OCC 2002-27
OCC Bulletin
Subject:     Homeownership Counseling
Description: Notice of Statutory Requirement
Date:        June 17, 2002


TO:  Chief Executive Officers and Compliance Officers of 
National Banks and Federal Branches, Department and 
Division Heads, and Examining Personnel

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:  

· Any homeowner who fails to pay, when due, any amount on 
  a loan secured by a principal residence, who is, or is 
  expected to be unable to make payments, to correct a 
  delinquency, or to resume full home-loan payments, 
  because of involuntary loss of income or other factors 
  specified in the statute.  Notice is not required if 
  the home loan is assisted by the Farmers Home 
  Administration.  The notice must be made within 45 days 
  from the date the payment was due, unless the homeowner 
  pays the amount before the expiration of the 45-day 
  period; and 

· Any mortgage loan applicant who is a first-time 
  homebuyer meeting eligibility for assistance from the 
  National Homeownership Trust, if the loan will be FHA-
  insured and the mortgage involves a principal obligation 
  greater than 97 percent of the property's appraised 
  value. See 42 USC 12852(b)(1).

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
Deputy Comptroller for Compliance