13.30.2.2 Decrease in Loan Amount

A. If HUD’s review of the cost certification results in a decrease in the Loan amount, which decrease would be set forth in form HUD-92580, the Lender must, subject to local practice, prepare and submit the following items to HUD, prior to final endorsement, to modify the Security Instrument amount and the LAMP amount accordingly.

1. A proposed Modification Agreement, in a form acceptable to HUD (see requirements in Part 2 of the Closing Guide) and,

2. As applicable, a proposed Allonge, in a form acceptable to HUD (see requirements in Part 2 of the Closing Guide).

• B. The final endorsement for insurance shall be in the lesser loan amount.

C. If a small loan decrease is involved, and the Borrower does not request a change of amortization, a notation may be made on the Note indicating that the mortgage loan amount is reduced without a change in amortization. In this case, the finally endorsed amount will reflect the reduced principal balance.

D. Any reduction in the original principal amount of the loan that may be required by HUD as a result of cost certification shall not be construed as a prepayment of the mortgage loan.