Title I Home and Property Improvement Loans - What are these???

Good Afternoon All!

Has anyone encountered a Title I Home and Property Improvement Loan? 

Apparently this "Title 1" loan is a HUD guaranteed loan (up to 90% of the balance owed) and is not your typical FHA loan. 

I just started to work a file with a Wells VA 1st with a United Bank 2nd. I've determined that the United Bank 2nd is a "Title 1" Loan. 

Has anyone worked on a short sale with a "Title 1" loan in junior lien position before? I'm being told that the borrower must sign a promissory note for the balance owed - PERIOD. No negotiating - no Discussion - Nothing! I was further told that once the borrowers are 180 days delinquent, the bank will file a claim with HUD for a repayment of 90% and HUD will pursue the borrowers. 

Below is an email I received for the bank's loss mit dept - any thoughts would be appreciated!!!

"As I stated yesterday, this loan is government guaranteed and cannot be included in any Bankruptcy. Once their loan reaches 180 days past due ( 6 months ) Admirals Bank will file a claim with HUD for 90% of balance. After claim process is complete the government will seek repayment thru wage garnishment or tax return proceeds from borrowers.Please advise the borrowers they will have to address this debt now or after claim."

Thank you!


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I've never ran into one of these in the last decade. I'd contact HUD if you have questions to see if they can shed some additional light on it.

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