tract of Insurance before the expiration of the 5-day notice period.

(c) Effects of termination. Termination of a Contract of Insurance shall not affect:

(1) The Department's obligation to provide insurance coverage with respect to eligible loans originated before the termination, absent fraud or misrepresentation;

(2) A lender's obligation to continue to pay insurance premiums and meet all other obligations associated with eligible loans originated before termination; or

(3) A lender's right to apply for and be granted a new Contract of Insurance provided that the requirements for approval at § 202.4 are met.

§ 202.6 Administrative actions.

(a) General. Administrative actions may be applied to a lender participating in the Title I program and may include one or more of the following:

(1) A letter of reprimand informing the lender of the existence or occurrence of a violation of any requirement of this part or Part 201 of this title and directing the lender to bring and maintain its activities into conformity with all HUD requirements. Failure to comply with a directive in a letter of reprimand may result in other actions as set forth in this section;

(2) Probation for a specified period of time, for the purpose of evaluating the lender's compliance with HUD requirements. During a period of probation, additional requirements may be imposed on the lender as an aid in evaluating the lender. Such additional requirements may include supervision of the lender's activities by HUD, periodic reporting to HUD, or submission to HUD of internal audits, audits by an Independent Public Accountant, or other reviews;

(3) Suspension, which is based on adequate evidence that: (i) One of the grounds for an administrative action contained in paragraph (b) of this section exists and (ii) that continuation of approval pending completion of any audit, investigation, or other review, or pending such administrative or legal proceedings as may ensue, would not be in the public interest or in the best

interest of the Department. During the period of suspension, a lender may not originate new Title I loans under its Title I Contract of Insurance or apply for a new Contract of Insurance; (4) Withdrawal of approval of a lender to enter into a Contract of Insurance. Such withdrawal shall be for a specified period of time or, in cases involving egregious circumstances, for an indefinite period.

(b) Grounds for administrative actions. Administrative actions shall be based upon one or more of the following grounds:

(1) Failure to remain in compliance with the requirements for approval of lenders at 24 CFR 202.4;

(2) Submission of false information to HUD in connection with a loan;

(3) Failure properly to supervise and monitor dealers under the provisions of 24 CFR Part 201;

(4) Exhaustion of the general insurance reserve established under 24 CFR Part 201;

(5) Maintenance of a claims/loan ratio representing an unacceptable risk to the Department;

(6) Failure to cooperate with an audit, investigation or request by the Department's Office of Inspector General or with an inquiry by HUD into the conduct of the lender's HUD-insured business or any other failure to provide required information to HUD concerning the conduct of the lender's HUD-insured business;

(7) Transfer of a Title I loan to a party who does not have a valid Contract of Insurance; or

(8) Such other reason as the Mortgagee Review Board, Secretary, Under Secretary or Hearing Officer, as appropriate, determines to be justified. Such reasons include, but are not limited to: Failure to exercise prudent credit judgment; failure to observe proper business practices; failure to observe proper loan origination servicing procedures; failure to comply with HUD requirements or other requirements of law or regulation.

(c) Notice, hearings and hearing requests. In the case of a probation, suspension or withdrawal action, a lender is entitled to notice and to request a hearing before a Hearing Officer to challenge the action, in accordance

with the procedures in 24 CFR 25.5(d)(4), 25.7 and 25.8. Hearings to challenge a probation, suspension or withdrawal action shall be conducted in accordance with the applicable rules of Part 26 of this Title.

(d) Settlement Agreements. The Department may at any time enter into a settlement agreement with a lender to resolve any outstanding grounds for any action provided for by this section. Such agreements may provide, among other requirements, for: cessation of any violation; correction or mitigation of the effects of any violation; repayment of sums of money wrongfully or incorrectly paid to the lender by a borrower or by HUD; actions to collect sums of money wrongfully or incorrectly paid by the lender to a third party; indemnification of HUD for insurance claims on Title I loans originated in violation of HUD requirements; or implementation of a Quality Control Plan or other corrective measures acceptable to HUD. Failure of a lender to comply with a settlement agreement may result in suspension or withdrawal of HUD approval.

203.406 Maturity of debentures.

203.420 Nature of Mutual Mortgage Insurance Fund.

203.421 Allocation of Mutual Mortgage Insurance Fund income or loss.

203.422 Right and liability under Mutual Mortgage Insurance Fund.

203.423 Distribution of distributive shares. 203.424 Maximum amount of distributive shares.

203.425 Finality of determination. 203.498 Applicability to outstanding mortgages and commitments. 203.499 Effective date.

(b) For the purposes of this subpart, all references in Part 203 of this chapter to section 203 of the act shall be construed to refer to title I, section 8 of the act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund.

[36 FR 24507, Dec. 22, 1971, as amended at 47 FR 30754, July 15, 1982; 48 FR 28807, June 23, 1983]

§ 202a.255

Due date of initial MIP.

The initial MIP shall be paid on the date on which the insurance becomes effective by endorsement.

§ 202a.260 Adjustment of initial MIP.

Regardless of whether the period covered by the MIP is more or less than 1 year, a payment shall be made to the Commissioner on account of the initial MIP which payment shall be in an amount equal to one-half percent of the average outstanding principal obligation for the first year of amortization under the mortgage. If such payment is less than the minimum premium or more than the maximum premium prescribed by the act, the initial MIP shall be in such minimum amount and the amount of the second premium shall be adjusted accordingly. If such payment is within the limitations prescribed by the act, no adjustment shall be made and the amount of the payment shall be retained by the Commissioner as the initial MIP.

§ 202a.265 Amount of MIP.

After payment of the initial MIP and until the mortgage is paid in full or until an application for insurance benefits is received by the Commissioner or until the contract is otherwise terminated with the consent of the Commissioner, the mortgagee shall continue to pay annual MIP to the Commissioner. Annual MIP shall be paid as provided in §§ 203.264 and 203.265 of this chapter. The MIP shall be paid in an amount equal to one-half percent of the average outstanding principal obligation for the 12-month period following the date on which the premium becomes payable.

[47 FR 30754, July 15, 1982]

§ 202a.270 Pro rata adjustment of MIP upon prepayment.

Upon prepayment of the mortgage in full prior to maturity, the Commissioner shall refund to the mortgagee for the account of the mortgagor an amount equal to the pro rata portion of the current MIP theretofore paid which is applicable to the portion of the year subsequent to such payment, computed from the first day of the month following the month in which such prepayment occurs. No such refund shall be made in any case where the prepayment occurs in the twelfth month of the premium year.

ELIGIBLE MORTGAGES

203.17 Mortgage provisions.

203.18 Maximum mortgage amounts. 203.18a Solar energy system.

203.18b Increased mortgage amount. 203.18c One-time mortgage insurance premium excluded from limitations on maximum mortgage amounts.

203.18d Minimum principal loan amount. 203.19 Mortgagor's minimum investment. 203.20 Agreed interest rate.

203.21 Amortization provisions. 203.22 Payment of insurance premiums or charges; prepayment privilege. 203.23 Mortgagor's payments to include other charges.

203.24 Application of payments. 203.25 Late charge.

203.26 Mortgagor's payments when mortgage is executed.

203.27 Charges, fees or discounts.

ELIGIBLE PROPERTIES

203.37 Nature of title to realty. 203.38 Location of dwelling. 203.39 Standards for buildings. 203.40 Location of property. 203.42 Rental properties.

203.43 Eligibility of miscellaneous type mortgages.

203.43a Eligibility of mortgages covering housing in certain neighborhoods. 203.43b Eligibility of mortgages covering housing intended for seasonal occupancy.

203.43c Eligibility of mortgages involving a dwelling unit in a cooperative housing development.

203.43d Eligibility of mortgages in certain communities.

203.43e Eligibility of mortgages covering houses in Federally impacted areas. 203.43f Eligibility of mortgages covering manufactured homes.

203.43g Eligibility of mortgages in certain communities.

203.43h Eligibility of mortgages on Indian land insured pursuant to section 248 of the National Housing Act.

203.431 Eligibility of mortgages on Hawaiian Home Lands insured pursuant to section 247 of the National Housing Act. 203.43j Eligibility of mortgages on Allegany Reservation of Seneca Nation of Indians.

203.44 Eligibility of open-end advances. 203.45 Eligibility of graduated payment mortgages.

203.47 Eligibility of growing equity mortgages.

203.49 Eligibility of adjustable rate mortgages.

203.50 Eligibility of rehabilitation loans.

Subpart B-Contract Rights and Obligations DEFINITIONS

203.251 Definitions.

ENDORSEMENT AND CONTRACT OF INSURANCE 203.255 Insurance of mortgage.

203.256 Insurance of open-end advance. 203.257 Contract created by Mortgage Insurance Certificate or by endorsement. 203.258 Assumption with or without release of mortgagor.

MORTGAGE INSURANCE PREMIUMS-IN
GENERAL

203.259 Method of payment of MIP.
203.259a Scope.

MORTGAGE INSURANCE PREMIUMS-PERIODIC

PAYMENT

WAIVER

203.248 Waivers.

EFFECTIVE DATE

203.249 Effect of amendments.

203.318 Notice of termination by mortgagee.

203.319 Pro rata payment of premiums and charges.

203.320 Notice and date of termination by Commissioner.

PROPERTY TITLE TRANSFERS AND TITLE
WAIVERS

203.385 Types of satisfactory title evidence.

203.386 Coverage of title evidence.

203.387 Acceptability of customary title

evidence.

203.389 Waived title objections.

203.390 Waiver of title-mortgages or property formerly held by the Secretary. 203.391 Title objection waiver with reduced insurance benefits.

PAYMENT OF INSURANCE BENEFITS 203.400 Method of payment.

203.401 Amount of payment-conveyed and non-conveyed properties.

203.402 Items included in payment-conveyed properties.

203.402a Reimbursement for uncollected interest.

203.403 Items deducted from paymentconveyed and non-conveyed properties. 203.404 Amount of payment-assigned mortgages.

203.405 Debenture interest rate.

203.406 Maturity of debentures. 203.407 Registration of debentures. 203.408 Denomination of debentures.

203.409 Redemption of debentures.

203.410 Issue date of debentures. 203.411 Cash adjustment.