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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

AMENDMENT TO THE NOVEMBER 1, 1986 PROVISIONAL WORKOUT ARRANGEMENT

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This will amend paragraph number 5, Second Mortgage, of the November 1 1986 Provisional Workout Arrangement.

5. Second Mortgage. Upon expiration of this workout, effective November 1, 1989, the deferred princinal (anoroximately $75,000) will be placed in a second mortgage to be held by the Department. Amortization of this second mortgage will commence November 1, 1989 and continue for eight (8) years at 8 nercent.

This amendment will be executed by the purchaser and submitted to our Detroit Office as part of the transfer of physical assets.

It is to be understood that all other provisions of the November 1, 1986 Provisional Workout Arrangement remain in effect.

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FROM :

SUBJECT:

IN REPLY REFER TO:

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John G. Terranella, Director, Housing Management Division, 5.4HM

Transfer of Physical Assets

Project #048-44001-SHM

Amy Jo Manor

Mt. Morris, Michigan

This office has received a copy of an unsigned policy letter from your office to the purchaser dated April 13, 1989 regarding the proposed transfer of physical assets (TPA) for the subject project. We are requesting verification of its authenticity and instructions on how to proceed.

Your letter refers to repairs in the amount of $320,000, however, our latest physical inspection report dated December 13, 1988 reflects $410,915. Please provide your basis for this repair amount. The letter cites an amount to be escrowed to perform the repairs that is substantially less than required to complete either amount of work. Is there a particular reason for this determination?

We are very concerned over the reduction of the Flexible Subsidy loan amount. Please provide this office with guidance on HUD's authority not to receive the full proceeds with the final approval of the TPA. It has been our under standing the statutory requirements prohibit this practice.

Finally, we are concerned over the administrative process being used for this transfer insofar as Headquarters is issuing instructions directly to the purchaser without going through the Field Office or the current owner. It would appear to bypass those most knowledgeable of conditions at the property. Will this establish a standardized operating procedure for future submissions by purchasers?

Please respond as soon as possible because we have received the TPA package from the purchaser. Contact Beverly Downing at FTS 226-4904 if you require further information.

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