U.S. Department of Housing and Urban Development
                         Washington, D.C.  20410-8000
                              April 29, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
                                                       TI-450
 
TO:  ALL APPROVED TITLE I LENDERS
 
SUBJECT:  Special Title I Assistance to Victims in Presidentially
          Declared Major Disaster Areas - Arkansas
 
     This Title I Letter is to advise you of recent Presidential
declarations of major disaster areas which allow you to provide
special assistance to current Title I borrowers in these areas as well
as potential borrowers.  These declarations were issued to assist
victims of flooding in Arkansas.
 
     The President's declaration of a major disaster area for Arkansas
was signed on April 14, 1997 and includes Ouachita County.
 
     The following are the special provisions of the Title I Property
Improvement Loan program for borrowers in these localities:
 
     Existing Title I Loans:  Lenders with existing loans in the above
areas are encouraged to use all available forbearance measures to
assist Title I borrowers who have experienced a loss of income or
other financial difficulties resulting from the major disaster.  In
recognition that it may take additional time for a borrower to bring a
defaulted loan current, the Department will extend the 9 month claim
filing period to 12 months.  This waiver of Section 201.54(b) of the
Title I regulations is available when the lender documents the loan
file to show that the borrower(s) experienced a loss of income or
other financial difficulties directly attributable to the disaster,
and that additional time to provide forbearance was required.
 
     New Title I Loans:  In the case of Title I lenders accepting new
Title I loan applications in these disaster areas, Section
201.20(b)(3) of the Title I regulations was recently modified to add a
new provision that allows lenders to approve the use of loan proveeds
to pay for emergency repairs made before final loan approval when the
property is located in a Presidentially declared disaster area.  The
lender needs to document the loan file that the repair work needed to
be eone before the loan was approved.  The most common reasons are to
protect a structure from additional damage from the elements or to
stabilize the structure until the replacement building materials can
be installed.
                                                            2
 
     These provisions apply for one year from the effective date of
each Presidential declaration.  Any areas added to these declarations
will also be eligible for this disaster relief under the same
conditions.  The Department appreciates any assistance Title I lenders
can provide to victims in these disaster areas.
 
     If you have any questions about this letter, please write to
Maurice D. Gulledge, Chief, Home Improvement Insurance Branch, 451
Seventh Street, S.W., Room 9272, Washington, D.C. 20410, or contact
the branch at 202-708-6396 or eMail to homeimpr@hud.gov.
 
                                   Sincerely,
 
                                   Nicolas P. Retsinas
                                   Assistant Secretary for Housing-
                                     Federal Housing Commissioner