U.S. Department of Housing and Urban Development
                                        Washington, D.C. 20410-8000
 
                              September 30, 1992
 
OFFICE OF THE ASSISTANT SECRETARY                                TI-419
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
        MEMORANDUM FOR:  ALL TITLE I LENDING INSTITUTIONS
                                  Attn:  Installment Loan Department
 
        SUBJECT:        Increased Maximum Loan Amounts and Loan Terms for
                        Title I Property Improvement Loans
 
          In today's FEDERAL REGISTER, the Department is publishing a final
        rule providing for increased maximum loan amounts and loan terms for
        single family and multifamily property improvement loans insured under
        Title I of the National Housing Act.  A copy of the final rule is
        enclosed.  These increased loan amounts and loan terms apply to any
        new loan and to any refinancing of an existing loan for which a credit
        application is received by the lender on or after September 30, 1992.
 
     Increased Maximum Loan Amounts
 
           The final rule amends  §201.10(a)(1) of the Title I regulations
        to make the following changes:
 
                o  The maximum loan amount for a single family property
                   improvement loan is increased from $17,500 to $25,000,
                   except that the loan limit on a manufactured home that
                   qualifies as real property remains at $17,500.
 
                o  The multifamily loan limits are increased from $43,750 or an
                   average of $8,750 per dwelling unit, whichever is less, to
                   $60,000 or an average of $12,000 per dwelling unit,
                   whichever is less.
 
                o  The maximum loan amount for a nonresidential property
                   improvement loan is increased to $25,000.
 
                In a related change, § 201.10(a)(2) is amended to increase the
        threshold amount at which a lender must obtain the prior approval of
        HUD before making a property improvement loan.  Previously, a lender
        was required to obtain prior approval from the Mortgage Credit Branch
        of the local HUD Office on any loan which would result in the borrower
        having a total unpaid principal balance exceeding $17,500 (or $20,000
        where the financing of a solar energy system was involved).  The new
        threshold for prior approval is $25,000.
 
                                                        2
 
        The definition of single family property improvement loan in
§ 201.2(hh) is also amended to clarify the requirements for a manufactured
home to qualify as real property.  It has been a longstanding HUD policy
that a manufactured home qualifies as real property if the home is placed
on a permanent foundation, the home and lot are classified as realty by
the State or locality in which the property is located, and any loans on
the property are secured by mortgages or deeds of trust covering the home
and lot.
 
Increased Loan Terms
 
        Section 201.11(a) of the Title I regulations is amended to increase
the maximum term of a single family or multifamily property improvement
loan from 15 years and 32 days to 20 years and 32 days, except that the
maximum loan term on a manufactured home that qualifies as real property
remains at 15 years and 32 days.
 
        For refinanced loans, § 201.11(c)(1) is amended to provide that the
total allowable time period from the date of the original loan to the final
maturity on the refinanced loan shall not exceed the maximum term permitted
under § 201.11(a) plus 9 years and 11 months.  For most single family and
multifamily property improvement loans, the total time period will be 30
years.
 
        The Department is not making any change in the maximum loan amount or
loan term of a manufactured home improvement loan, which is a loan for the
alteration, repair or improvement of an existing manufactured home that is
classified as personalty by the State or locality in which the home is
located.  The maximum loan limit for this type of loan remains at $5,000,
and the maximum term is limited to 12 years and 32 days.
 
For Further Information
 
        If you have any questions about this letter, please write to Robert J.
Coyle, Director, Title I Insurance Division, Room 9158, 451 Seventh Street,
S.W., Washington, D.C. 20410, or call the Department toll-free at
1-800-733-HOME (1-800-733-4663).
 
                                   Sincerely yours,
 
                                         Arthur J. Hill
                                         Assistant Secretary for
                                         Housing-Federal Housing Commissioner
 
Enclosure