U. S. Department of Housing and Urban Development
                         Washington, D.C. 20410-8000
 
                                January 19, 1996
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER                    TI-436
 
TO:  ALL TITLE I LENDING INSTITUTIONS
 
SUBJECT:  WAIVER OF THE TITLE I REGULATIONS TO ASSIST VICTIMS OF HURRICANES
          MARILYN AND OPAL
 
     The Department is interested in making Title I property improvement
loans more readily available to assist the victims of Hurricane Marilyn and
Hurricane Opal. In addition, the Department wants to encourage lenders to use
all available forbearance measures to assist existing Title I borrowers who
have experienced a loss of income or other financial difficulties resulting
from these hurricanes.
 
     To make Title I assistance available more quickly for hurricane victims
and to ease their financial burden, the Department has agreed to waive the
following provisions of the Title I regulations.
 
Waiver of the Equity Requirement
 
     Section 201.20(a)(3) of the Title I regulations requires that, for any
property improvement loan in excess of $15,000, the borrower must have equity
in the property being improved at least equal to the loan amount. In Title I
Letter TI-428  dated July 22, 1994, this provision was partially waived so
that it no longer applied when the property to be improved was occupied by
the borrower. The Department recognizes that it may be difficult for owners
of properties that are not owner-occupied to qualify for loans over $ 15,000
due to the general loss in property values that occur following severe
hurricanes, as well as the problems in obtaining a valid appraisal of any
property that has sustained hurricane damage. Therefore, the Department has
agreed to waive the equity requirement in its entirety and permit hurricane
victims to obtain Title I property improvement loans, even if the property is
not owner-occupied.
 
Waiver to Expedite Repairs in Emergency Situations
 
     Section 201 20(b)(3) of the Title I regulations provides that the
proceeds of a property improvement loan may be used only for improvements
that are started after loan approval. The Department has agreed to waive this
provision to permit hurricane victims to make emergency repairs to their
properties before final loan approval. However, the lender will have to
document the loan file explaining why emergency action was needed to repair
damage resulting from the disaster.
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Waiver to Extend the Claim Filing Period
 
     Section 201 54(b)(1) of the Title I regulations provides that insurance
claims on property improvement loans must be submitted within nine months
after the date of default. The Department has agreed to waive this provision
and permit claims to be filed up to twelve months after the date of default.
However, to receive this waiver, the lender will have to document the loan
file to show that the borrowers had experienced a loss of income or other
financial difficulties directly attributable to the hurricane, and additional
time was needed to provide forbearance.
 
Conditions on the Waivers
 
     Waivers of §§ 201.20(a)(3), 201.20(b)(3), and 201.54(b)(1) of the Title
I regulations will be applicable only under the following conditions:
 
     o    Borrowers must be able to demonstrate to the satisfaction of the
          lender that they are victims of Hurricane Marilyn or Hurricane
          Opal.
 
     o    The damaged property must be located within the disaster area
          designated by the President. For Hurricane Marilyn, this includes
          the Commonwealth of Puerto Rico and the United States Virgin
          Islands. For Hurricane Opal, this includes the following counties:
 
          Alabama:  Autauga, Baldwin, Barbour, Bullock, Butler, Calhoun,
          Chambers, Cherokee, Chilton, Clarke, Clay, Cleburne, Coffee,
          Conecuh, Coosa, Covington, Crenshaw, Cullman, Dale, De Kalb,
          Elmore, Escambia, Etowah, Geneva, Henry, Houston, Jefferson, Lee,
          Lowndes, Macon, Mobile, Montgomery, Pike, Randolph, Russell, Saint
          Clair, Talladega, and Tallapoosa Counties.
 
          Florida:  Bay, Calhoun, Collier, Escambia, Franklin, Gulf, Holmes,
          Jackson, Lee, Okaloosa, Santa Rosa, Taylor, Wakulla, Walton, and
          Washington Counties.
 
          Georgia:  Banks, Barrow, Bartow, Carroll, Catoosa, Chattooga,
          Cherokee, Clay, Clayton, Cobb, Coweta, Dade, Dawson, DeKalb,
          Douglas, Fannin, Fayette, Floyd, Forsyth, Fulton, Gilmer, Gordon,
          Gwinnett, Habersham, Hall, Haralson, Harris, Heard, Lumpkin,
          Meriwether, Murray, Muscogee, Paulding, Pickens, Pike, Polk,
          Quitman, Rabun, Randolph, Rockdale, Spaulding, Stewart, Talbot,
          Towns, Troup, Union, Upson, Walker, White, and Whitfield Counties.
                                   3
 
          North Carolina: Ashe, Avery, Cherokee, Clay, Graham, Haywood,
          Jackson, Macon, Madison, Mitchell, Swain, Transylvania, Watauga,
          Wilkes, and Yancey Counties.
 
     o    These waivers shall apply only to loans for which the credit
          application is received on or before September 30, 1996, unless the
          waivers are extended prior to that date.
 
For Further Information
 
     If you have any questions about this letter, please write to Robert J.
Coyle, Director, Title I Insurance Division, 490 L'Enfant Plaza East, Suite
3214, Washington, DC 20024, or call the Department at 202-755-7400.
 
                                Sincerely,
 
                           Nicolas P. Retsinas
                           Assistant Secretary for Housing-
                             Federal Housing Commissioner