U. S. Department of Housing and Urban Development
                              Washington, D.C. 20410-8000
 
                                   August 4, 1997
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
                                                       TI-456
 
TO:  ALL APPROVED TITLE I LENDERS
 
SUBJECT:  Special Title I Assistance to Victims in Presidentially
          Declared Major Disaster Areas - Alabama, Vermont,
          Washington State and Michigan; Additional counties
          added to the Idaho and Texas
 
     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 storms and flooding in Alabama, Vermont,
Washington State, Michigan, Idaho and Texas.
 
     The President's declaration of a major disaster area for
Alabama, resulting from storm damage associated with Hurricane
Danny, was signed on July 25, 1997 and includes Baldwin, Choctaw
and Mobile Counties.
 
     The President's declaration of a major disaster area for
Vermont was signed on July 25, 1997 and includes Caledonia,
Franklin, Lamoille, Orleans and Washington Counties.
 
     The President's declaration of a major disaster area for
Washington State was signed on July 21, 1997 and includes Pend
Oreille County.
 
     The President's declaration of a major disaster area for
Michigan was signed on July 11, 1997 and includes Macomb, Oakland
and Wayne Counties.
 
     The President's declaration of a major disaster area for
Idaho was signed on June 13, 1997 and at that time only included
assistance for the repair of public facilities.  On July 22,
1997, Bingham and Jefferson Counties were added to the
President's declaration and deemed eligible for individual
assistance.
 
     The President's declaration of a major disaster area for
Texas was signed on July 7, 1997.  The affected counties were
listed in Title I Letter   dated July 16, 1997.  On July 14,
1997, Kerr, Mason and Travis Counties were added to the
President's declaration.  The following are the special
provisions of the Title I Property Improvement Loan program
 
                                                            2
 
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.  Section 201.54 of the Title I regulations was
modified in 1996 to provide that the Secretary may extend the
claim filing period if the borrower has experienced a loss of
income or other financial difficulties directly attributable to a
major disaster declared by the President, and additional time is
needed to provide forbearance on a property improvement loan.
Accordingly, the claim filing period for such cases attributable
to this disaster is extended to 12 months.
 
     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 modified in 1996 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 must document the 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