BY OVERNIGHT DELIVERY PRIVATE

MEMORANDUM

Date: February 27, 1995
To: Prospective Bidders
Re: FHA Single Family Mortgage Loan Sale #2

This is the first Supplement ("Supplement") to the Bid Package dated February 5, 1996 ("Bid Package") relating to the referenced offering of Mortgage Loans by the Federal Housing Administration, an organizational unit in the United States Department of Housing and Urban Development. This Supplement contains certain general information that amends, supplements and updates the information contained in the Bid Package.

1. Question and Answer Package

2. CRA Letters

3. News Articles on Loan Sale

4. Understanding Optimization

5. Potential Financing Sources See (See Exhibit 6-F of Printed Document, Appendix B)

6. Loans with Updated Broker's Price Opinions Since 1/31/96 (See Exhibit 6-F of Printed Document, Appendix B)

7. Loans Deleted Since 1/31/96 (See Exhibit 6-F of Printed Document, Appendix B)

Bidders are encouraged to conduct due diligence by ordering the CD-ROM package from Williams. Adley & Co., 1150 17th Street, NW, Suite 200, Washington, DC 20036 * (202) 496-1170. Detailed information on the loan sale can also be obtained by accessing the website address:

"http://199.29.173.66/fha/". Data diskettes are enclosed.

[The letter from the Federal Reserve will be mailed in the next supplement.]

[The letter from Federal Deposit Insurance Corporation will be mailed in the next supplement.]