Notice to the Borrower

NOTICE TO THE BORROWER

WHAT TO DO IN CASE OF LATE PAYMENT OR NON-PAYMENT

BY YOUR LENDER

FHA Case No. ________________ Date of Mortgage __/__/__

Borrower Name(s) __________________________________________________________

Property Address __________________________________________________________

Mortgagee (Lender) Name ___________________________________________________

The U.S. Department of Housing and Urban Development (HUD) can help

you if your lender fails to make payments to you on time. However, HUD can

only help you if you follow these instructions.

1. INTRODUCTION

Your Home Equity Conversion Mortgage (HECM) was insured on __________[date]

under a special law, Section 255 of the National Housing Act, which makes

HUD responsible for making any payments you have not received because the

lender has defaulted. This document explains the steps HUD will take if

the lender fails to make its payments to you. The term "mortgage" in this

Notice includes the loan agreement between you, the lender, and HUD.

2.HUD OFFICE

Your local HUD Field Office is located at _________________________________

. Any letter addressed to that office should include

your FHA case number, which appears at the top of this notice. You should put

"Home Equity Conversion Mortgage" on the envelope to ensure prompt and

correct handling. Telephone calls should be made to the ________________

Branch at ______________[telephone number]. You should inform the person

answering the call that you are calling about your insured HECM. Please be

prepared to provide your FHA case number.

3.METHOD OF PAYMENT

You may choose to receive payments through the "direct deposit" method of

payment, where the lender automatically transfers money to your bank

account, or you may receive checks through the mail. You may change your

method of payment at any time during the loan.

4.PAYMENT OPTIONS

You can receive regular monthly payments, payments from a line of credit,

or a combination of these payment options. You may change between these

payment options at any time. Please follow the instructions in this Notice

which apply to the payment option that you have chosen.

5.REGULAR MONTHLY PAYMENTS

If you have chosen to receive regular monthly payments, the lender must

transfer the full payment to your bank account by the first day of each

month, or place your check in the mail by that day. If you do not receive

payment on time (allowing sufficient time for mail delivery of the check,

if applicable), your first contact should be with the lender's

representative assigned to handle your account. HUD requires your lender

to keep you informed of a current telephone number and address for the

representative assigned to your account. If you can not contact your

lender or if the account representative can not help you, you should

contact HUD.

HUD can help you with late payments in two circumstances. First, if the

lender often makes payments which you receive late but before the 10th day

of the month, and this problem continues after you tell the lender about

it, HUD will contact the lender at your request and require the lender to

improve its performance and pay any late charges as required by your Loan

Agreement. HUD will generally not be able to help with rare cases of late

payment if the lender pays the late charge required by your Loan Agreement.

Second, if any payment is not received before the 10th day of the month,

you should immediately contact HUD (and the lender, if you have not done

so). HUD will investigate the circumstances.

6.LINE OF CREDIT

If you have chosen to receive payments at your request from a line of

credit, the lender must transfer the full amount requested, up to your

principal limit, to your bank account or place your check in the mail

within five business days after the lender receives your request. If you

do not receive payment on time (allowing sufficient time for any mail

delivery of your request to the lender, and any mail delivery of the

check), your first contact should be with the lender representative

assigned to handle your account. HUD requires your lender to keep you

informed of a current telephone number and address for the representative

assigned to your account. If you cannot contact your lender or if your

account representative cannot help you, you should contact HUD.

HUD can help you with late payments in two circumstances. First, if the

lender often makes payments which you receive after you expect to receive

them but fewer than 10 days after you expect them, and this problem

continues after you tell the lender about it, HUD will contact the lender

and require the lender to improve its performance and pay late charges

required by your Loan Agreement. HUD will generally not be able to help

with rare cases of late payment if the lender pays the late charge required

by your Loan Agreement. Second, if any payment has not been received 10

days after you expect to receive it, you should immediately contact HUD

(and the lender, if you have not already done so). HUD will investigate

the circumstances.

7.HUD INVESTIGATION OF LATE LENDER PAYMENT: HUD PAYMENTS

A HUD investigation will begin with an immediate request to the lender for

explanation for the late payment(s). If the lender does not provide a

satisfactory explanation to HUD within 15 days of the request, or provide

all funds due to you (including any late charges), then HUD will begin

arrangements to make payments to you. Your HUD Field Office will keep you

informed regarding the likely date for resumption of payments. The initial

HUD payment will be equal to the total of all payments not made by the

lender, including an amount equivalent to any late charge due from the

lender. Subsequent HUD payments will be made in accordance with the timing

required by the mortgage.

8.PAYMENT OF TAXES AND INSURANCE, OR OTHER PROPERTY CHARGES

If you elected to have the lender pay taxes, hazard insurance premiums, and

certain other charges against the property using funds in your loan

account, and you learn that the lender has not paid these items on time,

you should contact the lender's representative assigned to handle your

account. If the lender does not correct the situation, you should contact

the HUD office immediately.

9.HUD ASSUMPTION OF PAYMENT RESPONSIBILITY

Even if HUD is required to make some payments under the mortgage, we will

try to have the lender resume making payments in accordance with the timing

required by the mortgage. If HUD cannot arrange for the lender to resume

payments, HUD will demand assignment of the mortgage from the lender. If

the mortgage is assigned to HUD, you will deal with HUD as the new lender.

If the lender can not or will not assign the mortgage to HUD, you will

receive no further payments from the lender under the first mortgage. No

further interest or mortgage insurance premium will be added to the amount

which you owe under the mortgage. HUD will then make all future payments

under the terms of a second mortgage which you gave to HUD when you gave

the first mortgage to the original lender. The first and second mortgages

will have to be repaid at the same time (for example, when you sell your

home). Since you will not owe any interest under the first mortgage, the

total debt under the first and second mortgages will be less than the

amount you would have owed under the mortgage if the lender had continued

making payments.

HUD may allow the lender to resume making payments after HUD has made

payments. If that happens, you will not owe anything to HUD but you will

deal with the lender as if the lender had made all the payments under the

first mortgage.

Signature of HUD Representative: ___________________________

Title: ___________________________