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

                               April 8, 1997

OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER                              TI-448

TO: ALL TITLE I LENDING INSTITUTIONS

SUBJECT: DECEPTIVE ADVERTISING BY DEALER/CONTRACTORS AND LENDERS

     In Title I Letter TI-434 , issued on September 29, 1995, the
Department informed all Title I lenders that deceptive and
misleading advertising by lenders and dealers/contractors would
not be tolerated and that sanctions would be taken unless the
situation was corrected immediately.  Subsequent to the issuance
of TI-434 , HUD has taken action against a number of Title I
lending institutions by means of both fines and sanctions.

     Unfortunately, deceptive advertising, primarily on the part
of dealers and contractors, has continued.  These actions will
not be tolerated by the Department.  False and misleading
advertising is an affront to ethical business practices and harms
both the consumer and the lender.

     Most of the advertisements brought to our attention do not
even identify the names of the dealers/contractors -- they merely
offer telephone numbers to call for further information.
Additionally, dealers/contractors should advertise their skills
and services and not imply or infer that prospective borrowers
will receive some special assistance from HUD.  Such language is
misleading and must be stopped.

     TI-434  reminded lenders that the performance of a
dealer/contractor is an important lender responsibility, and that
all lenders were to review and approve each dealer's/contractor's
advertising.  Based on recent advertising, the supervision of
dealers and contractors appears to be woefully deficient.

     Lenders that continue to do business with entities using
deceptive advertising are subject to sanctions and civil money
penalties for lack of compliance and dealers/contractors may be
barred from participation in federal programs.

     Lenders should provide copies of TI-434  and this Title I
Letter to each approved dealer/contractor and make it a regular
part of your dealer/contractor approval and renewal process.
                              -2-

     If you have any questions about this letter, please call the
Quality Assurance Division, at (202)-708-2830.

                              Sincerely,

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