12 months before they begin
        making their payments electronically.
 
                The Department has developed two methods for transmitting
        insurance charges and accounting data through the ACH program.  Below
        is a description of each method and the equipment required.
 
     Terminal Input Method
 
           The terminal input method allows the lender to transmit insurance
        charge payments and accounting data by dialing up the system access
        line via a modem connected to a remote terminal or personal computer
        in the lender's office.  With this method, the lender is guided
        step-by-step through the data entry process.  The following equipment
        is needed to utilize the terminal input method:
 
                o    Terminal and/or IBM-compatible personal computer
                o    Hayes compatible modem
                o    Communication software package
 
                                                        2
 
CPU-to-CPU Transmission Method
 
        The second method uses CPU-to-CPU transmission.  This method requires
the lender to write a program that will download data from their database
using a specified format, and transmit the data using an IBM Standard
2780/3780 bisynchronous protocol.  HUD's collection agent currently
supports three dial-up transmission line speeds: 2400, 4800, and 9600 (X)
BAUD.  The following modems are used by the collection agent:
 
        o    2400 BAUD - Bell 201C
        o    4800 BAUD - Bell 208B
        o    9600 BAUD - V.32
 
Getting Started on the ACH Program
 
        All lenders will be contacted by HUD's support team, either by
telephone or letter, and the Title I Insurance Charge Payments System
User's Manual will be mailed out.  The User's Manual provides detailed
instructions for implementing the ACH program for insurance charge
payments.  When you receive the User's Manual, you must complete the
application form (HUD-56150) in Attachment B of the Manual and return the
form to HUD within ten business days.  The support team will then contact
you and provide technical assistance for the initial set-up.
 
        If you want to begin immediate participation in the ACH program, call
HUD's ACH voice mailbox at 202-755-7540, ext. 106.  HUD's support team will
contact you for initial set-up in the ACH program before other Title I
lenders are contacted.
 
For Further Information
 
        If you have any questions about this letter, please write to the
Department of Housing and Urban Development, Title I Insurance Section,
P.O. Box 44426, L'Enfant Plaza Station, Washington, D.C. 20026-4426, or
call the ACH voice mailbox at 202-755-7540, ext. 106.
 
                                   Sincerely yours,
 
                                    Nicolas P. Retsinas
                                    Assistant Secretary for
                                    Housing-Federal Housing Commissioner
 
Enclosure