U.S. Department of Housing and Urban Development
                         Washington, D.C.  20410-8000
                              April 1, 1997

OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER               TI-446

TO:  ALL APPROVED TITLE I LENDERS

SUBJECT:  Special Title I Assistance to Victims in Presidentially
          Declared Major Disaster Areas - Illinois

     The Department is interested in Title I lenders providing
special assistance to victims in Presidentially declared major
disaster areas.  The following areas have recently been declared
major disaster areas by the President:

     Illinois:  The counties of Alexander, Gallatin, Hardin,
                Massac and Pope counties, effective March 21, 1997.

     Existing Title I Loans:  Lenders with existing loans in the
above areas are encouraged to use all available forbearance
measures to assist Title I borrowers who have experienced a loss
of income or other financial difficulties resulting from the
major disaster.  In recognition that it may take additional time
for a borrower to bring a defaulted loan current, the Department
will extend the 9 month claim filing period to 12 months.  This
waiver of Section 201.54(b) of the Title I regulations is
available when the lender documents the loan file to show that
the borrower(s) experienced a loss of income or other financial
difficulties directly attributable to the disaster, and that
additional time to provide forbearance was required.

     New Title I Loans:  In the case of Title I lenders accepting
new Title i loan applications in these disaster areas, Section
201.20(b)(3) of the Title I regulations was recently modified to
add a new provision that allows lenders to approve the use of
loan proceeds to pay for emergency repairs made before final loan
approval when the property is located in a Presidentially
declared disaster area.  The lender needs to document the loan
file that the repair work needed to be done before the loan was
approved.  The most common reasons are to protect a structure
from additional damage from the elements or to stabilize the
structure until the replacement building materials can be
installed.

     These provisions apply for one year from the effective date
of each Presidential declaration.  Any areas added to these
declarations will also be eligible for this disaster relief under
the same conditions.  The Department appreciates any assistance
Title I lenders can provide to victims in these disaster areas.
                                                       Page 2

     If you have any questions about this letter, please write to
Maurice D. Gulledge, Chief, Home Improvement Insurance Branch,
451 Seventh Street, S.W., Room 9272, Washington, D.C. 20410, or
call 202-708-6396.

                              Sincerely,

                              Nicolas P. Retsinas
                              Assistant Secretary for Housing-
                                Federal Housing Commissioner