[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Rules and Regulations]
[Pages 14396-14407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7488]
[[Page 14395]]
_______________________________________________________________________
Part V
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 200, et al.
Streamlining of the FHA Single Family Housing, and Multifamily Housing
and Health Care Facility Mortgage Insurance Programs Regulations; Final
Rule
Federal Register / Vol. 61, No. 63 / Monday, April 1, 1996 / Rules
and Regulations
[[Page 14396]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 200, 207, 213, 215, 219, 220, 221, 222, 231, 232, 233,
234, 236, 237, 241, 242, 244, 248, 265, and 267
[Docket No. FR-3966-F-01]
RIN 2502-AG58
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner; Streamlining of the FHA Single Family Housing, and
Multifamily Housing and Health Care Facility Mortgage Insurance
Programs Regulations
AGENCY: Office of the Assistant Secretary for Housing, HUD.
ACTION: Final rule.
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SUMMARY: This final rule amends HUD's regulations for certain of the
FHA Single Family Housing, Multifamily Housing, and Health Care
Facility Mortgage Insurance Programs. In an effort to comply with the
President's regulatory reform initiatives, this rule will streamline
certain Single Family Housing, and Multifamily Mortgage Insurance
Program regulations by eliminating regulatory provisions that are
redundant of statutes, are obsolete, or are otherwise unnecessary.
EFFECTIVE DATE: May 1, 1996.
FOR FURTHER INFORMATION CONTACT: Eliot Horowitz, Office of Housing,
Development of Housing and Urban Development, Room 9110, 451 Seventh
Street SW., Washington, DC 20410, telephone number (202) 708-0579 (this
not a toll-free number). A telecommunications device for hearing- and
speech-impaired persons (TTY) is available at 1-800-877-8339 (Federal
Information Relay Service).
SUPPLEMENTARY INFORMATION: On March 4, 1995, President Clinton issued a
memorandum to all Federal departments and agencies regarding regulatory
reinvention. In response to this memorandum, HUD conducted a page-by-
page review of its regulations to determine which regulations could be
eliminated, consolidated, or otherwise improved. HUD has determined
that the regulations for certain of the FHA programs can be improved
and streamlined by eliminating obsolete and unnecessary provisions, and
by consolidating provisions that are repeated throughout several of the
FHA program regulations.
Several provisions in the regulations repeat statutory language
from the National Housing Act, as amended. It is unnecessary to
maintain statutory requirements in the Code of Federal Regulations
(CFR), since those requirements are otherwise fully binding.
Furthermore, if regulations merely repeat statutory language, HUD must
amend the regulations whenever Congress amends the statute. Therefore,
this final rule will remove repetitious statutory language and replace
it with a citation to the specific statutory section for easy
reference.
Several other provisions in the regulations apply to more than one
program, and therefore HUD repeated these provisions in different
subparts. This repetition is unnecessary, and updating these scattered
provisions is cumbersome and often creates confusion. Therefore, this
final rule will consolidate these duplicative provisions, maintaining
appropriate cross-references for the reader's convenience.
Some provisions in the regulations are now obsolete and these will
be removed.
Lastly, some provisions in the regulations are not regulatory
requirements. For example, several sections in the regulations contain
nonbinding guidance or explanations. While this information is very
helpful to recipients, HUD will more appropriately provide this
information through handbook guidance or other materials rather than
maintain it in the CFR.
Specifically, the following changes are made by this rulemaking:
Part 200, Subpart A. Part 200 is amended to include a new subpart A
that will consolidate those requirements that are common to all of
HUD's Multifamily and Hospital Mortgage Insurance Programs.
Part 200, Regulatory Provisions Concerning Multifamily Processing
Fees. Certain provisions pertaining to multifamily processing fees,
Sec. 200.40 (HUD fees) and Sec. 200.45 (Processing of applications),
are set forth in a final rule published elsewhere in today's Federal
Register.
Part 200, Subpart E. Part 200 is also amended to make the following
changes to subpart E.
Sections 200.140-200.152 concerning underwriting requirements are
not needed in this general part, except for Sec. 200.145(c)(1). The
provisions being removed are either obsolete or better addressed in
program-specific regulations. Section 200.145(c)(1) is retained in
modified form. Section 200.145 provides that HUD's underwriting
requirement for an appraisal and inspection, including environmental,
in no way constitutes a guarantee by HUD as to the value or condition
of the property.
Section 200.153 pertaining to presentation of claim is revised to
remove obsolete reference to location of claim application forms and to
update the reference to what may occasion a claim, since certain types
of claims are occasioned by events other than the borrower's default.
Section 200.154 pertaining to notice of default is removed because
requirements for notifying HUD of a default are more appropriately
covered in the program-specific parts; for example, see Secs. 203.332
and 207.256.
Section 200.155 pertaining to claim requirements is removed because
there is no one general rule; program-specific parts cover these
requirements. (See Secs. 203.350 and following of the Single Family
Mortgage Insurance Program regulations and Secs. 207.258 and 207.259
for Multifamily Mortgage Insurance Program regulations.)
Section 200.156 pertaining to settlement of claims is revised to
remove unnecessary detail and to retain only the appropriate general
language. In addition, a provision is added to address the infrequent
claims in negative amounts and to provide that the mortgagee may settle
a claim in a negative amount by payment of cash or surrender of
debentures, just as mortgagees may pay mortgage insurance premiums in
cash or debentures (see Secs. 203.259 and 207.252(f)).
Sections 200.157-200.162 are retained without revision because they
contain necessary general information not contained elsewhere.
Part 200, Subpart K. Part 200 is also amended to remove subpart K.
Subpart K, which pertains to Correction of Structural Defects, contains
provisions that are outdated and no longer in use. Subpart K also
contains non-binding guidance that is more appropriately provided
through means other than codification in the CFR, which would allow HUD
to more easily update and keep this information current.
Part 207 is amended by revising subpart A to remove the existing
regulatory provisions and to provide for cross-referencing to new
subpart A in part 200. New subpart A now contains the eligibility
provisions for HUD's Multifamily and Health Care Facility Mortgage
Insurance Program. Part 207 is also amended by revising subpart B to
remove Sec. 207.51 which contains definitions. The definitions are now
in new subpart A of part 200. Additionally, subpart B of part 207 is
amended to remove the following sections: Sec. 207.254 (Insurance
Endorsement), now incorporated in Sec. 200.1; and Secs. 207.260
(Protection of Mortgage Security), 207.261 (Assignment of Insured
[[Page 14397]]
Mortgages), 207.261a (Actions To Be Taken by Mortgagee), 207.262 (No
Vested Right in Fund), and 207.270 (Special Reinsurance Provisions),
all of which are now obsolete or provide non-binding guidance that can
be provided through more accessible means, such as mortgagee letters.
Part 213. Part 213, which pertains to Cooperative Housing Mortgage
Insurance, is amended by revising subpart A to remove the regulatory
provisions pertaining to eligibility requirements and to provide a
cross-reference to new subpart A in part 200.
Part 215. Part 215 which pertains to the Rent Supplement Payments
Program will be removed. New rent supplement contracts are no longer
authorized under this program. Reference to the regulations of part 215
and a savings clause will be included in new Sec. 200.1301 of subpart W
in part 200. This new section was added by HUD's final rule published
on September 11, 1995 (60 FR 47260, see 47262). All of the existing
projects and rent supplement contracts will remain subject to the part
215 regulations that were in existence immediately prior to the
effective date of this final rule.
Part 219. Part 219 which pertains to HUD's Flexible Subsidy Program
will be removed. HUD's Flexible Subsidy is an expiring program. Funding
formerly available under the Flexible Subsidy Program is gradually
being replaced by comprehensive needs assessment funding. The current
regulations merely repeat the statutory requirements and the guidance
which is contained in HUD's Handbook applicable to the Flexible Subsidy
Program. The existing regulatory provisions in part 219 will be removed
and replaced with a savings clause.
Part 220. Part 220, which pertains to Mortgage Insurance and
Insured Improvement Loans for Urban Renewal and Concentrated
Development Areas, is amended by revising subpart C to remove the
regulatory provisions pertaining to eligibility requirements and to
provide a cross-reference to new subpart A in part 200.
Part 221. Part 221, which pertains to Low Cost and Moderate Income
Mortgage Insurance, is amended by revising subpart C to remove the
regulatory provisions pertaining to eligibility requirements for
multifamily projects and to provide a cross-reference to new subpart A
in part 200.
Part 222. Part 222 which pertains to Servicepersons Mortgage
Insurance Program is an expired program. No more mortgages are insured
under this program. The part will be removed and a savings clause will
be retained.
Part 231. Part 231, which pertains to Housing Mortgage Insurance
for the Elderly, is amended by revising subpart A to remove the
regulatory provisions pertaining to eligibility requirements and to
provide a cross-reference to new subpart A in part 200.
Part 232. Part 232, which pertains to Mortgage Insurance for
Nursing Homes, Intermediate Care Facilities and Board and Care Homes,
is amended by revising subpart A to remove the regulatory provisions
concerning eligibility requirements and to provide a cross-reference to
new subpart A in part 200.
Part 233. Part 233 which pertains to Experimental Housing Mortgage
Insurance is being amended to remove the outdated cross-references
provided in certain of the regulatory sections.
Part 234. Part 234, which pertains to Condominium Ownership
Mortgage Insurance, is amended by revising subpart C to remove the
regulatory provisions pertaining to eligibility requirements for
project blanket mortgages and to provide a cross-reference to new
subpart A in part 200. In addition, the reservation of Secs. 234.11,
234.12, and 234.13 is removed.
Part 236. Part 236, which pertains to Mortgage Insurance and
Interest Reduction Payments for Rental Projects, is amended by revising
subpart A to advise that a moratorium against issuance of commitments
to insure new mortgages under section 236 was imposed January 5, 1973.
Accordingly, the eligibility requirements in subpart A will be removed
and replaced by a savings clause.
Part 237. Part 237 which pertains to Special Mortgage Insurance for
Low and Moderate Income Families is removed. Reference to the
regulations of part 237 and a savings clause will be included in new
Sec. 200.1301 of subpart W in part 200.
Part 241. Part 241, which pertains to Supplemental Financing for
Insured Project Mortgages, is amended by revising subpart A to remove
the regulatory provisions pertaining to eligibility requirements and to
provide a cross-reference to new subpart A in part 200.
Part 242. Part 242, which pertains to Mortgage Insurance for
Hospitals, is amended by revising subpart A to remove the regulatory
provisions pertaining to eligibility requirements and to provide a
cross-reference to new subpart A in part 200.
Part 244. Part 244, which pertains to Mortgage Insurance for Group
Practice facilities (Title XI), is amended by revising subpart A to
remove the regulatory provisions pertaining to eligibility requirements
and to provide a cross-reference to new subpart A in part 200.
Part 248. Part 248 pertaining to Prepayment of Low Income Housing
Mortgage is amended by removing Sec. 248.7. This section contains
waiver authority which authority for all programs is contained in new
part 5.
Part 265. Part 265, which pertains to ``Transfer from Nonprofit to
Profit-Motivated Ownership for Multifamily Housing Projects with HUD-
Insured or HUD-Held Mortgages'' is removed. Part 265 does not involve a
loan or insurance program. This part merely sets out in the regulation
administrative guidelines for the transfer of physical assets from a
nonprofit owner to a for-profit owner. These guidelines, which are not
regulations, will be made available through means other than the CFR.
Part 267. Part 267, which pertains to Appraisal and Property
Valuation, will be removed. The standards and requirements that are
applicable to HUD insured single family and multifamily properties are
set forth in contracts or handbooks, and need not be repeated in the
CFR. However, the nondiscrimination provisions in part 267 which
pertain to the selection of the appraiser, and the appraisal of the
property will be retained in Sec. 200.35 of part 200.
Justification for Final Rulemaking
HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with its own regulations on rulemaking
in 24 CFR part 10. However, part 10 provides for exceptions to the
general rule if the agency finds good cause to omit advance notice and
public participation. The good cause requirement is satisfied when
prior public procedure is ``impracticable, unnecessary, or contrary to
the public interest'' (24 CFR 10.1). HUD finds that good cause exists
to publish this rule for effect without first soliciting public
comment. This rule merely removes obsolete and unnecessary regulatory
provisions, and consolidates repetitive requirements, and does not
establish or affect substantive policy. Therefore, prior public comment
is unnecessary.
Other Matters
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this final rule, and in so
doing certifies that this rule will not have a significant economic
impact on a substantial number of small entities. This rule merely
streamlines regulations by
[[Page 14398]]
removing unnecessary provisions. The rule will have no adverse or
disproportionate economic impact on small businesses.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR part 50,
which implements section 102(2)(C) of the National Environmental Policy
Act of 1969 (NEPA). This Finding of No Significant Impact is available
for public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the
Office of the Rules Docket Clerk, Office of the General Counsel,
Department of Housing and Urban Development Room 10276, 451 Seventh
Street, SW, Washington, DC 20410.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
will not have substantial direct effects on States or their political
subdivisions, or the relationship between the Federal government and
the States, or on the distribution of power and responsibilities among
the various levels of government. No programmatic or policy changes
will result from this rule that would affect the relationship between
the Federal Government and State and local governments.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule will not have
the potential for significant impact on family formation, maintenance,
or general well-being, and thus is not subject to review under the
Order. No significant change in existing HUD policies or programs will
result from promulgation of this rule.
List of Subjects
24 CFR Part 200
Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Home improvement, Housing standards,
Incorporation by reference, Lead poisoning, Loan programs--housing and
community development, Minimum property standards, Mortgage insurance,
Organization and functions (Government agencies), Penalties, Reporting
and recordkeeping requirements, Social security, Unemployment
compensation, Wages.
24 CFR Part 207
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements, Solar energy.
24 CFR Part 213
Cooperatives, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 215
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 219
Loan programs--housing and community development, Low and moderate
income housing, Reporting and recordkeeping requirements.
24 CFR Part 220
Home improvement, Loan programs--housing and community development,
Mortgage insurance, Reporting and recordkeeping requirements, Urban
renewal.
24 CFR Part 221
Low and moderate income housing, Mortgage insurance, Reporting and
recordkeeping requirements.
24 CFR Part 222
Condominiums, Military personnel, Mortgage insurance.
24 CFR Part 231
Aged, Mortgage insurance, Reporting and recordkeeping requirements.
24 CFR Part 232
Fire prevention, Health facilities, Loan programs--health, Loan
programs--housing and community development, Mortgage insurance,
Nursing homes, Reporting and recordkeeping requirements.
24 CFR Part 233
Home improvement, Loan programs--housing and community development,
Mortgage insurance, Reporting and recordkeeping requirements.
24 CFR Part 234
Condominiums, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 236
Grant programs--housing and community development, Low and moderate
income housing, Mortgage insurance, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 237
Grant programs--housing and community development, Low and moderate
income housing, Mortgage insurance.
24 CFR Part 241
Energy conservation, Home improvement, Loan programs--housing and
community development, Mortgage insurance, Reporting and recordkeeping
requirements, Solar energy.
24 CFR Part 242
Hospitals, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 244
Health facilities, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 248
Intergovernmental relations, Loan programs--housing and community
development, Low and moderate income housing, Mortgage insurance,
Reporting and recordkeeping requirements.
24 CFR Part 265
Mortgage insurance.
24 CFR Part 267
Appraisals, Mortgage insurance, Property valuation, Reporting and
recordkeeping requirements.
Accordingly, chapter II of title 24 of the Code of Federal
Regulations is amended as follows:
PART 200--INTRODUCTION TO FHA PROGRAMS
1. The authority citation for part 200 continues to read as
follows:
Authority: 12 U.S.C. 1701--1715z-18; 42 U.S.C. 3535(d).
2. The part heading for part 200 is revised to read as set forth
above.
Sec. 200.1 [Redesignated]
3. Undesignated introductory text is added to part 200 to read as
follows:
This part sets forth requirements that are applicable to several of
the programs of the Federal Housing Administration, an organizational
unit within the Department of Housing and Urban Development. Program
requirements applicable to FHA programs and other HUD programs also can
be found in 24 CFR part 5. The specific program regulations should be
consulted to determine which requirements in this part 200 or 24 CFR
part 5 are applicable.
4. Subpart A is added to read as follows:
[[Page 14399]]
Subpart A--Requirements For Application, Commitment and Endorsement
Generally Applicable to Multifamily and Health Care Facility Mortgage
Insurance Programs
Sec.
200.3 Definitions.
Eligible Mortgagor
200.5 Eligible mortgagor.
200.6 Employer identification and social security numbers.
Eligible Mortgagee
200.10 Lender requirements.
200.11 Audit requirements for State and local governments as
mortgagees.
Eligible Mortgage
200.15 Maximum mortgage.
200.16 Project mortgage adjustments and reduction.
200.17 Mortgage coverage.
200.18 Minimum loan prohibition.
Miscellaneous Project Mortgage Insurance
200.20 Refinancing insured mortgages.
200.21 Reinsurance of Commissioner held mortgages.
200.22 Operating loss loans.
200.23 Projects in declining neighborhoods.
200.24 Existing projects.
200.25 Supplemental loans.
Miscellaneous Cross Cutting Regulations
200.30 Nondiscrimination and equal opportunity.
200.31 Debarment and suspension.
200.32 Participation and compliance requirements.
200.33 Labor standards.
200.34 Property and mortgage assessment.
200.35 Appraisal standards--nondiscrimination requirements.
Fees and Charges
200.40 HUD fees. [Reserved]
200.41 Maximum mortgagee fees and charges.
Commitment Applications
200.45 Processing of applications. [Reserved]
200.46 Commitment issuance.
200.47 Firm commitments.
Requirements Incident to Insured Advances
200.50 Building loan agreement.
200.51 Mortgagee certificate.
200.52 Construction contract.
200.53 Initial operating funds.
200.54 Project completion funding.
200.55 Financing fees and charges.
200.56 Assurance of completion for on-site improvements.
General Requirements
200.60 Assurance of completion for offsite facilities.
200.61 Title.
200.62 Certifications.
200.63 Required deposits and letters of credit.
Property Requirements
200.70 Location and fee interest.
200.71 Liens.
200.72 Zoning, deed and building restrictions.
200.73 Property development.
200.74 Minimum property standards.
200.75 Environmental quality determinations and standards.
200.76 Smoke detectors.
200.77 Lead-based paint poisoning prevention.
200.78 Energy conservation.
Mortgage Provisions
200.80 Mortgage form.
200.81 Disbursement of mortgage proceeds.
200.82 Maturity.
200.83 Interest rate.
200.84 Payment requirements.
200.85 Covenant against liens.
200.86 Covenant for fire and other hazard insurance.
200.87 Mortgage prepayment.
200.88 Late charge.
Cost Certification
200.95 Certification of cost requirements.
200.96 Certificates of actual cost.
200.97 Adjustments resulting from cost certification.
Endorsement
200.100 Insurance endorsement.
200.101 Mortgagor lien certificate.
Regulation of Mortgagors
200.105 Mortgagor supervision.
200.106 Low-income housing tax credits and other program
assistance.
Subpart A--Requirements For Application, Commitment and Endorsement
Generally Applicable to Multifamily and Health Care Facility
Mortgage Insurance Programs
Sec. 200.3 Definitions.
(a) The definitions ``Department'', ``Elderly person'', ``HUD'',
and ``Secretary'', as used in this subpart A shall have the meanings
given these definitions in 24 CFR part 5.
(b) The terms ``first mortgage'', ``hospital'', ``maturity date'',
``mortgage'', ``mortgagee'', and ``state'', as used in this subpart A
shall have the meaning given in the section of the National Housing Act
(12 U.S.C. 1701), as amended, under which the project mortgage is
insured.
(c) As used in this subpart A:
Act means the National Housing Act, (12 U.S.C. 1701) as amended.
Commissioner means the Federal Housing Commissioner.
FHA means the Federal Housing Administration.
Insured mortgage means a mortgage which has been insured by the
endorsement of the credit instrument by the Commissioner, or the
Commissioner's duly authorized representative.
Project means a property consisting of site, improvements and,
where permitted, equipment meeting the provisions of the applicable
section of the Act, other applicable statutes and regulations, and
terms, conditions and standards established by the Commissioner.
Eligible Mortgagor
Sec. 200.5 Eligible mortgagor.
The mortgagor shall be a natural person or entity acceptable to the
Commissioner, as limited by the applicable section of the Act, and
shall possess the powers necessary and incidental to operating the
project.
Sec. 200.6 Employer identification and social security numbers.
The requirements set forth in 24 CFR part 5, regarding the
disclosure and verification of social security numbers and employer
identification numbers by applicants and participants in assisted
mortgage and loan insurance and related programs, apply to these
programs.
Eligible Mortgagee
Sec. 200.10 Lender requirements.
The requirements set forth in 24 CFR part 202 regarding approval,
recertification, withdrawal of approval, termination of approval
agreement, approval for servicing, report requirements and conditions
for supervised mortgagees, nonsupervised mortgagees, investing
mortgagees, governmental institutions, national mortgage associations,
public housing agencies and State housing agencies, apply to these
programs.
Sec. 200.11 Audit requirements for State and local governments as
mortgagees.
Requirements set forth in 24 CFR part 44, Non-Federal Governmental
Audit Requirements, apply to State and local governments (as defined in
24 CFR part 44) that receive mortgage insurance as mortgagees.
Eligible Mortgage
Sec. 200.15 Maximum mortgage.
Mortgages must not exceed either the statutory dollar amount or
loan ratio limitations established by the section of the Act under
which the mortgage is insured, except that the Commissioner may
increase the dollar amount limitations:
(a) By not to exceed 110 percent in any geographical area in which
the Commissioner finds that cost levels so require; and
(b) By not to exceed 140 percent where the Commissioner determines
it necessary on a project-by-project basis.
[[Page 14400]]
Sec. 200.16 Project mortgage adjustments and reductions.
The principal amount computed in accordance with the applicable
section of the Act for the insured mortgage shall be subject to
additional adjustments and reductions in accordance with terms and
conditions established by the Commissioner.
Sec. 200.17 Mortgage coverage.
The mortgage shall cover the entire property included in the
project.
Sec. 200.18 Minimum loan prohibition.
A mortgagee may not require that the mortgage exceed a minimum
amount established by the mortgagee, as a condition of providing a loan
secured by a mortgage insured under this part.
Miscellaneous Project Mortgage Insurance
Sec. 200.20 Refinancing insured mortgages.
An existing insured mortgage may be refinanced pursuant to
provisions of section 223(a)(7) of the Act and such terms and
conditions established by the Commissioner.
Sec. 200.21 Reinsurance of Commissioner held mortgages.
Any mortgage assigned to the Commissioner in connection with
payment under a contract of mortgage insurance, or executed in
connection with a sale by the Commissioner of any property acquired
under any section or title of the Act, may be insured pursuant to
provisions of section 223(c) of the Act and such terms and conditions
established by the Commissioner.
Sec. 200.22 Operating loss loans.
An insured loan to cover the operating losses of a project with an
existing Commissioner insured mortgage may be made in accordance with
provisions of section 223(d) of the Act and such terms and conditions
established by the Commissioner.
Sec. 200.23 Projects in declining neighborhoods.
A Mortgage financing the repair, rehabilitation or construction of
a project located in an older declining urban area shall be eligible
for insurance pursuant to provisions of section 223(e) of the Act and
such terms and conditions established by the Commissioner.
Sec. 200.24 Existing projects.
A mortgage financing the purchase or refinance of an existing
rental housing project under section 207 of the Act, or for refinancing
the existing debt of an existing nursing home, intermediate care
facility, assisted living facility or board and care home, or any
combination thereof, under section 232 of the Act, or hospital under
section 242 of the Act may be insured pursuant to provisions of section
223(f) of the Act and such terms and conditions established by the
Commissioner.
Sec. 200.25 Supplemental loans.
A loan, advance of credit or purchase of an obligation representing
a loan or advance of credit made for the purpose of financing
improvements or additions to a project covered by a mortgage insured
under any section of the Act or Commissioner held mortgage, or
equipment for a nursing home, intermediate care facility, board and
care home, assisted living facility, hospital or group practices
facility, may be insured pursuant to the provisions of section 241 of
the Act and such terms and conditions established by the Commissioner.
Miscellaneous Cross Cutting Regulations
Sec. 200.30 Nondiscrimination and equal opportunity.
The requirements set forth in 24 CFR part 5, and subparts I, J, and
M of this part pertaining to nondiscrimination and equal opportunity,
apply to these programs.
Sec. 200.31 Debarment and suspension.
The requirements set forth in 24 CFR part 24, except subpart F,
apply to these programs.
Sec. 200.32 Participation and compliance requirements.
The requirements set forth in 24 CFR part 200, subpart H, apply to
these programs.
Sec. 200.33 Labor standards
(a) The requirements set forth in 29 CFR parts 1, 3 and 5 for
compliance with labor standards laws apply to projects under these
programs to the extent that labor standards apply as provided in
section 212 of the Act, provided that:
(1) The labor standards provisions do not apply to projects insured
under sections 207 or 232 pursuant to section 223(f) of the Act; and
(2) Supplemental loans under section 241 of the Act are subject to
the provisions of section 212 applicable to the section or title
pursuant to which the mortgage covering the project is insured or
pursuant to which the original mortgage was insured.
(b) The requirements set forth in 24 CFR part 70 apply to those
programs with respect to which there is a statutory provision allowing
HUD waiver of Davis-Bacon prevailing wage rates for volunteers.
(c) Project commitments, contracts and agreements, as determined by
the Commissioner, and construction contracts and subcontracts, shall
include terms, conditions and standards for compliance with applicable
requirements set forth in 29 CFR parts 1, 3 and 5 and section 212 of
the Act.
(d) No advance under a loan or mortgage that is subject to the
requirements of section 212 shall be eligible for insurance unless
there is filed with the application for the advance a certificate as
required by the Commissioner certifying that the laborers and mechanics
employed in construction of the project have been paid not less than
the wage rates required under section 212.
Sec. 200.34 Property and mortgage assessment.
The requirements set forth in 24 CFR part 200, subpart E, regarding
the mortgagor's responsibility for making those investigations,
analysis and inspections it deems necessary for protecting its
interests in the property apply to these programs.
Sec. 200.35 Appraisal standards--nondiscrimination requirements.
(a) Nondiscrimination in the selection of appraiser. In the
selection of an appraiser, there shall be no discrimination on the
basis of race, color, religion, national origin, sex, age, or
disability.
(b) Nondiscrimination in appraisal determination. The certification
required by the Uniform Standards of Professional Appraisal Practice
must include a statement that the racial/ethnic composition of the
neighborhood surrounding the property in no way affected the appraisal
determination.
Fees and Charges
Sec. 200.40 HUD fees. [Reserved]
Sec. 200.41 Maximum mortgagee fees and charges.
(a) Mortgagee fees and charges included in the mortgage must be for
actual required services provided to the mortgagor by the mortgagee,
and shall not exceed common market rates for such services as
determined by the Commissioner.
(b) Mortgagee charges for prepayment of the mortgage and late
mortgage payments shall not exceed that determined appropriate by the
Commissioner.
[[Page 14401]]
Commitment Applications
Sec. 200.45 Processing of applications. [Reserved]
Sec. 200.46 Commitment issuance.
Upon approval of an application for insurance, a commitment shall
be issued by the Commissioner setting forth the terms and conditions
upon which the mortgage will be insured. The commitment term and any
extension or reopening of an expired commitment shall be in accordance
with standards established by the Commissioner.
Sec. 200.47 Firm commitments.
A valid firm commitment must be in effect at the time the mortgage
instrument is endorsed.
(a) Insurance upon completion. The commitment shall provide the
terms and conditions for the insurance of the mortgage:
(1) After completion of construction or substantial rehabilitation
of the project; or
(2) Upon completion of required work, except as deferred by the
Commissioner in accordance with terms, conditions and standards
established by the Commissioner, for an existing project without
substantial rehabilitation.
(b) Insured advances. The commitment shall provide for insurance of
the mortgage as provided in paragraph (a) of this section, and for the
insurance of mortgage money advanced in accordance with terms and
conditions established by the Commissioner during: construction;
substantial rehabilitation; or other work acceptable to the
Commissioner.
Requirements Incident to Insured Advances
Sec. 200.50 Building loan agreement.
The mortgagor and mortgagee must execute a building loan agreement
approved by the Commissioner, that sets forth the terms and conditions
under which progress payments may be advanced during construction,
before initial endorsement of the mortgage for insurance.
Sec. 200.51 Mortgagee certificate.
The mortgagee shall certify to the Commissioner that it will
conform with terms and conditions established by the Commissioner for
the mortgagee's control of project funds, and other incidental
requirements established by the Commissioner.
Sec. 200.52 Construction contract.
The form of contract between the mortgagor and builder shall be as
prescribed by the Commissioner in accordance with terms and conditions
established by the Commissioner.
Sec. 200.53 Initial operating funds.
The mortgagor shall deposit cash with the mortgagee, or in a
depository satisfactory to the mortgagee and under control of the
mortgagee, in accordance with terms, conditions and standards
established by the Commissioner for:
(a) Accruals for taxes, ground rates, mortgage insurance premiums,
and property insurance premiums, during the course of construction;
(b) Meeting the cost of equipping and renting the project
subsequent to its completion in whole or part; and
(c) Allocation by the mortgagee for assessments required by the
terms of the mortgage in an amount acceptable to the Commissioner.
Sec. 200.54 Project completion funding.
The mortgagor shall deposit with the mortgagee cash deemed by the
Commissioner to be sufficient, when added to the proceeds of the
insured mortgage, to assure completion of the project and to pay the
initial service charge, carrying charges, and legal and organizational
expenses incident to the construction of the project. The Commissioner
may accept a lesser cash deposit or an alternative to a cash deposit in
accordance with terms and conditions established by the Commissioner,
where the required funding is to be provided by a grant or loan from a
Federal, State, or local government agency or instrumentality.
(a) An agreement acceptable to the Commissioner shall require that
funds provided by the mortgagor under requirements of this section must
be disbursed in full for project work, material and incidental charges
and expenses before disbursement of any mortgage proceeds, except;
(b) Funds provided by a grant or loan from a Federal, State or
local governmental agency or instrumentality under requirements of this
section need not be fully disbursed before the disbursement of mortgage
proceeds, where approved by the Commissioner in accordance with terms,
conditions and standards established by the Commissioner.
Sec. 200.55 Financing fees and charges.
Fees and charges approved by the Commissioner in excess of the
initial service charge shall be deposited with the mortgagee in cash
before initial endorsement, except as otherwise preapproved by the
Commissioner.
Sec. 200.56 Assurance of completion for on-site improvements.
The mortgagor shall furnish assurance of completion of the project
in the form and amount provided by terms, conditions and standards
established by the Commissioner.
General Requirements
Sec. 200.60 Assurance of completion for offsite facilities.
An assurance of completion for offsite utilities, streets, and
other facilities required for a buildable site shall be provided in an
amount and form acceptable to the Commissioner, except where a
municipality or other public body has, in a manner acceptable to the
Commissioner, agreed to install such improvements without cost to the
mortgagor.
Sec. 200.61 Title.
(a) Marketable title to the project must be vested in the mortgagor
as of the date the mortgage is filed for record.
(b) Title evidence for the Commissioner's examination shall include
a lender's title insurance policy, which title policy provides survey
coverage based on a survey acceptable to the title company and the
Commissioner; or as the Commissioner may otherwise require, in
accordance with terms, conditions and standards established by the
Commissioner.
(c) Endorsement of the credit instrument for insurance shall
evidence the acceptability of title evidence.
Sec. 200.62 Certifications.
Any agreement, undertaking, statement or certification required by
the Commissioner shall specifically state that it has been made,
presented, and delivered for the purpose of influencing an official
action of the FHA, and of the Commissioner, and may be relied upon by
the Commissioner as a true statement of the facts contained therein.
Sec. 200.63 Required deposits and letters of credit.
(a) Deposits. Where the Commissioner requires the mortgagor to make
a deposit of cash or securities, such deposit shall be with the
mortgagee or a depository acceptable to the mortgagee. The deposit
shall be held by the mortgagee in a special account or by the
depository under an appropriate agreement approved by the Commissioner.
(b) Letter of credit. Where the use of a letter of credit is
acceptable to the Commissioner in lieu of a deposit of cash or
securities, the letter of credit shall be issued to the mortgagee by a
[[Page 14402]]
banking institution and shall be unconditional and irrevocable:
(1) The mortgagee of record may not be the issuer of any letter of
credit without the prior written consent of the Commissioner.
(2) The mortgagee shall be responsible to the Commissioner for
collection under the letter of credit. In the event a demand for
payment thereunder is not immediately met, the mortgagee shall
immediately provide a cash deposit equivalent to the undrawn balance of
the letter of credit.
Property Requirements
Sec. 200.70 Location and fee interest.
The property must be held by an eligible mortgagor, and must
conform with requirements pertaining to property location and fee or
lease interests of the section of the Act under which the mortgage is
insured.
Sec. 200.71 Liens.
The project must be free and clear of all liens other than the
insured mortgage, except that the property may be subject to an
inferior lien as provided by terms and conditions established by the
Commissioner for an inferior lien:
(a) Made or held by a Federal, State or local government
instrumentality;
(b) Required in connection with: an operating loss loan insured
pursuant to a section 223(d) of the Act; a supplemental loan insured
pursuant to section 241 of the Act; or a mortgage to purchase or
refinance an existing project pursuant to section 223(f) of the Act; or
(c) As otherwise provided by the Commissioner.
Sec. 200.72 Zoning, deed and building restrictions.
The project when completed shall not violate any material zoning or
deed restrictions applicable to the project site, and shall comply with
all applicable building and other governmental codes, ordinances,
regulations and requirements.
Sec. 200.73 Property development.
(a) The property shall be suitable and principally designed for the
intended use, as provided by the applicable section of the Act under
which the mortgage is insured, and have long-term marketability.
Design, construction, substantial rehabilitation and repairs shall be
in accordance with standards established by the Commissioner.
(b) A project may include such commercial and community facilities
as the Commissioner deems acceptable.
(c) The improvements shall constitute a single project. Not less
than five rental dwelling units or personal care units, 20 medical care
beds, or 50 manufactured home pads, shall be on one site, except that
such limitations do not apply to group practice facilities.
Sec. 200.74 Minimum property standards.
The requirements set forth in subpart S of this part apply to these
programs, except for hospitals insured under section 242 of the Act and
group practice facilities insured under title XI of the Act.
Sec. 200.75 Environmental quality determinations and standards.
Requirements set forth in 24 CFR part 50, Protection and
Enhancement of Environmental Quality, 24 CFR part 51, Environmental
Criteria and Standards, 24 CFR part 55, Implementation of Executive
Order 11988, Flood Plain Management, and as otherwise required by the
Commissioner apply to these programs.
Sec. 200.76 Smoke detectors.
Smoke detectors and alarm devices must be installed in accordance
with standards and criteria acceptable to the Commissioner for the
protection of occupants in any dwelling or facility bedroom or other
primary sleeping area.
Sec. 200.77 Lead-based paint poisoning prevention.
Requirements set forth in 24 CFR part 35 apply to these programs.
Sec. 200.78 Energy Conservation.
Construction, mechanical equipment, and energy and metering
selections shall provide cost effective energy conservation in
accordance with standards established by the Commissioner.
Mortgage Provisions
Sec. 200.80 Mortgage form.
The mortgage shall be:
(a) Executed on a form approved by the Commissioner for use in the
jurisdiction in which the property securing the mortgage is situated,
which form shall not be changed without the prior written approval of
the Commissioner.
(b) Executed by an eligible mortgagor.
(c) A first lien on the property securing the mortgage, which
property conforms with the property standards prescribed by the
Commissioner.
Sec. 200.81 Disbursement of mortgage proceeds.
The mortgagee shall be obligated, as a part of the mortgage
transaction, to disburse the principal amount of the mortgage to the:
(a) Mortgagor or mortgagor's account;
(b) Mortgagor's creditors for the mortgagor's account, subject to
the mortgagor's consent.
Sec. 200.82 Maturity.
The mortgage shall have a maturity satisfactory to the
Commissioner, and shall contain complete amortization or sinking-fund
provisions satisfactory to the Commissioner.
(a) The maximum mortgage term may not exceed the lesser of:
(1) Any limits included under the applicable section of the Act.
(2) Thirty-five years for existing projects, except that the
mortgage term may be up to 40 years under terms and conditions
established by the Commissioner, and 40 years for proposed construction
and substantial rehabilitation projects.
(3) Seventy-five percent of the estimated remaining economic life
of the physical improvements.
(b) The minimum mortgage term shall not be less than 10 years.
Sec. 200.83 Interest rate.
(a) The mortgage shall bear interest at the rate agreed upon by the
mortgagee and the mortgagor.
(b) Interest shall be payable in monthly installments on the
principal amount of the mortgage outstanding on the due date of each
installment.
(c) The amount of any increase approved by the Commissioner in the
mortgage amount between initial and final endorsement in excess of the
amount that the Commissioner had committed to insure at initial
endorsement shall bear interest at the rate agreed upon by the
mortgagee and the mortgagor.
Sec. 200.84 Payment requirements.
The mortgage shall provide for:
(a) A single aggregate payment each month for all payments to be
made by the mortgagor to the mortgagee.
(b) The mortgagor to pay to the mortgagee:
(1) Interest and principal on the first day of each month in
accordance with an amortization plan agreed upon by the mortgagor, the
mortgagee and the Commissioner.
(i) Date of first payment to interest shall be the endorsement date
or, where there are insured advances, the initial endorsement date.
(ii) Date of first payment to principal. The Commissioner shall
estimate the time necessary to complete the project and shall establish
the date of the first payment to principal so that the lapse of time
between completion of the project and commencement of amortization will
not be longer than
[[Page 14403]]
necessary to obtain sustaining occupancy.
(2) An amount on each interest payment date sufficient to
accumulate in the hands of the mortgagee one payment period prior to
its due date, the next annual mortgage insurance premium payable by the
mortgagee to the Commissioner. Such payments shall continue only so
long as the contract of insurance shall remain in effect.
(3) Equal monthly payments as will amortize the ground rents, if
any, and the estimated amount of all taxes, water charges, special
assessments, and fire and other hazard insurance premiums, within a
period ending one month prior to the dates on which the same become
delinquent.
(4) The mortgage shall further provide:
(i) That such payments shall be held by the mortgagee, for the
purpose of paying such items before they become delinquent.
(ii) For adjustments in case such estimated amounts shall prove to
be more, or less, than the actual amounts so paid therefor by the
mortgagor.
(c) The mortgagee to apply each mortgagor payment received to the
following items in the order set forth:
(1) Premium charges under the contract of mortgage insurance.
(2) Ground rents, taxes, special assessments, and fire and other
hazard insurance premiums.
(3) Interest on the mortgage.
(4) Amortization of the principal of the mortgage.
Sec. 200.85 Covenant against liens.
(a) The mortgage shall contain a covenant against the creation by
the mortgagor of liens against the property superior or inferior to the
lien of the mortgage except for such inferior lien as may be approved
by the Commissioner in accordance with provisions of Sec. 200.71; and
(b) A covenant against repayment of a Commissioner approved
inferior lien from mortgage proceeds other than surplus cash or
residual receipts, except in the case of an inferior lien created by an
operating loss loan insured pursuant to section 223(d) of the Act, or a
supplemental loan insured pursuant to section 241 of the Act.
Sec. 200.86 Covenant for fire and other hazard insurance.
The mortgage shall contain a covenant binding the mortgagor to
maintain fire and extended coverage insurance on the property in
accordance with terms and conditions established by the Commissioner.
Sec. 200.87 Mortgage prepayment.
(a) Prepayment privilege. Except as provided in paragraph (c) of
this section or otherwise established by the Commissioner, the mortgage
shall contain a provision permitting the mortgagor to prepay the
mortgage in whole or in part upon any interest payment date, after
giving the mortgagee 30 days' notice in writing in advance of its
intention to so prepay.
(b) Prepayment charge. The mortgage may contain a provision for
such charge, in the event of prepayment of principal, as may be agreed
upon between the mortgagor and the mortgagee, subject to the following:
(1) The mortgagor shall be permitted to prepay up to 15 percent of
the original principal amount of the mortgage in any one calendar year
without any such charge.
(2) Any reduction in the original principal amount of the mortgage
resulting from the certification of cost which the Commissioner may
require shall not be construed as a prepayment of the mortgage.
(c) Prepayment of bond-financed or GNMA securitized mortgages.
Where the mortgage is given to secure GNMA mortgage-backed securities
or a loan made by a lender that has obtained the funds for the loan by
the issuance and sale of bonds or bond anticipation notes, or both, the
mortgage may contain a prepayment restriction and prepayment penalty
charge acceptable to the Commissioner as to term, amount, and
conditions.
(d) HUD override of prepayment restrictions. In the event of a
default, the Commissioner may override any lockout, prepayment penalty
or combination thereof in order to facilitate a partial or full
refinancing of the mortgaged property and avoid a claim.
Sec. 200.88 Late charge.
The mortgage may provide for the collection by the mortgagee of a
late charge in accordance with terms, conditions and standards of the
Commissioner for each dollar of each payment to interest or principal
more than 15 days in arrears to cover the expense involved in handling
delinquent payments. Late charges shall be separately charged to and
collected from the mortgagor and shall not be deducted from any
aggregate monthly payment.
Cost Certification
Sec. 200.95 Certification of cost requirements.
(a) Before initial endorsement of the mortgage for insurance, the
mortgagor, the mortgagee, and the Commissioner shall enter into an
agreement in form and content satisfactory to the Commissioner for the
purpose of precluding any excess of mortgage proceeds over statutory
limitations. Under this agreement, the mortgagor shall disclose its
relationship with the builder, including any collateral agreement, and
shall agree:
(1) To enter into a construction contract, the terms of which shall
depend on whether or not there exists an identity of interest between
the mortgagor and the builder.
(2) To execute a Certificate of Actual Costs, upon completion of
all physical improvements on the mortgaged property.
(3) To apply in reduction of the outstanding balance of the
principal of the mortgage any excess of mortgage proceeds over
statutory limitations based on actual cost.
(b) The provisions of paragraph (a) of this section relating to
disclosure and the requirement for a construction contract shall not
apply where the mortgagor is the general contractor.
Sec. 200.96 Certificates of actual cost.
(a) The mortgagor's certificate of actual cost, in a form
prescribed by the Commissioner, shall be submitted upon completion of
the physical improvements to the satisfaction of the Commissioner and
before final endorsement, except that in the case of an existing
project that does not require substantial rehabilitation and where the
commitment provides for completion of specified repairs after
endorsement, a supplemental certificate of actual cost will be
submitted covering the completed costs of any such repairs. The
certificate shall show the actual cost to the mortgagor, after
deduction of any kickbacks, rebates, trade discounts, or other similar
payments to the mortgagor, or to any of its officers, directors,
stockholders, partners or other entity member ownership, of
construction and other costs, as prescribed by the Commissioner.
(b) The Certificate of Actual Cost shall be verified by an
independent Certified Public Accountant or independent public
accountant in a manner acceptable to the Commissioner.
(c) Upon the Commissioner's approval of the mortgagor's
certification of actual cost such certification shall be final and
incontestable except for fraud or material misrepresentation on the
part of the mortgagor.
Sec. 200.97 Adjustments resulting from cost certification.
(a) Fee simple site. Upon receipt of the mortgagor's certification
of actual cost
[[Page 14404]]
there shall be added to the total amount thereof the Commissioner's
estimate of the fair market value of any land included in the mortgage
security and owned by the mortgagor in fee, such value being prior to
the construction of the improvements.
(b) Leasehold site. In the event the land is held under a leasehold
or other interest less than a fee, the cost, if any, of acquiring the
leasehold or other interest is considered an allowable expense which
may be added to actual cost provided that in no event shall such amount
be in excess of the fair market value of such leasehold or other
interest exclusive of proposed improvements.
(c) Adjustment. If the amount calculated in accordance with
paragraphs (a) or (b) of this section exceeds the statutory dollar
amount limits or loan ratio limits permitted by the section of Act
under which the mortgage is to be insured, or program loan ratio limits
established by the Commissioner in the absence of statutory limits, the
amount must be reduced to the applicable limits before final
endorsement.
Endorsement
Sec. 200.100 Insurance endorsement.
The credit instrument shall be initially and finally endorsed
simultaneously for insurance pursuant to a commitment to insure upon
completion. Where the advances of construction funds are to be insured
pursuant to a commitment for insured advances, initial endorsement of
the credit instrument shall occur before any mortgage proceeds are
insured and the time of final endorsement shall be as set forth in
paragraph (b) of this section.
(a) Initial endorsement. The Commissioner shall indicate the
insurance of the mortgage by endorsing the original credit instrument
and identifying the section of the Act and the regulations under which
the mortgage is insured and the date of insurance.
(b) Final endorsement. When all advances of mortgage proceeds have
been made and all the terms and conditions of the commitment have been
met to the Commissioner's satisfaction the Commissioner shall indicate
on the original credit instrument the total of all advances approved
for insurance and again endorse such instrument.
(c) Contract rights and obligations. The Commissioner and the
mortgagee or lender shall be bound from the date of initial
endorsement, whether the initial and final endorsement occur
simultaneously or are split, by the provisions of the Contract Rights
and Obligations set forth in the respective regulations for each
section of the Act, as follows: Section 207 of the Act (24 CFR part
207); Section 213 of the Act (24 CFR part 213); Section 220 of the Act
(24 CFR part 220); Section 221 of the Act (24 CFR part 221); Section
231 of the Act (24 CFR part 231); Section 232 of the Act (24 CFR part
232); Section 234 of the Act (24 CFR part 234); Section 241 of the Act
(24 CFR part 241); Section 242 of the Act (24 CFR part 242); title XI
of the Act (24 CFR part 244).
Sec. 200.101 Mortgagor lien certificate.
The mortgagor shall certify at the final endorsement of the
mortgage for insurance as to each of the following:
(a) That the mortgage is the first lien upon and covers the entire
project, including any equipment financed with mortgage proceeds.
(b) That the property upon which the improvements have been made or
constructed and the equipment financed with mortgage proceeds are free
and clear of all liens other than the insured mortgage and such other
liens as may be approved by the Commissioner.
(c) That the certificate sets forth all unpaid obligations in
connection with the mortgage transaction, the purchase of the mortgaged
property, the construction or rehabilitation of the project or the
purchase of the equipment financed with mortgage proceeds.
Regulation of Mortgagors
Sec. 200.105 Mortgagor supervision.
(a) As long as the Commissioner is the insurer or holder of the
mortgage, the Commissioner shall regulate the mortgagor by means of a
regulatory agreement providing terms, conditions and standards
established by the Commissioner, or by such other means as the
Commissioner may prescribe.
(b) The Commissioner may delegate to the mortgagee, or other party,
in accordance with terms, conditions and standards established by the
Commissioner in any executed Regulatory Agreement or other
instrumentality granting the Commissioner supervision of the mortgagor.
Sec. 200.106 Low-income housing tax credits and other program
assistance.
Mortgagors with projects assisted through the Low-Income Housing
Tax Credit program or receiving other government assistance (as defined
in HUD's regulations implementing the HUD Reform Act) may be regulated
by the Commissioner as limited distribution mortgagors.
Subpart E--Mortgage Insurance Procedures and Processing
Secs. 200.140 through 200.144, 200.146 through 200.152, 200.154, and
200.155 [Removed]
5. Sections 200.140 through 200.144, 200.146 through 200.152,
200.154, and 200.155, are removed.
5a. Sections 200.145, 200.153, and 200.156, are revised to read as
follows:
Sec. 200.145 Property and mortgage assessment.
(a) The mortgagor is responsible for making those investigations,
analyses and inspections it deems necessary for protecting its
interests in the property.
(b) Any appraisals, inspections, environmental assessments, and
technical or financial evaluations conducted by or for the Commissioner
are performed to determine the maximum insurable mortgage, and to
protect the Commissioner and the FHA insurance funds. Such appraisals,
inspections, assessments and evaluations neither create nor imply a
duty or obligation from HUD to the mortgagor, or to any other party,
and are not to be regarded as a warranty by HUD to the mortgagor, or
any other party, of the value or condition of the property.
Sec. 200.153 Presentation of claim.
In the event the insured lender is entitled under the contract of
mortgage insurance to receive a claim settlement, the mortgagee
presents a claim for insurance benefits in accordance with the
Secretary's instructions.
Sec. 200.156 Settlement of claims.
Upon the Secretary's approval of a claim, the claim will be settled
by issuance of cash, debentures or both, and, in certain cases, by
issuance of a certificate of claim. However, in the event a final claim
is in a negative amount, the claim will be settled by the mortgagee's
payment of cash or surrender of debentures at par plus accrued interest
to the Secretary.
Subpart K [Removed and Reserved]
6. Subpart K is removed and reserved.
7. In subpart W, Sec. 200.1301 is revised to read as follows:
Subpart W--Administrative Matters
Sec. 200.1301 Additional Expiring Programs--Savings Clause.
No new loan assistance, additional participation, or new loans are
being insured under the programs listed in this section. Any existing
loan
[[Page 14405]]
assistance, ongoing participation, or insured loans under these
programs will continue to be governed by the regulations in effect as
they existed immediately before May 1, 1996 (contained in the April 1,
1995 edition of 24 CFR, parts 200 to 219, and parts 220 to 400). A list
of any amendments to these parts published after the CFR revision date
is available from the Office of the Rules Docket Clerk, Department of
Housing and Urban Development, 451 Seventh Street SW., Washington, DC.
20410.
Part 215 Rent Supplement Payments Program
Part 222 Servicepersons Mortgage Insurance Program
Part 237 Special Mortgage Insurance for Low and Moderate Income
Families
PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE
8. The authority citation for part 207 continues to read as
follows:
Authority: 12 U.S.C. 1701z-11(e), 1713, and 1715b; 42 U.S.C.
3535(d).
9. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements
Sec.
207.1 Eligibility requirements.
Subpart A--Eligibility Requirements
Sec. 207.1 Eligibility requirements.
The eligibility requirements set forth in 24 CFR part 200, subpart
A, apply to multifamily project mortgages insured under section 207 of
the National Housing Act (12 U.S.C. 1713), as amended.
Subpart B--Contract Rights and Obligations
Secs. 207.254, 207.260, 207.261, 207.261a, 207.262, and
207.270 [Removed]
9a. Sections 207.254, 207.260, 207.261, 207.261a, 207.262, and
207.270 are removed.
PART 213--COOPERATIVE HOUSING MORTGAGE INSURANCE
10. The authority citation for part 213 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715e; 42 U.S.C. 3535(d).
10a. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements--Projects
Sec.
213.1 Eligibility requirements.
Subpart A--Eligibility Requirements--Projects
Sec. 213.1 Eligibility requirements.
The eligibility requirements set forth in 24 CFR part 200, subpart
A, apply to multifamily project mortgages insured under section 213 of
the National Housing Act (12 U.S.C. 1715e), as amended.
PART 215--[REMOVED]
11. Part 215 is removed.
PART 219--FLEXIBLE SUBSIDY PROGRAM FOR TROUBLED PROJECTS
12. The authority citation for part 219 continues to read as
follows:
Authority: 12 U.S.C. 1715z-1a; 42 U.S.C. 3535(d).
13. Part 219 is revised to read as follows:
PART 219--FLEXIBLE SUBSIDY PROGRAM FOR TROUBLED PROJECTS
Sec.
219.1 Program operations.
219.2 Savings provision.
Sec. 219.1 Program operations.
Effective May 1, 1996, the Flexible Subsidy Program for Troubled
Projects will be governed and operate under the statutory provisions
codified at 12 U.S.C. 1715z-1a, under the administrative policies and
procedures contained in any applicable HUD Handbooks, and other
administrative bulletins and notices as the Department may issue from
time to time.
Sec. 219.2 Savings provision.
Part 219, as it existed immediately before May 1, 1996, (contained
in the April 1, 1995 edition of 24 CFR, parts 200 to 219) will continue
to govern the rights and obligations of housing owners, tenants, and
the Department of Housing and Urban Development with respect to units
and projects assisted under the Flexible Subsidy Program for Troubled
Projects prior to May 1, 1996. A list of any amendments to this part
published after the CFR revision date is available from the Office of
the Rules Docket Clerk, Department of Housing and Urban Development,
451 Seventh Street, S.W., Washington, DC 20410.
PART 220--MORTGAGE INSURANCE AND INSURED IMPROVEMENT LOANS FOR
URBAN RENEWAL AND CONCENTRATED DEVELOPMENT AREAS
14. The authority citation for part 220 continues to read as
follows:
Authority: 12 U.S.C. 1713, 1715b, and 1715k; 42 U.S.C. 3535(d).
15. Subpart C is revised to read as follows:
Subpart C--Eligibility Requirements--Projects
Sec.
220.501 Eligibility requirements.
Subpart C--Eligibility Requirements--Projects
Sec. 220.501 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 220 of the National
Housing Act (12 U.S.C. 1715k), as amended.
PART 221--LOW COST AND MODERATE INCOME MORTGAGE INSURANCE
16. The authority citation for part 221 continues to read as
follows:
Authority: 12 U.S.C. 1707(a), 1715b and 1715l; 42 U.S.C.
3535(d).
17. Subpart C is revised to read as follows:
Subpart C--Eligibility Requirements--Moderate Income Projects
Sec.
221.501 Eligibility requirements.
Subpart C--Eligibility Requirements--Moderate Income Projects
Sec. 221.501 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 221 of the National
Housing Act (12 U.S.C. 1715l), as amended.
PART 222--[REMOVED]
18. Part 222 is removed.
PART 231--HOUSING MORTGAGE INSURANCE FOR THE ELDERLY
19. The authority citation for part 231 continues to read as
follows:
Authority: 12 U.S.C. 1715b and 1715v; 42 U.S.C. 3535(d).
20. Subpart A is revised to read as follows:
[[Page 14406]]
Subpart A--Eligibility Requirements
Sec.
231.1 Eligibility requirements.
Subpart A--Eligibility Requirements
Sec. 231.1 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 231 of the National
Housing Act (12 U.S.C. 1715v), as amended.
PART 232--MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE
FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES
21. The authority citation for part 232 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715w, and 1715z(9); 42 U.S.C.
3535(d).
22. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements
Sec.
232.1 Eligibility requirements.
232.2 License.
232.3 Bathroom.
Subpart A--Eligibility Requirements
Sec. 232.1 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 232 of the National
Housing Act (12 U.S.C. 1715w), as amended.
Sec. 232.2 License.
The Commissioner shall not insure any mortgage under this part
unless the facility is regulated by the State, municipality or other
political subdivision in which the facility is or is to be located, and
the appropriate agency for such jurisdiction provides a license,
certificate or other assurances the Commissioner considers necessary,
that the facility complies with any applicable State or local standards
and requirements for such facility.
Sec. 232.3 Bathroom.
Not less than one full bathroom must be provided for every four
residents of a board and care home or assisted living facility, and
bathroom access from any bedroom or sleeping area must not pass through
a public corridor or area.
PART 233--EXPERIMENTAL HOUSING MORTGAGE INSURANCE
23. The authority citation for part 233 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715x; 42 U.S.C. 3535(d).
24. In Sec. 233.5, paragraph (a) introductory text is revised to
read as follows:
Sec. 233.5 Cross-reference.
(a) To be eligible for insurance under this subpart, a mortgage or
home improvement loan shall meet the eligibility requirements for
insurance under parts 203, 213, 220, 221, 234, 235, and 237 of this
chapter.
* * * * *
25. In Sec. 233.251, paragraph (b) introductory text is revised to
read as follows:
Sec. 233.251 Cross-reference.
* * * * *
(b) For purposes of this subpart, all the references in parts 203,
213, 220, 221, 234, 235 and 237 of this chapter to:
* * * * *
26. Section 233.401 is revised to read as follows:
Sec. 233.401 Cross-reference.
(a) Section 235 type home mortgages. All of the provisions of 24
CFR part 235 concerning assistance payments pursuant to section 235 of
the Act (12 U.S.C. 1715y), apply with full force and effect to a
mortgage insured under subparts A and B of this part, if the mortgage
is insured as meeting the eligibility requirements of 24 CFR part 235.
(b) Section 237 type home mortgages. All of the provisions of 24
CFR part 237 concerning assistance payments in connection with a
mortgage insured under section 237, apply with full force and effect to
a mortgage insured under subparts A and B of this part, if the mortgage
is insured as meeting the eligibility requirements of 24 CFR part 237.
27. In Sec. 233.505, paragraph (a) introductory text is revised to
read as follows:
Sec. 233.505 Cross-reference.
(a) To be eligible for insurance under this subpart, a mortgage or
project improvement loan shall meet the eligibility requirements for
insurance under parts 207, 213, 220, 221, 231, 234, 235, or 241 of this
chapter except that:
* * * * *
28. In Sec. 233.751, paragraph (b) introductory text is revised to
read as follows:
Sec. 233.751 Cross-reference.
* * * * *
(b) For purposes of this subpart, all the references in parts 207,
213, 220, 221, 231, 232, 234, 235, 236 and 241 of this chapter to:
* * * * *
29. Section 233.900 is revised to read as follows:
Sec. 233.900 Cross-reference.
(a) Section 235(j) type home mortgages. All of the provisions of 24
CFR part 235 concerning assistance payments pursuant to section 235(j)
of the Act (12 U.S.C. 1701), apply with full force and effect to a
mortgage insured under subparts D and E of this part, if the mortgage
is insured as meeting the eligibility requirements of 24 CFR part 235.
(b) Section 236 type home mortgages. All of the provisions of 24
CFR part 236 concerning interest reduction payments pursuant to section
236 of the Act (12 U.S.C. 1701), apply with full force and effect to a
mortgage insured under subparts D and E of this part, if the mortgage
is insured as meeting the eligibility requirements of 24 CFR part 236.
PART 234--CONDOMINIUM OWNERSHIP MORTGAGE INSURANCE
30. The authority citation for part 234 continues to read as
follows:
Authority: 12 U.S.C. 1715b and 1715y; 42 U.S.C. 3535(d). Section
234.520(a)(2)(ii) is also issued under 12 U.S.C. 1707(a).
31. Subpart C is revised to read as follows:
Subpart C--Eligibility Requirements--Projects--Conversion Individual
Sales Units
Sec.
234.501 Eligibility requirements.
Subpart C--Eligibility Requirements--Projects--Conversion
Individual Sales Units
Sec. 234.501 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
blanket mortgages on condominium projects insured under section 234 of
the National Housing Act (12 U.S.C. 1715y), as amended.
PART 236--MORTGAGE INSURANCE AND INTEREST REDUCTION PAYMENT FOR
RENTAL PROJECTS
32. The authority citation for part 236 continues to read as
follows:
Authority: 12 U.S.C. 1715b and 1715z-1; 42 U.S.C. 3535(d).
33. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements for Mortgage Insurance
Sec.
236.1 Applicability and savings clause.
[[Page 14407]]
Subpart A--Eligibility Requirements for Mortgage Insurance
Sec. 236.1 Applicability and savings clause.
(a) Applicability. This section implements the eligibility
requirements for mortgage insurance under the Rental and Cooperative
Housing For Lower Income Families Program contained in section 236 of
the National Housing Act (12 U.S.C. 1701), as amended. The program
authorized the Secretary to insure mortgages to support new
construction or rehabilitation of real property to be used primarily
for residential rental purposes. A moratorium against issuance of
commitments to insure new mortgages under section 236 was imposed
January 5, 1973. Section 236(n) prohibits the insurance of mortgages
under section 236 after November 30, 1983, except to permit the
refinance of a mortgage insured under section 236, or to finance
pursuant to section 236(j)(3), the purchase, by a cooperative or
nonprofit corporation or association, of a project assisted under
section 236.
(b) Savings clause. Any mortgage approved by the Commissioner for
insurance pursuant to sections 236(n) and 236(j)(3) of the National
Housing Act, as amended, will be governed by subpart A of this part in
effect immediately before May 1, 1996 contained in the April 1, 1995
edition of 24 CFR, parts 220 to 499 and by subparts B through E of this
part. A list of any amendments to this part published after the April
1, 1995 CFR revision date is available from the Office of the Rules
Docket Clerk, Department of Housing and Urban Development, 451 Seventh
Street, SW, Washington, DC 20410.
PART 237--[REMOVED]
35. Part 237 is removed.
PART 241--SUPPLEMENTARY FINANCING FOR INSURED PROJECT MORTGAGES
36. The authority citation for part 241 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715z-6; 42 U.S.C. 3535(d).
37. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements
Sec.
241.1 Eligibility requirements.
Subpart A--Eligibility Requirements
Sec. 241.1 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 241 of the National
Housing Act (12 U.S.C. 1715z-6), as amended.
PART 242--MORTGAGE INSURANCE FOR HOSPITALS
37a. The authority citation for part 242 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1715n(t), and 1715z-7; 42 U.S.C.
3535(d).
38. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements
Sec.
242.1 Eligibility requirements.
242.2 License.
242.3 Eligible hospital.
Subpart A--Eligibility Requirements
Sec. 242.1 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured under section 242 of the National
Housing Act (12 U.S.C. 1715z-7), as amended.
Sec. 242.2 License.
The Commissioner shall not insure any mortgage under this part
unless the facility is regulated by the State, municipality or other
political subdivision in which the facility is or is to be located, and
the appropriate agency for such jurisdiction provides a license,
certificate or other assurances the Commissioner considers necessary,
that the facility complies with any applicable State or local standards
and requirements for such facility.
Sec. 242.3 Eligible hospital.
The hospital to be financed with a mortgage insured under this part
shall involve one of the following: the construction and equipping of a
new hospital, rehabilitation of a hospital, the addition of new
facilities or equipment, or the rehabilitation or replacement of a
portion of an existing hospital structure.
PART 244--MORTGAGE INSURANCE FOR GROUP PRACTICE FACILITIES (TITLE
XI)
39. The authority citation for part 244 continues to read as
follows:
Authority: 12 U.S.C. 1715b, 1749aaa-5; 42 U.S.C. 3535(d).
40. Subpart A is revised to read as follows:
Subpart A--Eligibility Requirements
Sec.
244.1 Eligibility requirements.
244.2 License.
Subpart A--Eligibility Requirements
Sec. 244.1 Eligibility requirements.
The requirements set forth in 24 CFR part 200, subpart A, apply to
group practice facilities (title XI) of the National Housing Act (12
U.S.C. 1749aaa), as amended.
Sec. 244.2 License.
The Commissioner shall not insure any mortgage under this part
unless the appropriate licensing agency for the State, municipality or
other political subdivision in which a project is or is to be located
provides such assurances as the Commissioner considers necessary that
the facility will comply with any applicable State or local standards
and requirements for such facilities.
PART 248--PREPAYMENT OF LOW INCOME HOUSING MORTGAGES
41. The authority citation for part 248 continues to read as
follows:
Authority: 12 U.S.C. 1715l note, 4101 note, and 4101-4124; 42
U.S.C. 3535(d).
Sec. 248.7 [Removed]
42. Section 248.7 is removed.
PART 265--[REMOVED]
43. Part 265 is removed.
PART 267--[REMOVED]
44. Part 267 is removed.
Dated: March 15, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 96-7488 Filed 3-29-96; 8:45 am]
BILLING CODE 4210-27-P
