U.S. Department of Housing and Urban Development

H O U S I N G

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Special Attention of: Notice H 92-70 (HUD)

Directors of Housing

Field Office Managers

Directors of Housing Management Issued: August 28, 1992

Regional Coordinators for Expires: August 31, 1993

Mortgagee Reviews (RCMR)
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Chiefs of Single Family Loan Cross References:

Management

Single Family Supervisory Loan

Specialists

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Subject: Monitoring Mortgagees During On-site Reviews in Compliance

with the Provisions of the Housing and Urban Development

Act of 1968 as amended - Single Family

1\. PURPOSE. This Notice provides guidance to Field Offices for

monitoring mortgagees during on-site reviews to determine

that the homeownership counseling notification requirements

are met. The homeownership counseling notification requires

mortgagees to:

a\. notify delinquent mortgagors (within 45 days of the

delinquency) of the availability of homeownership

counseling and

b\. provide a list of Housing Counseling Agencies or the HUD

toll-free nationwide telephone number (1-800-733-3238).

2\. BACKGROUND. Section 106 of the Housing and Urban Development

Act of 1968 as amended, requires the Department to report

annually the extent to which mortgagees are in compliance

with the homeownership counseling notification requirements.

3\. PROCEDURES. As part of the on-site mortgagee servicing

review, Field Offices:

a\. will determine if the mortgagee is in compliance with the

homeownership counseling notification requirements (see

Attachment A for procedures),

b\. will use Attachment B, (Homeownership Housing Counseling

Checklist) when monitoring mortgagee\'s on-site for

compliance with the homeownership counseling notification

requirements,

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HSIS : Distribution: W-3-1, W-1, W-2(H)(A)(OGC), W-3(H)(A)(OGC),
W-3(H)(A)

(OGC), W-4(H)(OGC), R-1, R-2, R-3, R-3-1(H)(RC),

R-3-2, R-3-3, R-6, R-6-1, R-6-2, R-7, R-7-1, R-7-2,

R-8, R-8-1

Previous Editions Are Obsolete HUD 21B(3-80)

GPO 871 902

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2

c\. will use information gathered during the on-site

mortgagee review concerning the homeownership counseling

notification requirements and fill out the information

on Attachment C,

d\. will submit the completed Attachment C to the Regional

Coordinator for Mortgagee Reviews (RCMR) bi-annually on

June 15 and December 15.

The RCMRs:

a\. will collect and tally Attachment C information submitted

by each of the RCMRs jurisdictional Field Offices,

b\. will submit to Headquarters Secretary-held and Housing

Counseling Branch: Attention Phillip Murray bi-annually

on June 30 and December 31 the tallied information

submitted from each of the jurisdictional Field Offices

using Attachment C.

If a lender was found in non-compliance prior to this Notice, it

should be immediately reported on Attachment C and transmitted to

the RCMR. The RCMR should send Attachment C submitted from the

Field Office\'s findings to the attention of Philip Murray in

Headquarters.

Very sincerely yours,

Arthur J. Hill

Assistant Secretary for Housing

\- Federal Housing Commissioner

Attachments

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ATTACHMENT A

HOMEOWNERSHIP COUNSELING PROCEDURES

1\. Mortgagees must notify a homeowner who fails to pay any

amount due under a home loan, within 45 days of the

delinquency, of the availability of homeownership

counseling. The notification must be made unless the

homeowner pays the amount overdue before the expiration

of the 45-day period.

2\. Mortgagees must also provide the homeowner with

notification of the availability of any homeownership

counseling it offers and either:

a\. availability of homeownership counseling provided by

HUD-approved housing counseling agencies that serve

the homeowner\'s residential area, or

b\. the HUD toll-free telephone number (1-800-733-3238)

through which the homeowner can obtain a list of the

counseling organizations.

EXCEPTIONS: This requirement does not apply to loans:

1\. guaranteed by the Department of Veterans Affairs and

Farmers Home Administration, or

2\. for which the amount overdue is paid before the

expiration of the 45-day period.

Mortgagees may provide the notification with any collection

letter as long as the information is provided within 45 days of

the delinquency. In addition to the 45-day notification, mortgagees

must provide the housing counseling agency list or the HUD

toll-free telephone number with the HUD Assignment Program

Letters No. 1 and 3.

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ATTACHMENT B

HOMEOWNERSHIP COUNSELING CHECKLIST

EXAMINATION OBJECTIVE

To determine whether the financial institution has established

procedures regarding homeownership counseling notification

requirements to ensure that it is in compliance

with the provisions of Section 106 of the Housing and Urban

Development Act of 1968 as amended.

EXAMINATION PROCEDURES

1\. Determine if the financial institution has a system in

place that provides the homeownership counseling

notification requirements to mortgagors within 45 days

of an initial loan default of the availability of

homeownership counseling it is offering.

2\. Determine if the financial institution is informing

borrowers of homeownership counseling offered by nearby

HUD-approved agencies or the HUD toll-free telephone

number (1-800-733-3238) through which the homeowner can

obtain a list of such agencies.

3\. Determine that the financial institution is in compliance

with the homeownership counseling notification

requirements and if not, is the financial institution

notifying those mortgagors identified.

EXAMINATION CHECKLIST

1\. Does the financial institution have a

system in place that provides the

homeownership counseling notification

requirements to mortgagors within

45 days of an initial loan default? YES NO

2\. Does the financial institution provide

borrowers with the names of nearby

HUD-approved homeownership counseling

agencies or the HUD toll-free telephone

number (1-800-733-3238) to obtain a

list of such agencies? YES NO

3\. Is there a pattern of non-compliance? YES NO

Number Loans Reviewed \_\_\_\_\_\_\_\_\_

Number Loans Non-compliance \_\_\_\_\_\_\_\_\_ \*

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ATTACHMENT B

(cont.)

\* Request lender explanation while

on-site: (describe or attach)

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Based on explanation is expansion of

review in this area warranted? YES NO

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ATTACHMENT C

ON-SITE MORTGAGEE SERVICING REVIEW REPORT

FOR HOMEOWNERSHIP COUNSELING

NOTIFICATION REQUIREMENTS

1\. TOTAL NUMBER OF MORTGAGEES REVIEWED \_\_\_\_\_\_\_\_\_\_\_

2\. MORTGAGEES IN NON-COMPLIANCE

A. No System in Place \_\_\_\_\_\_\_\_

OR

B. Does not provide borrowers

list of housing counseling

agencies or HUD toll-free

telephone number \_\_\_\_\_\_\_\_

TOTAL NUMBER OF MORTGAGEES IN

NON-COMPLIANCE \* \_\_\_\_\_\_\_\_

NOTE: REPORTING REQUIREMENTS (CUMULATIVE)

FOs DUE DATES: JUNE 15 and DEC. 15

ROs DUE DATES: JUNE 30 and DEC. 31

ONLY ROs SHOULD SUBMIT THE JUNE 30

and DEC. 31 REPORTS TO HEADQUARTERS

\* IF NO SYSTEM IS IN PLACE, DO NOT

INCLUDE THAT MORTGAGEE AGAIN IN

2B ABOVE FOR THE TOTAL NUMBER

OF MORTGAGEES IN NON-COMPLIANCE)