Execution of assistance payment contract.

(a) Homeowners. The issuance of a mortgage insurance certificate pursuant to § 235.1 et seq. shall also constitute the execution of the assistance payment contract with respect to the mortgage being insured.

(b) Cooperative members. The issuance of a certificate approving an application filed on behalf of a cooperative member shall constitute the execution of the assistance payment contract with respect to member named in the certificate. § 235.315 Qualified homeowners.

To qualify for assistance payments, the homeowner shall have, at the time of application for assistance, assets and an adjusted annual income which come within the limits established by the Commissioner, and shall be a mortgagor under a mortgage insured or to be insured pursuant to Subparts A and B of this part.

To qualify for assistance payments, the cooperative member shall have, at the time of application for assistance, assets and an adjusted annual income which come within the limits established by the Commissioner, and shall be one of the following:

(a) A member of a cooperative association which operates a housing project which has been constructed or substantially rehabilitated not more than two years prior to the filing of the application for assistance payments and which ⚫is financed with a mortgage insured under §§ 213.1 through 213.280 of this chapter. The dwelling unit occupied by the cooperative member shall have had no previous occupant.

(b) A member of a cooperative association which operates an existing housing project financed with a mortgage insured under §§ 213.1 through 213.280 of this chapter, if such member has acquired membership and occupancy rights from one who was the first member to receive assistance payments in connection with the dwelling unit.

(c) A member of a cooperative association which operates an existing housing project financed with a mortgage insured under §§ 213.1 through 213.280 of this chapter, if such member meets one of the following qualifications:

(1) The member shall qualify as a displaced family.

(2) The member's family shall include five or more minor persons.

(3) The member's family shall have been occupying low-rent public housing at the time the application for assistance payments is filed.

§ 235.330 Cooperative units eligible for assistance payments.

The maximum amount of the mortgage attributed to the dwelling unit of the cooperative member shall not exceed $15,000, except that such amount may be increased to $17,500 in the case of a family of five or more persons. These amounts may be increased to $17,500 and $20,000, respectively, in any geographical area where the Commissioner finds the cost levels so require.

(2) The difference between the required monthly payment under the mortgage for principal, interest, and mortgage insurance premium and the monthly payment which would be required for principal and interest if the mortgage bore an interest rate of one percent.

(b) The assistance payment on behalf of a cooperative member shall be in an amount computed by using the formula prescribed in paragraph (a) of this section and applying the cooperative member's proportionate share of the obligation under the project mortgage to the items set forth in the formula.

(c) In addition to the assistance payment referred to in paragraphs (a) and (b) of this section, the mortgagee shall be entitled to the monthly payment of an amount the Commissioner deems sufficient to reimburse the mortgagee for its expense in handling the mortgage. § 235.340 Time of payment.

The assistance payment shall be due on the first day of each month and shall be paid upon the receipt of a billing, on a form prescribed by the Commissioner, from the mortgagee or its authorized agent.

Amended: January 8, 1969

§ 235.345 Term of assistance contract.

(a) Homeowners. The term of the assistance payment contract shall begin on the date of disbursement of mortgage proceeds as shown on the commitment for insurance and shall continue until the contract is terminated pursuant to § 235.375.

(b) Cooperative members. The term of the assistance payment contract shall begin on the date of issuance of a certificate approving an application filed on behalf of a cooperative member and shall continue until the contract is terminated pursuant to § 235.375.

§ 235.350 Mortgagor's biennial recertifi

cation.

The mortgagee shall obtain from the homeowner (or from the cooperative association on behalf of the cooperative member) a biennial recertification as to occupancy, employment, income, and family composition. This recertification shall be on a form prescribed by the Commissioner.

§ 235.355 Mortgagor's optional recertification.

Upon request of the mortgagor or cooperative member, the mortgagee may accept (during the first year following the execution of the assistance payment contract or during the first year following a biennial recertification) a recertification as to occupancy, employment, income, and family composition. This recertification shall be on a form prescribed by the Commissioner.

§ 235.360 Adjustments in assistance

payments.

The mortgagee shall make appropriate adjustments in the amount of the requested assistance payments to reflect changes shown in the biennial or optional recertification of the homeowner or cooperative member. These adjustments shall not be retroactive. In the case of a biennial recertification, the adjustment shall apply only to the assistance payment for the next 2-year period. In the case of an optional recertification, the adjustment shall apply only to the assistance payment at the beginning of the second year of the current 2-year period.

§ 235.365 Mortgagee records.

The mortgagee shall maintain such records as the Commissioner may require with respect to the mortgagor's payments, the mortgage assistance payments received from the Commissioner, and the

biennial recertifications of financial status from the homeowner or mortgagor. Such records shall be kept on file for a period of time and in a manner prescribed by the Commissioner and shall be made available, when requested, for review and inspection by the Commissioner or the Comptroller General of the United States.

§ 235.370 Effect of assignment of mortgage with an assistance payment con

tract.

Where a mortgage covered by an assistance payment contract is sold to another approved mortgagee, the buyer shall succeed to all the rights and become bound by all the obligations of the seller under such contract.

§ 235.375 Termination of the assistance payment contract.

(a) The assistance payment contract shall be terminated when any one of the following events occurs:

(1) The contract of mortgage insurance is terminated.

(2) The homeowner or cooperative member ceases to occupy the property, except in the following instances:

(i) Where the mortgage is insured pursuant to § 235.45 and the property is purchased by a homeowner who assumes the mortgage obligation and who meets the income and asset requirements prescribed by the Commissioner.

(ii) Where the cooperative member transfers his membership and occupancy rights to a new member who meets the qualifications of § 235.325(b).

(3) The mortgagee determines that the homeowner or cooperative member ceases to qualify for the benefits of assistance payments by reason of his income increasing to an amount enabling him to pay the full monthly mortgage payment by using 20 percent of his income.

(4) Foreclosure is instituted or the property is acquired by means other than foreclosure by the mortgagee or the Commissioner.

(5) The mortgage is assigned to the Commissioner with his prior approval or at his request.

(b) Upon termination of the assistance payment contract, the payment due on the first day of the month in which the termination occurs shall be the last payment to which the mortgage.” shall be entitled.

(c) The termination of the assistance payment contract, where the mortgage insurance contract is not simultaneously terminated, shall have no effect on the mortgage insurance contract.

(d) Where the assistance payment contract is terminated as a result of the institution of foreclosure and the foreclosure action is subsequently dismissed, the assistance payment contract may be reinstated by the Commissioner, in his discretion and on such conditions as he may prescribe. In the event of such reinstatement, assistance payments will be made to the mortgagee for those months during which such payments were suspended.

§ 235.499 Effect of amendments.

The regulations in this subpart may be amended by the Commissioner at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interests of a mortgagee under an existing contract for assistance payments.

AUTHORITY: The provisions of this Part 237 issued under secs. 203, 211, 52 Stat. 10, as amended, sec. 237, 82 Stat. 476, as amended; 12 U.S.C. 1715b.

§ 237.1 Scope of subpart.

Mortgage insurance under section 237 of the National Housing Act is provided under this section for mortgages financing the purchase of a single family home by a low or moderate income family that is unable to meet the credit requirements for mortgages insured under section 203, 220, 221, or 234 of the Act, if the mortgage meets the special requirements of this subpart.

§ 237.5 Incorporation by reference.

To be eligible for insurance under this subpart, a mortgage shall meet all of the eligibility requirements for insurance under §§ 203.1 et seq. (Part 203, Subpart A) of this chapter; §§ 220.1 et seq. (Part 220, Subpart A) of this chapter; §§ 221.1 et seq. (Part 221, Subpart A) of this chapter; or §§ 234.1 et seq. (Part 234, Subpart A) of this chapter, except that the mortgage shall comply with the special requirements of this subpart. § 237.15 Credit requirements.

The mortgage shall be executed by a mortgagor who the Commissioner has determined would not be an acceptable credit risk for mortgage insurance purposes under one of the subparts referred to in § 237.5, but who would be a reason

ably satisfactory credit risk and acceptable for insurance under this subpart. The determination of unacceptability for mortgage insurance under one of the referenced subparts shall be based on the mortgagor's credit standing, debt obligations, total annual income, or income characteristics. The determination of acceptability for mortgage insurance under this subpart shall be based on a finding by the Commissioner that the mortgagor should be able to meet his obligations under the insured mortgage if he receives budget, debt management, and related counseling.

§ 237.20 Eligible property.

The mortgage shall be given to finance the purchase of a single family dwelling or a family unit in a condominium.

§ 237.30

Maximum mortgage amount.

The mortgage shall not exceed the smallest of the following amounts:

(a) The applicable dollar limits of the subpart under which the mortgage would otherwise be eligible for insurance.

(b) $15,000 or $17,500 in any geographical area where the Commissioner finds that cost levels so require.

(c) A principal amount which when amortized will result in monthly payments consisting of principal, interest, mortgage insurance premiums, and estimated real estate taxes, the aggregate of which will not exceed 25 percent of the mortgagor's income. For the purposes of determining such 25 percent, the mortgagor's income shall be computed either as his average monthly income during the year prior to the date of the application for mortgage insurance or as his average monthly income during the 3 years prior to such application, whichever amount is the greater.