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U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

June 27, 1988
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 88-24
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Shared Equity Program
Purchase Transactions
 
        The Shared Equity Program has generated an unfortunate amount
of abuse.  Therefore, effective with sales contracts signed on or
after September 1, 1988, the Shared Equity Program, when it involves
unrelated co-mortgagors, will no longer be available.
 
Refinance Transactions
 
        Effective immediately, the maximum mortgage amount for Shared
Equity refinances is limited to 75 percent of appraised value plus
closing costs or acquisition, whichever is less (investor mortgage
limit).  No cash out is allowed in these transactions.
 
Streamline Refinance Transactions
 
        On the other hand, streamline Shared Equity refinances
without an appraisal will continue to be handled as other streamline
mortgages since such tranctions, by definition, serve the interests
of the Secretary.
 
NOTE:   Occupant mortgagors refinancing for the purpose of buying out
        an investor mortgagor will not be subject to shared equity
        restrictions.
 
                        Sincerely yours,
                        Thomas T. Demery
                        Assistant Secretary
 
NOTE:   If you have any questions please contact the local HUD Field
        Office.