§ 206.121 - Commissioner authorized to make payments.

§ 206.121 Secretary Commissioner authorized to make payments.

(a) Investigation. The Secretary Commissioner will investigate all complaints by a mortgagor borrower concerning late payments. If the Secretary Commissioner determines that the mortgagee is unable or unwilling to make all payments required under the mortgage, including late charges, the Secretary Commissioner shall pay such payments and late charges to the mortgagorborrower.

(b) Reimbursement or assignment. The Secretary Commissioner may demand that within 30 days from the demand, the mortgagee reimburse the SecretaryCommissioner, with interest from the date of payment by the SecretaryCommissioner, or assign the insured mortgage to the SecretaryCommissioner. Interest shall be paid at a rate set in conformity with the Treasury Financial Manual. If the mortgagee complies with the reimbursement demand, then the contract of insurance shall not be affected. If the mortgagee complies by assigning the mortgage for record within 30 days of the demand, then the Secretary Commissioner shall pay an insurance claim as provided in § 206.129(e)(3) and assume all responsibilities of the mortgagee under the first mortgage. If the mortgagee fails to comply with the demand within 30 days, the contract of insurance will terminate as provided in § 206.133(c).

(c) Second mortgage. If the contract of insurance is terminated as provided in § 206.133(c), all payments to the mortgagor borrower by the Secretary Commissioner will be secured by the second mortgage, if anyunless otherwise provided by the Commissioner. Payments will be due and payable in the same manner as under the insured first mortgage. The liability of the mortgagor borrower under the first mortgage shall be limited to payments actually made by the mortgagee to or on behalf of the mortgagor borrower (including prior recoupment of the MIP remitted by the mortgagee and billed to the borrower), and shall exclude accrued interest, whether or not it has been included in the mortgage outstanding loan balance, and shared appreciation, if any. Interest will stop accruing on the first mortgage when the Secretary Commissioner begins to make payments under the second mortgage. The first mortgage will not be due and payable until the second mortgage is due and payable.

[54 FR 24833, June 9, 1989; 54 FR 32060, Aug. 4, 1989, as amended at 60 FR 42761, Aug. 16, 1995; 61 FR 49034, Sept. 17, 1996; 61 FR 67931, Dec. 26, 1996]