www.hudclips.org 


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

November 4, 1992
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter No. 92-41
   TO:  All HUD-Approved Multifamily Mortgagees
   SUBJECT:  Hazard Insurance Proceeds
 
        This Mortgagee Letter is to provide information regarding
   the disposition of insurance loss drafts resulting from partial
   or whole settlements of damage claims from natural disasters,
   such as hurricanes and fires.  The disposition of insurance
   drafts tendered to mortgagees in the event of partial or whole
   settlements of damage claims resulting from such hazards is
   governed by the regulations at 24 CFR 207.260(e).  Upon receipt
   of an insurance draft, the mortgagee is required to obtain
   written approval of the Department prior to the disposition of
   the funds.
 
        Due to the shortage of affordable housing for low and
   moderate income residents created as a result of damage to and/or
   partial destruction of HUD assisted projects caused by
   hurricanes, fires and other natural disasters, the Department
   will, as a matter of policy, endorse only a plan to repair,
   replace or rebuild the HUD project.  Field Offices have been
   given the authority to approve a plan to repair, replace or
   rebuild the affected project.
 
        Any requests to prepay the mortgage with insurance claim
   proceeds must be submitted to the Field Office and must provide a
   justification which addresses the availability of alternate
   affordable housing in the project's market area.
 
                                    Very sincerely yours,
 
                                    Arthur J. Hill
                                    Assistant Secretary for Housing
                                    Federal Housing Commissioner
 
              *U.S. Government Printing Office: 1992 - 342-362/600335