Effective May 4, 2015, HUD removed the regulations for its Section 235 Program, which authorized HUD to provide mortgage subsidy payments to Mortgagees to assist lower-income families who were unable to meet the credit requirements generally applicable to FHA mortgage insurance programs. Authority to insure new Mortgages under Section 235 expired October 1, 1989. To the extent that any Section 235 mortgages remain in existence, or second mortgages for the recapture of subsidy payment pursuant to HUD’s regulations governing the Section 235 Program, the removal of these regulations does not affect the requirements for transactions entered into when Section 235 Program regulations were in effect. A Borrower with an existing Section 235 Mortgage may still refinance the Mortgage.
Section 235 Mortgages have additional servicing requirements due to the Assistance Payment Contract. The Mortgagee must continue servicing Section 235 Mortgages in accordance with published guidance, preserved here verbatim. Mortgagees should direct questions regarding Section 235 Mortgage servicing to the HUD National Servicing Center (NSC):
ISN Corporation – Western Operations Center
Attention: Secretary Held Loan Servicing
2000 N Classen Blvd Suite #3200
Oklahoma City, Ok 73106
Toll-Free: FHA Resource Center 1-(800)-CALL-FHA (225-5342)
Fax: (405) 724-7800, (405) 724-7833 or (405) 724-7854
Requests receiving by fax will generally be processed within 5 business days. Requests received by postal mail will generally be processed within 10 business days from receipt.
For policy information see Handbook 4000.1 III.A.3.j. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh