U.S. Department of Housing and Urban Development
                       Washington, D.C.  20410-8000
                               May 16, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
                                                                     TI-451
 
TO:  ALL APPROVED TITLE I LENDERS
 
SUBJECT:  Special Title I Assistance to Victims in Presidentially Declared
          Major Disaster Areas - Additional Counties added to the Previous
          Disaster Declarations for Minnesota
 
     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 to assist victims of flooding, severe winter storms, snow melt,
high winds, rain and ice in Minnesota.
 
     The President's declaration of a major disaster area for Minnesota was
signed on April 8, 1997.  On April 15, 1997, Aitkin, Anoka, Becker, Blue
Earth, Carver, Dakota, Goodhue, Grant, Hennepin, Houston, Kandiyohi, Lake
of the Woods, Le Sueur, Lincoln, Mahnomen, Morrison, Nicollet, Ramsey,
Redwood, Renville, Scott, Sibley, Stevens, Wabasha and Winona counties were
added to the declaration.  On April 16, 1997, St. Louis county was added to
the declaration.  On April 18, 1997, Cass, Clearwater, McLeod, Otter Tail,
Todd and Wadena counties were added to the declaration.  Finally, on April
23, 1997 Beltrami, Douglas and Pope counties were added to the declaration.
 
     The following are the special provisions of the Title I Property
Management 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 201.209b)(3) of the
Title I regulations was recently modified to add a new provision that
allows lenders to approve the use of loan proceeds 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
                                                            2
 
loan file that the repair work needed to be done 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.
 
     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