sential to the prevention and cure of delinquencies and the avoidance of defaults and litigation.

§ 200.118

Area Director and Deputy Area Director.

To the position of Area Director in each HUD Area Office and under his general supervision to the position of Deputy there is delegated the following basic authority and functions:

(a) To administer the activities of the Area Office for insuring mortgages within the assigned insuring jurisdiction, to administer the low-rent and other housing production activities of the Area Office, and to perform the functions and exercise the authorities set forth in §§ 200.116 and 200.117.

(b) To approve applications, feasibility letters, conditional commitments, firm commitments, initial and final endorsements for insurance pursuant to such commitments, project mortgage increases prior to or in conjunction with final endorsement, insurance fee refunds and adjustments pursuant to outstanding fiscal instructions, requests from sponsors for section 106 seed money loans or grants, and Appalachian 207 loans.

(c) To approve applications for program reservations and preliminary loans, to determine that there is no practical alternative to high-rise elevator projects for families with children before approving such projects, to approve ACC (Annual Contributions Contract) Lists and amendments thereto, to approve part II of certificates of completion or consolidated certificates, and to terminate ACC's (Annual Contributions Contracts), all as related to the production of lowrent public housing.

(d) To approve reservations of funds for college housing.

(e) To assign and deliver mortgages to the permanent lender, in connection with section 202 loans to be converted to insured mortgages under section 236, Provided, however, That the issuance of feasibility letters, conditional commitments, or final commitments to insure projects in accordance with section 236 shall require the concurrence, indicated by signature, on the part of the Regional Administrator as to projects for which feasibility letters or conditional commitments were issued after December 15, 1972.

[36 FR 24467, Dec. 22, 1971, as amended at 36 FR. 25152, Dec. 29, 1971; 36 F.R. 25405, Dec. 31, 1971; 38 FR 2759, Jan. 30, 1973]

(1) The regulatory agreement between the Secretary and the owner;

(2) The agreement and certification between the Secretary, mortgagor, and mortgagee;

(3) The rent supplement contract between the Secretary and the housing owner; and

(4) The endorsement of the note for mortgage insurance.

(b) Officials designated. The functions described in paragraph (a) of this section may be exercised by the officials appointed to the following positions:

(1) The Deputy Area Director;

(2) The Director, Operations Division; (3) The Deputy Director, Operations Division; and

(4) The Assistant to the Director, Operations Division.

[37 F.R. 7156, Apr. 11, 1972]

Region VIII (Denver).

To the position of Assistant Regional Administrator for Housing Management, Region VIII (Denver), effective as of September 5, 1971, and to the position of Assistant Regional Administrator for Housing Management and Community Services, Region VIII (Denver), effective from September 1, 1970, through September 4, 1971, there is delegated the basic authority and functions set forth in § 200.117.

[37 F.R. 10665, May 26, 1972]

§ 200.123

Director and Deputy Director of the Honolulu Insuring Office.

To the position of Director of the Honolulu Insuring Office, and under his general supervision to the position of Deputy Director of the Honolulu Insuring Office, with respect to the production of low-rent public housing within the jurisdiction of the Honolulu Insuring Office, there is redelegated the authority to perform the functions and exercise the authorities set forth in § 200.118. [37 F.R. 23608, Dec. 9, 1972]

§ 200.124 Chief Underwriter and Deputy Chief Underwriter for Multifamily Housing of the Honolulu Insuring Office.

To the position of Chief Underwriter of the Honolulu Insuring Office and under his general supervision to the position of Deputy Chief Underwriter for Multifamily Housing of the Honolulu Insuring Office, with respect to the production of low-rent public housing within the jurisdiction of the Honolulu Insuring Office, there is redelegated the authority to perform the functions and exercise the authorities set forth in §§ 200.113, 200.115, and 200.116.

[37 F.R. 23608, Dec. 9, 1972]

Subpart E-Mortgage Insurance
Procedures and Processing

§ 200.140 Scope of subpart.

This subpart is confined to general procedures and processing covering mortgage insurance irrespective of the particular program involved. More specific information regarding procedures and processing, including variances under the several titles and sections of the National Housing Act, are treated in other provisions of this chapter.

All mortgage insurance programs involve four basic steps. First, applications for insurance; second, commitments for insurance; third, insurance endorsements; and fourth, claims for losses.

APPLICATION FOR INSURANCE

§ 200.142 Form and filing.

Any financial institution approved by the Commissioner as a mortgagee may apply for mortgage insurance. The application form may be obtained from any Federal Housing Administration field office. The application must be submitted to the office having jurisdiction over the area in which the property described in the application and offered as security is located.

Every application, whether for insurance of a home type or project type mortgage, sets forth the required information to enable FHA to determine eligibility under a particular program. The eligibility consideration covers three general areas as follows:

(a) The eligibility of the proposed loan under the statute, i.e., term, interest rate, mortgage amount, and ratios of loan to value or replacement cost.

(b) The eligibility of the property with respect to compliance with FHA statutory and regulatory requirements.

(c) (1) The eligibility of the mortgagor with regard to the mortgagor's ability to carry and pay the proposed mortgage debt.

(2) Applications are designed to meet the requisites of the several programs. Accordingly, the applications will call for certain supplemental information, such as drawings and specifications, financial statements, exhibits and other information appropriate to enable the FHA to make the necessary determinations concerning eligibility.

§ 200.144 Fees.

Each application must be accompanied by a fee for examination in an amount in effect on the date the application is filed as indicated by the regulations covering the particular insurance program. § 200.145 Technical analysis and underwriting processing.

(a) When an application for mortgage insurance is received in the Field Office it is recorded and a receipt issued there

(a) If an application for mortgage insurance meets the eligibility requirements a commitment for insurance is issued.

(b) If the application for mortgage insurance is not eligible for processing or does not qualify, this fact is reported to the applicant together with the reason for the rejection.

(c) A rejected application for mortgage insurance may be reconsidered upon written request to the Field Office which rejected the application.

COMMITMENT FOR INSURANCE

§ 200.147 Issuance of commitment.

After a determination that the mortgagor and the property offered for security meets the standards and requirements as to eligibility, a commitment is prepared and forwarded over the signature of the Authorized Agent to the approved mortgagee setting forth the terms and conditions under which the mortgage transaction will be insured. The commitment is a binding contract between the FHA and the mortgagee presenting the application.

§ 200.148 Types of commitments.

(a) Home mortgages. In connection with home mortgages the commitment issued may be conditional or firm.

(1) Conditional commitment. A conditional commitment is requested in a case where the mortgagor is unknown and therefore cannot be specified in the application. The Commissioner agrees to insure a mortgage on specified property in an amount and under the terms specified, provided the property is sold to a purchaser who is satisfactory to the FHA as a borrower.

(2) Firm commitment. A firm commitment is requested where the mortgagee desires insurance of a mortgage

on specified property with a named mortgagor in an amount and on terms set forth in the commitment.

(b) Project mortgages. In connection with project mortgages the mortgagee may specify which of two types of commitments he desires.

(1) Commitment for insurance of advances. A commitment for insurance of advances specifies that the FHA will insure construction advances, subject to compliance with the commitment terms.

(2) Commitment to insure upon completion. A commitment to insure upon completion does not include construction advances, but provides that the FHA will insure the mortgage upon completion of the project subject to compliance with the commitment terms.

§ 200.149 Terms and conditions.

(a) The commitment sets forth the exact conditions under which the FHA will insure the mortgage loan. It indicates the maximum eligible term of years, the amount of such loan, the interest rate and the amount of the monthly installment, including principal and interest. In addition, in connection with proposed construction there may be provision for structural requirements and the number and type of inspections necessary. In the case of project mortgages, the commitment may indicate a schedule of advances which will be insured upon a finding that such advances are made in accordance with the commitment.

(b) A commitment is for a definite period of time and contains cancellation conditions which permit FHA to cancel the commitment in case of non-compliance with its terms. Upon full compliance with the terms of the commitment instrument, the FHA is legally bound to endorse the mortgage for insurance.

INSURANCE ENDORSEMENT

ments to determine that all are in proper order and that the terms and conditions have been fully performed.

§ 200.152 Endorsement for insurance.

When it has been determined that the terms and conditions of the commitment have been fully complied with, the FHA insures the mortgage and evidences the insurance by the Authorized Agent's signature in the endorsement panel on the mortgage note which is then returned to the mortgagee. After this endorsement the mortgagee is entitled to the benefits of insurance subject to compliance with the administrative regulations which are, in effect, a part of the insurance contract.

CLAIMS FOR LOSSES

§ 200.153 Presentation of claim.

In the event of a default of an insured mortgage the mortgagee presents a claim for insurance benefits. The application form for debentures and certificate of claim may be obtained from the Headquarters Office in Washington and is filed with the FHA Comptroller in Washington, D.C.

§ 200.154 Notice of default.

Upon default in a mortgage the mortgagee submits a notice of default status to the FHA Insuring Office having jurisdiction over the area wherein the mortgage security is located.

§ 200.155 Claim requirements.

To perfect its claim for payment the mortgagee is required either to assign the mortgage to the Commissioner or tender to him a good merchantable title to the property covered by the insured mortgage. In the home mortgage programs the mortgagee is required to foreclose the insured mortgage and obtain title to the property under a deed conveying good merchantable title. In project mortgage programs the foregoing procedure may be followed or the mortgagee has an alternative option to assign the project mortgage to the Commissioner. If the latter option is exercised the claim for insurance is reduced by one percent of the amount of the mortgage. § 200.156 Settlement of claims.

Upon approval of title conveyance thereof and delivery of possession of the property to the Commissioner, debentures and a certificate of claim are issued to the mortgagee in accordance with a

computation provided by statute for the particular program. The debentures include an amount equal to the unpaid principal of the mortgage plus certain other items such as advances made for hazard insurance, payment of taxes, FHA mortgage insurance premium and a portion of foreclosure expenses. The terms of the statute strictly control the amounts which may be allowed in debentures. Certain expenditures made by the mortgagee, not allowed in the debentures, are included in the certificate of claim. $ 200.157 Provisions and characteristics of debentures.

(a) Series and fund. Debentures are issued in appropriate series and are the obligation of and issued in the name of the particular mortgage insurance fund under which the mortgage is insured.

(b) Registration, denomination and execution. Debentures are issued in registered form and in denominations of $50, $100, $500, $1,000, $5,000 and $10,000. Debentures are signed by the Federal Housing Commissioner by facsimile signature and imprinted with the seal of the Federal Housing Administration.

(c) Rate of interest and interchangeability. Debentures carry a rate of interest prescribed by the Commissioner but not in excess of an annual rate determined by the Secretary of the Treasury in accordance with a prescribed statutory formula involving yields or prices of outstanding marketable obligations of the United States. Debentures of the same series bearing the same interest rate and having the same maturity date shall be freely interchangeable between the various authorized denominations.

and redemption.

(d) Negotiability Debentures are negotiable and are fully guaranteed as to principal and interest by the United States. Debentures are redeemable on call issued by the Commissioner.

(e) Payment of principal and interest. Principal and interest of debentures shall be payable when due at the Treasury Department, Washington, D.C., or at any Government agency or agencies in the United States which the Secretary of the Treasury may from time to time designate for that purpose. The principal and interest shall be payable to the registered owner whose name shall be inscribed on the debentures or to the assignee as shown by executed assignments.

(f) Transfer and use—(1) In general. Debentures are fully transferable and may be freely sold or assigned. They may be used by approved mortgagees in lieu of cash for payment of FHA mortgage insurance premiums.

(2) Mutual Mortgage Insurance Fund debentures. Debentures of the Mutual Mortgage Insurance Fund may be used to pay mortgage insurance premiums on mortgages insured under sections 203(b), 203(h), and 203(1), of the National Housing Act.

(3) Cooperative Management Housing Insurance Fund debentures. Debentures which are the obligation of the Cooperative Management Housing Insurance Fund may be used to pay premiums on mortgages and loans which are insured under that Fund. Where the insurance of a mortgage or loan is transferred from the General Insurance Fund to the Cooperative Management Housing Insurance Fund, or where a mortgage or loan is endorsed for insurance pursuant to a commitment transferred to the Cooperative Management Housing Insurance Fund, debentures issued in connection with such mortgage or loan may be used to pay insurance premiums of either the Cooperative Management Housing Insurance Fund or the General Insurance Fund.

(4) General Insurance Fund and debentures of other funds. Debentures of the General Insurance Fund and those debentures issued as obligations of mortgage insurance funds and accounts in existence prior to the enactment of the Housing and Urban Development Act of 1965 (other than the Mutual Mortgage Insurance Fund) which are transferred by the 1965 Act to the General Insurance Fund may be used to pay mortgage insurance premiums only on the following mortgages and loans:

(1) Those which are the obligation of the General Insurance Fund.

(ii) Those transferred from the General Insurance Fund to the Cooperative Management Housing Insurance Fund.

(iii) Those endorsed for insurance pursuant to commitments transferred to the Cooperative Management Housing Insurance Fund.

§ 200.158 Applicability of Treasury regulations to debenture transactions. The United States Treasury Department is the agent for the Commissioner in connection with transactions and operations relating to debentures. The

general regulations of the United States Treasury Department governing transactions and operations in United States registered bonds, and the payment of interest thereon, are adopted, so far as applicable, as the regulations of the Commissioner for similar transactions and operations in debentures, including the payment of interest on, with the following exceptions:

(a) Payment of final interest on maturing or called debentures. If the notice of maturity or call for redemption shall so provide, the final installment of interest payable on any debentures at maturity or earlier redemption date may be paid with the principal in accordance with the assignments on the debentures instead of by separate check drawn to the order of the registered payee and forwarded to him at his address of record.

(b) Closing of transfer books. If the call for redemption shall so provide, the books maintained by the Treasury Department may be closed against transfers and denominational exchanges in debentures for three full months preceding any interest payment date with respect to any debentures called for redemption on such interest payment date.

(c) Detached assignments. Detached assignments shall be recognized and accepted in any particular case in which the use of detached assignments is specifically authorized by the Treasury Department. Any assignment not made upon the debentures is considered a detached assignment.

(d) Assignments by corporations for redemption for their own account. A debenture registered in the name of, or assigned to, a corporation will be paid to such corporation, at maturity or earlier redemption date, upon an appropriate assignment for that purpose executed on behalf of the corporation by a duly authorized officer thereof. An assignment so executed and duly attested to in accordance with Treasury Department regulations will ordinarily be accepted without proof of the officer's authority. In all cases within this exception, payment will be made only by check drawn to the order of the corporation.