FHA 235 Loan first and second lien

[rb22owl]

What is the name of your state? Texas

I got a FHA 235 loan in 1982 and I recently tried to get an equity loan from my credit union. The credit union turned me down on the loan because of the second lien. The first lien is by the mortgage company and the second lien is by HUD. I contacted the HUD National Servicing Center and that agency directed me to call First Madison, which services and handles any questions on FHA 235 loans. I asked them what I would have to do to to refinance the 235 loan so that I would no longer be under the FHA 235 program. The person I spoke to at First Madison said that I could payoff the balance of my mortgage and have that and the recapture of subsidy assistance payments added to the refinance loan. I think I understood correctedly that the second lien would be released. However when I asked the person if I paid out the mortgage loan in 2012 ,when it matures, would the second lien from HUD be removed? As I understand the second lien from HUD would continue even if I paid my mortgage off. If that is true what I cannot understand is, why would HUD continue the second lien? I know that FHA 235 loans are old types of loan, but is there someone out there who has the expertise on this types of loans and could answer my questions? Thanks.
rb22owl

[HUD-1]

You have the correct contacts and the correct info. If you paid off the loan, the lien securing the subsidy payments must be paid. First Madison can calculate how much the payoff will be. The payoff is based on total amount funded by HUD and property value. The subsidy is not "forgiven", you will have to pay the amount HUD paid on your behalf or 50% of the net appreciation in your property value, whichever is less.

I have seen situations in the early 90s where property values decreased and the payoff was therefore zero. In this hot market, however, there will most likely be some appreciation...

[rb22owl]

Thank you for response. I hope that I can refinance the loan after I find out what the recapture subsidy amount is. Again thanks. rb22owl

[pjl]

I too am trying to refinance my home I bought and have the lien from when hud paid so much of the mortgage. WE haven't qualified for over 10 years and have made the total payments for at least the past 10 years. My question is, on the payback of what hud paid in, is there interest added to it. We tried 8 years ago to refinance and there wasn't enough equity to pay off the original loan and the recapture amount too. Now we are trying it again and the loan officer thinks we will owe the huge interest on top of what hud paid in. we were told what the payback was 8 years ago and the loan officer talked to someone who figures the recapture amount and he said he gave her a guess quote which was over 8,000 more than 8 years ago and hud hasn't paid any in those years. The loan officer said she believes there is interest added. No one ever mentioned that to us and when we got the amount of payback last time we were told that would be the most we'd ever have to payback. So, my question is, will there be interest added on to this??
I live in ohio
Thanks

[CluelessinNJ]

This AnthonyQ guy clearly works for the website he is promoting all over the boards. Enough already!

[HUD-1]

PJL. The number for First Madison is 800-967-3050

[rb22owl]

I learned that I will have to repay the subsidy assistance payments or pay 50% of the net appreciation of the property, whichever is less. Reasonable costs of improvements made to the property may be eligible to lower the recapture amount. Receipts are required to provide proof of costs of improvements. I am lucky that I kept receipts of the higher priced improvements and I hope that will further lower the recapture amount.