Department of Housing and Urban Development with respect to loans coinsured under this part. (b) A precommitment review procedure applies to any application for mortgage coinsurance for which a lender has accepted a non-refundable application fee before November 12, 1990 under this part and for which a legally binding Conditional or Firm Commitment is proposed to be issued. This procedure applies to lenders with preliminary as well as full approval to process coinsurance applications and without regard to whether the lender is under probation. For any coinsurance application for which the lender has accepted an application and a non-refundable application fee before November 12, 1990, the lender shall, prior to commitment, submit to HUD headquarters and to the HUD field office with jurisdiction for the proposed project such exhibits and other information as has been specified in administrative instructions of the Commissioner. The lender shall not issue a commitment without written approval from the Commissioner. Field Offices shall not endorse any case covered by this precommitment review requirement unless the lender submits with the endorsement package evidence of the Commissioner's approval of the processing and evidence of compliance with any conditions imposed by the Commissioner. (c) Extensions of commitments for projects which had outstanding legally binding commitments as of November 12, 1990 are limited as follows: (1) Firm commitments for insurance of advances may be granted two 60-day extensions; (2) Conditional commitments may be granted one 60-day extension; (3) Firm commitments for insurance upon completion may not be extended. However, should any underwriting conclusions be altered and reflected in the extension, the project must be submitted for precommitment review in accordance with paragraph (b) of this section. In the event an extension is required beyond those provided for in this paragraph, the case will be subject to the precommitment review process described in paragraph (b) of this section. (d) Reopened expired commitments are subject to precommitment review under paragraph (b) of this section. (e) HUD considers a commitment to be legally binding if: (1) It conforms to the format prescribed in the appropriate HUD Handbook and contains only such modifications as have been approved by HUD in writing; (2) All required underwriting, analyses, reviews and approvals have been accomplished prior to issuance of the commitment; (3) It conforms to HUD requirements pertaining to initial term and extensions; (4) It obligates the lender and HUD to proceed to the next stage (i.e., firm commitment in the case of a conditional commitment, or endorsement in the case of a firm commitment) if the applicant mortgagor complies with all conditions of such commitment; (5) It does not permit the lender to change unilaterally the conditions or terms of the commitment; and (6) It is signed by an official of the coinsuring lender who has been designated and authorized in accordance with HUD requirements. (Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0437) [55 FR 41319, Oct. 10, 1990] § 252.2 GNMA right to assignment. If the lender-issuer defaults on its obligations under the GNMA MortgageBacked Securities Program, GNMA will have the right to cause all Coinsured Mortgages held in GNMA pools by the defaulting coinsuring lenderissuer to be assigned to another GNMA-approved coinsuring lenderissuer, or to GNMA itself. (a) For any Coinsured Mortgage that is not in default and is held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the mortgage to itself. However, before exercising this right, GNMA will attempt to have the Mortgage assigned to another eligible coinsuring lender (unless GNMA determines, with the agreement of the Commissioner, that the attempt would prove ineffectual because of market conditions or other factors). This attempt will be undertaken by soliciting offers to assume the defaulting lender-issuer's rights and obligations under the Mortgage from those eligible coinsuring lenders that are also GNMA issuers and that are indicated on a periodically updated listing furnished to GNMA by the Commissioner. (b) For any Coinsured Mortgage that is in default and held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the Coinsured Mortgage directly to itself before extinguishing the Mortgage by completion of foreclosure action or acquisition of title by deed-in-lieu of foreclosure. (c) GNMA, as assignee, will give the Commissioner written notice, within 30 days after taking a Mortgage by assignment in accordance with this section, in order to allow an appropriate endorsement and necessary changes in the Commissioner's records. (d) The Commissioner will endorse any Mortgage assigned to GNMA as provided by this section for full insurance, effective as of the date of assignment in accordance with the appropriate provisions of 24 CFR part 232. Any future claim by GNMA, or any assignment of the fully insured Mortgage, will be governed by the appropriate provisions of 24 CFR part 232, except that any payment will be made in cash instead of debentures. [59 FR 1475, Jan. 11, 1994] § 252.3 Case-by-case conversion to full insurance. CROSS-REFERENCE. The provisions of 24 CFR 251.3 apply to this part. [61 FR 49038, Sept. 17, 1996] § 252.6 Method of payment of mortgage insurance premiums. The provisions of 24 CFR 251.6 shall apply to this part. [63 FR 1303, Jan. 8, 1998] PART 255-COINSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS Sec. 255.1 Termination of program. 255.2 GNMA right to assignment. 255.3 Case-by-case conversion to full insur ance. 255.6 Method of payment of mortgage insurance premiums. AUTHORITY: 12 U.S.C. 1515b, 17152-9; 42 U.S.C. 3535(d). § 255.1 Termination of program. (a) Effective on November 12, 1990, the authority to coinsure mortgages under this part is terminated, except that the Department: (1) Will honor legally binding and validly issued commitments issued before November 12, 1990 and (2) Will accept for review the coinsurance applications described in paragraph (b) of this section. Part 255, as it existed immediately before November 12, 1990, will continue to govern the rights and obligations of coinsured lenders, mortgagors, and the Department of Housing and Urban Development with respect to loans coinsured under this part. (b) A precommitment review procedure applies to any application for mortgage coinsurance for which a lender has accepted a non-refundable application fee before November 12, 1990 under this part and for which a legally binding Conditional or Firm Commitment is proposed to be issued. This procedure applies to lenders with preliminary as well as full approval to process coinsurance applications and without regard to whether the lender is under probation. For any coinsurance application for which the lender has accepted an application and a non-refundable application fee before November 12, 1990, the lender shall, prior to commitment, submit to HUD headquarters and to the HUD field office with jurisdiction for the proposed project such exhibits and other information as has been specified in administrative instructions of the Commissioner. The lender shall not issue a commitment without written approval from the Commissioner. Field Offices shall not endorse any case covered by this precommitment review requirement unless the lender submits with the endorsement package evidence of the Commissioner's approval of the processing and evidence of compliance with 179-079 0—98—15 any conditions imposed by the Commissioner. (c) Extensions of commitments for projects which had outstanding legally binding commitments as of November 12, 1990 are limited as follows: (1) Conditional commitments may be extended not to exceed 180 days from the date of original issuance; (2) Firm commitments may be granted two 60-day extensions. However, should any underwriting conclusions be altered and reflected in the extension, the project must be submitted for precommitment review in accordance with paragraph (b) of this section. In the event an extension is required beyond those provided for in this paragraph, the case will be subject to the precommitment review process described in paragraph (b) of this section. (d) Reopened expired commitments are subject to precommitment review under paragraph (b) of this section. (e) HUD considers a commitment to be legally binding if: (1) It conforms to the format prescribed in the appropriate HUD Handbook and contains only such modifications as have been approved by HUD in writing; (2) All required underwriting, analyses, reviews and approvals have been accomplished prior to issuance of the commitment; (3) It conforms to HUD requirements pertaining to initial term and extension; (4) It obligates the lender and HUD to proceed to the next stage (i.e., firm commitment in the case of a conditional commitment, or endorsement in the case of a firm commitment) if the applicant mortgagor complies with all conditions of such commitment; (5) It does not permit the lender to change unilaterally the conditions or terms of the commitment; and (6) It is signed by an official of the coinsuring lender who has been des ignated and authorized in accordance with HUD requirements. (Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0437) (55 FR 41320, Oct. 10, 1990, as amended at 56 FR 14642, Apr. 11, 1991] § 255.2 GNMA right to assignment. If the lender-issuer defaults on its obligations under the GNMA MortgageBacked Securities Program, GNMA will have the right to cause all Coinsured Mortgages held in GNMA pools by the defaulting coinsuring lenderissuer to be assigned to another GNMA-approved coinsuring lender issuer, or to GNMA itself. (a) For any Coinsured Mortgage that is not in default and is held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the mortgage to itself. However, before exercising this right, GNMA will attempt to have the Mortgage assigned to another eligible coinsuring lender (unless GNMA determines, with the agreement of the Commissioner, that the attempt would prove ineffectual because of market conditions or other factors). This attempt will be undertaken by soliciting offers to assume the defaulting lender-issuer's rights and obligations under the Mortgage from those eligible coinsuring lenders that are also GNMA issuers and that are indicated on a periodically updated listing furnished to GNMA by the Commissioner. (b) For any Coinsured Mortgage that is in default and held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the Coinsured Mortgage directly to itself before extinguishing the Mortgage by completion of foreclosure action or acquisition of title by deed-in-lieu of foreclosure. (c) GNMA, as assignee, will give the Commissioner written notice, within 30 days after taking a Mortgage by assignment in accordance with this section, in order to allow an appropriate endorsement and necessary changes in the Commissioner's records. (d) The Commissioner will endorse any Mortgage assigned to GNMA as provided by this section for full insurance, effective as of the date of assignment in accordance with the appropriate provisions of 24 CFR part 207. Any future claim by GNMA, or any assignment of the fully insured Mortgage, will be governed by the appropriate provisions of 24 CFR part 207, except that any payment will be made in cash instead of debentures. (59 FR 1475, Jan. 11, 1994] Subpart G-Contract Rights and MORTGAGE INSURANCE PREMIUMS 266.600 Mortgage insurance premium: Insurance upon completion. 266.602 Mortgage insurance premium: Insured advances. 266.604 Mortgage insurance premium: Other requirements. 266.606 Mortgage insurance premium: Duration and method of paying. 266.608 Mortgage insurance premium: Pro rata refund. 266.610 Method of payment of mortgage insurance premiums. INSURANCE ENDORSEMENT 266.612 Insurance endorsement. ASSIGNMENTS 266.616 Transfer of partial interest under participation agreement. TERMINATION 266.620 Termination of Contract of Insur ance. 266.622 Notice and date of termination by the Commissioner. CLAIM PROCEDURES 266.626 Notice of default and filing an insurance claim. 266.628 Initial claim payments. 266.630 Partial payment of claims. 266.632 Withdrawal of claim. 266.634 Reinstatement of the contract of in surance. 266.636 Insuring new loans for defaulted projects. 266.638 Issuance of HFA Debenture. 266.640 Foreclosure and acquisition. 266.642 Appraisals. 266.644 Application for final claim settlement. 266.646 Determining the amount of loss. 266.648 Items included in total loss. 266.650 Items deducted from total loss. 266.652 Determining share of loss. 266.654 Final claim settlement and HFA Debenture redemption. 266.656 Recovery of costs after final claim settlement. 266.658 Program monitoring and compli ance. AUTHORITY: 12 U.S.C. 1707; 42 U.S.C. 3535(d). SOURCE: 59 FR 62524, Dec. 5, 1994, unless otherwise noted. Subpart A-General Provisions § 266.1 Purpose and scope. (a) Authority and scope. (1) Section 542 of the Housing and Community Development Act of 1992 directs the Secretary of the Department of Housing and Urban Development, acting through the Federal Housing Administration, to carry out programs that will demonstrate the effectiveness of providing new forms of Federal credit enhancement for multifamily loans. Section 542, entitled, "Multifamily Mortgage Credit Demonstrations," provides new independent insurance authority that is not under the National Housing Act. (2) Section 542(c) of the Housing and Community Development Act of 1992 specifically directs the Secretary to carry out a pilot program of risk-sharing with qualified State and local housing finance agencies (HFAs). The qualified HFAs are authorized to underwrite and process loans. HUD will provide full mortgage insurance on affordable multifamily housing projects processed by such HFAs under this program. Through risk-sharing agreements with HUD, HFAs contract to reimburse HUD for a portion of the loss from any defaults that occur while HUD insurance is in force. (3) The extent to which HUD will direct qualified HFAs regarding their underwriting standards and loan terms and conditions is related to the proportion of the risk taken by an HFA. (b) Purpose. The primary purpose of this pilot program is to test the effectiveness of providing new forms of credit enhancement for multifamily loans, i.e., utilization of full insurance by HUD, pursuant to to risk-sharing agreements with qualified housing finance agencies, for the development of affordable housing. The utilization of Federal credit enhancements should increase access to capital markets and, thereby, increase the supply of affordable multifamily housing. By permitting HFAs to underwrite, process, and service loans and to manage and dispose of properties that fall into default, HUD expects affordable housing to be made available to eligible families and individuals in a timely manner. $266.5 Definitions. Act means the Housing and Community Development Act of 1992, as amended. Affordable housing means a project in which 20 percent or more of the units are both rent-restricted and occupied by families whose income is 50 percent or less of the area median income as determined by HUD, with adjustments for household size, or in which 40 percent (25 percent in New York City) or more of the units are both rent-restricted and occupied by families whose income is 60 percent or less of the area median income as determined by HUD, with adjustments for household size. A residential unit is rent-restricted if the gross rent with respect to such unit does not exceed 30 percent |