www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

June 5, 1992
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER 92-19
    TO:  ALL APPROVED MORTGAGEES
    ATTENTION:  SINGLE FAMILY SERVICING MANAGERS
    SUBJECT:  Prepayment Disclosure Statements - Correction to the
              Federal Register Notice, Correction dated April 13,
              1992
 
         On April 13 and 29, 1992, the Federal Register published
    notice corrections for the format for Prepayment Disclosure
    Statements to be provided to mortgagors regarding the accrual of
    any interest on an FHA-insured mortgage after the date of
    prepayment.
 
         Because of the misinterpretations of the Prepayment
    Disclosure Statements, the time has been extended to December 31,
    1992 for mortgagees to provide the first Annual Disclosure
    Statement to mortgagors.  Of course mortgagees should have been
    providing mortgagors the "Notice to Mortgagor at Loan Closing"
    for all closings since August 21, 1991.
 
         For your convenience, attached are the formats for the
    "Notice to Mortgagor at Loan Closing" and the "Annual Disclosure
    Notice to Mortgagor" Disclosure Statements in their entirety.
 
         If you have questions regarding the statements, you may
    contact the local HUD Office Single Family Loan Management
    Branch.
 
                             Very sincerely yours,
 
                             Arthur J. Hill
                             Assistant Secretary for
                               Housing-Federal Housing Commissioner
 
    Attachments
 
_____________________________________________________________________
 
                                                     Attachment 1
 
                      DISCLOSURE STATEMENT
               Notice to Mortgagor at Loan Closing
                      Regarding Prepayment
 
Mortgagor: _________________________    Date: ___________________
Address: ___________________________    Loan#: __________________
         ___________________________    FHA#: ___________________
 
     This notice is to advise you of the requirements that must
be followed to accomplish a prepayment of your mortgage, and to
prevent accrual of any interest after the date of prepayment.
 
     You may prepay any or all of the outstanding indebtedness
due under your mortgage at any time, without penalty.  However,
to avoid the accrual of interest on any prepayment after the date
of the prepayment, the prepayment must be received on the
installment due date (the first day of the month).
 
      Instructions:  Lender may use either of these options in
     its notice.
 
     (1)  Otherwise, your payment will be refused until the next
          installment due date and interest will be charged to
          that date.
 
     (2)  Otherwise, you may be required to pay interest on the
          amount prepaid through the end of the month.
 
                                   ___________________________
                                   Mortgagee
 
_____________________________________________________________________
                                                        Attachment 2
 
                      DISCLOSURE STATEMENT
             Annual Disclosure Notice to Mortgagor
 
Mortgagor: ________________________     Date: ___________________
Address: __________________________     Loan#: __________________
         __________________________     FHA#: ___________________
 
     This notice is to advise you of requirements that must be
followed to accomplish a prepayment of your mortgage, and to
advise you of requirements you must fulfill upon prepayment to
prevent accrual of any interest after the date of prepayment.
 
     The amount listed below is the amount outstanding on the
loan for prepayment of the indebtedness due under your mortgage.
This amount is good through ___(date)___.  (The amount provided
is subject to further accounting adjustments.  Also, any mortgage
payments received or advances made by us before the stated
expiration date will change the prepayment amount.)
 
$__________(amount)
 
      For A Mortgage Insured Before August 2, 1985, Insert:
 
     You may prepay your mortgage at any time without penalty.
However, you are required to provide a written 30-day advance
notice of prepayment.  In order to avoid the accrual of interest
on any prepayment after the date of prepayment, the prepayment
must be received on the installment due date (the first day of
the month).
 
   For A Mortgage Insured On or After August 2, 1985, Insert:
 
     You may prepay your mortgage at any time without penalty.
However, in order to avoid the accrual of interest on any
prepayment after the date of prepayment, the prepayment must be
received on the installment due date (the first day of the
month).
 
      Instructions:  Lender may use either of these options in
     its notice.
 
     (1)  Otherwise, your prepayment will be refused until the
          next installment due date and interest will be charged
          to that date.
 
     (2)  Otherwise, you may be required to pay interest on the
          amount prepaid through the end of the month.
 
     If you have any questions regarding this notice, please
contact _(name and/or department)_ at _(telephone number).
 
                                   ________________________
                                   Mortgagee
 
*U.S. Government Printing Office: 1992 - 312-218/60177