4240.2 REV CHG

APPENDIX 4

Modification of FHA Note and Mortgage Forms for Section 245

Graduated Payment Mortgage Program - Instructions and Examples

1\. Mortgage Instrument

a\. In all States, under the document caption (Mortgage, Deed

of Trust, etc.) type in capital letters, \"WITH DEFERRED

INTEREST AND INCREASING MONTHLY INSTALLMENTS.\"

b\. In all States, type in capital letters, \"DEFERRAL OF INTEREST

MAY INCREASE THE PRINCIPAL BALANCE TO \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\"

The location of this sentence will depend on available space.

where space permits, it should follow the clause identifying

the indebtedness. (See Example 1.) Where space limitation

prohibits this location, it will be necessary to type the

sentence in the margin or the property description space

with appropriate identification by asterisks. (See Example 2.)

Note that the amount entered is the maximum principal balance,

not the amount by which the principal balance may be increased.

c\. In those States which provide for the amount of monthly

installments insert in such space in capital letters,

\"ACCORDING TO THE SCHEDULE ATTACHED TO SAID NOTE.\" The

security instrument need not state the amount of the various

installments but must give notice that the amount may be

found by reference to the note.

d\. In those States which recite the note verbatim, the modifications

to the note must be recited in the security instrument.

2\. Note

Modifications to the note are more detailed than modifications

to the security instrument. The location of the additional terms

depends on the available space, or the note may be reproduced,

if desired, to provide additional space.

a\. Under the document caption (Mortgage Note, Deed of Trust

Note, etc.), type in capital letters, \"WITH DEFERRED INTEREST

AND INCREASING MONTHLY INSTALLMENTS.\"

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4240.2 REV CHG

APPENDIX 4

b\. In the space which ordinarily specifies the amount of each

monthly installment, type in capital letters, \"ACCORDING TO

SCHEDULE A ATTACHED.\"

c\. In an appropriate space, type in capital letters, \"DEFERRED

INTEREST SHALL BE ADDED TO THE PRINCIPAL BALANCE MONTHLY AND

SHALL INCREASE THE PRINCIPAL BALANCE TO NOT MORE THAN \$\_\_\_\_.\"

(See Example 3.) Where space limitations make it appropriate,

the sentence may be entered in an attachment. (See Example

4.)

d\. The payment schedule may be added to the face of the note

if there is sufficient space or it may be provided by an

attachment. This schedule should be in the following form

depending on the plan selected:

(for Plans I, II, III) (for Plans IV, V)

SCHEDULE A SCHEDULE

\$\_\_\_\_\_\_\_\_\_during the 1st note year \$\_\_\_\_\_\_\_\_during
the 1st note year

\_\_\_\_\_\_\_\_\_during the 2nd note year \_\_\_\_\_\_\_\_during the
2nd note year

\_\_\_\_\_\_\_\_\_during the 3rd note year \_\_\_\_\_\_\_\_during the
3rd note year

\_\_\_\_\_\_\_\_\_during the 4th note year \_\_\_\_\_\_\_\_during the
4th note year

\_\_\_\_\_\_\_\_\_during the 5th note year \_\_\_\_\_\_\_\_during the
5th note year

\_\_\_\_\_\_\_\_\_during the 6th note year \_\_\_\_\_\_\_\_during the
6th note year

and thereafter \_\_\_\_\_\_\_\_during the 7th note year

\_\_\_\_\_\_\_\_during the 8th note year

\_\_\_\_\_\_\_\_during the 9th note year

\_\_\_\_\_\_\_\_during the 10th note year

\_\_\_\_\_\_\_\_during the 11th note year

and thereafter

3\. Increased Principal Balance

The maximum principal balance, as increased by deferred interest,

which will be entered on the note and security instrument is

computed by using the highest outstanding principal balance factor

shown in Appendix 3 of Handbook 4240.2. For the example shown in

paragraph 6d of Handbook 4240.2, the original outstanding balance

of \$46,750 will increase to \$48,497.27 by the end of the 48th payment

(\$46,750 / 1,000 = \$46.75; \$46.75 X 1037.3747 = \$48,497.27),
therefore

the increased principal balance shown on the note and security

instrument will be \$48,497.27.

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4240.2 REV CHG

APPENDIX 4

4\. Additional modifications

If modifications beyond those discussed in this letter are

required under State laws, such modifications shall be discussed

with the HUD Field Office.

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4240.2 REV CHG

APPENDIX 4

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4240.2 REV CHG

APPENDIX 4

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4240.2 REV CHG

APPENDIX 4

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4240.2 REV CHG

APPENDIX 4

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4240.2 REV CHG

APPENDIX 4

FHA Case No.

SCHEDULES \"A\" AND \"B\"

Schedules \"A\" and \"B\" as referred to in the Mortgage Note dated

executed by

secured by a Mortgage of even date herewith to

SCHEDULE A

\$\_\_\_\_\_\_\_\_ during the 1st note year

\_\_\_\_\_\_\_\_ during the 2nd note year

\_\_\_\_\_\_\_\_ during the 3rd note year

\_\_\_\_\_\_\_\_ during the 4th note year

\_\_\_\_\_\_\_\_ during the 5th note year

\_\_\_\_\_\_\_\_ during the 6th note year

\_\_\_\_\_\_\_\_ during the 7th note year

\_\_\_\_\_\_\_\_ during the 8th note year

\_\_\_\_\_\_\_\_ during the 9th note year

\_\_\_\_\_\_\_\_ during the 10th note year

\_\_\_\_\_\_\_\_ during the 11th note year and thereafter

SCHEDULE B

Deferred interest shall be added to the Principal Balance monthly and

shall increase the Principal Balance to not more than
\$\_\_\_\_\_\_\_\_.

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