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Subject: Homeownership Counseling
Date: June 17, 2002
To: Chief Executive Officers and Compliance Officers of National Banks and Federal Branches, Department and Division Heads, and Examining Personnel
Description: Notice of Statutory Requirement
As a result of amendments to the National Housing Act that became effective November 26, 2001, all creditors must provide notice of the availability of homeownership counseling to certain first-time mortgage loan applicants and to certain homeowners who are delinquent on their home loans. See 12 USC 1701x(c). The prior counseling requirement had expired on September 30, 2000.
For purposes of this provision, a creditor includes a person or entity that services a home loan on its own behalf or on behalf of another person or entity. Home loan means a loan secured by a mortgage or lien on "residential property." Residential property means a single family residence including a condominium, an interest in a cooperative housing project, or a manufactured home and the lot on which such home is situated. See 12 USC 1701x(c)(6)(Definitions).
Under the statute, a national bank acting as a creditor, as defined, must provide notice of homeownership counseling to:
The required notice must, at a minimum, provide the homeowner or mortgage applicant with information on the availability of any homeownership counseling offered by the creditor and either (1) the list of HUD-approved counseling agencies, available at HUD's Web site, (http://www.hudhcc.org/agencies/all.txt) or (2) the HUD toll-free telephone number (1-800-569-4287) through which the homeowner can obtain a list of HUD-approved nonprofit organizations that serve the homeowner's residential area. In addition, for eligible first-time mortgage loan applicants, the notice must state that completion of a counseling program is required for FHA-insured loans.
Questions regarding these requirements may be directed to the appropriate district office, the Compliance Department at (202) 874-4428, or the Community and Consumer Law Division at (202) 874-5750.
David G. Hammaker