HUD’s Office of Multifamily Housing recently issued a memo providing guidance for processing requests by mortgagees to reduce the interest rate on an insure mortgage loans and to clarify HUD’s processing procedures to reduce the interest rate and re-amortize the loan. The memo does not apply to requests to waive prepayment penalties and the maturity dates and other mortgage loan terms should not be affected either. HUD notes in the Notice that mortgagees are responsible for submitting an interest rate reduction request package to the local Hub Director and there are items that must be included in this package, specific to both current and defaulted loans. The HUD memo also includes an interest rate reduction checklist for loan servicers or Hub Directors to follow when approving such packages. The HUD memo is effective immediately.

Click here to read the HUD memo.