Sec.

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 section 611 of the Act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund.

[36 FR 24553, Dec. 22, 1971, as amended at 47 FR 30754, July 15, 1982; 48 FR 28807, June 23, 1983]

§ 211.255 Due date of initial MIP.

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

§ 211.260 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.

§ 211.265 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]

8 211.270 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 therefor 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.

§ 211.275 Insurance

benefits-conveyed properties-foreclosure costs.

All the provisions of § 203.402 of this chapter shall govern the computation of the items included in insurance benefits for conveyed properties, except that in lieu of the allowance in paragraph (f) of § 203.402 of this chapter for foreclosure costs or for the costs of acquiring the property otherwise, there shall be included on account of such costs, in those cases involving mortgages on which the unpaid principal obligation at the time of the institution of foreclosure exceeds 80 percent of the appraised value of the property as of the date the mortgage was accepted for insurance, an amount not in excess of the greater of the following:

(a) Two percent of the unpaid principal of the mortgage as of the date of the institution of foreclosure proceedings, but not in excess of $75; or

(b) Two-thirds of the foreclosure costs or the costs of acquiring the property otherwise.

8 211.280 Debenture interest rate.

Debentures shall bear interest at the rate of 2% percent per annum in the case of mortgages endorsed for insurance prior to July 8, 1953, and at the rate of 2 percent per annum in the case of mortgages endorsed for insurance on or after July 8, 1953, and at

the rate of 2% percent per annum if issued in exchange for property accepted for insurance pursuant to commitments issued by the Commissioner on or after May 29, 1954, payable semiannually on the first day of January and the first day of July of each year. § 211.285 Maturity of debentures.

Debentures shall mature 10 years from the date of issue.

§ 211.290 Applicability to outstanding mortgages and commitments.

The regulations in this part shall be effective as to all mortgages with respect to which a commitment to insure under section 611 of the Act is issued on or after the date of this part.

Subpart C-Servicing Responsibilities § 211.400 Cross-reference.

All of the provisions of Subpart C, Part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages covering individual homes released from project mortgages in connection with large scale rentals and sales war housing insurance under section 611 of the National Housing Act. [42 FR 29303, June 8, 1977]

As used in this subpart, the following terms will have the meaning indicated.

(a) "Commissioner" means the Federal Housing Commissioner or his authorized representatives.

(b) "Act" means the National Housing Act, as amended.

(c) "Private Mortgagor” means a private corporation or trust, formed or created with the approval of the Commissioner, or, in the case of an Investor Project, any mortgagor approved by the Commissioner, which is regulated or restricted by the Commissioner as to rents, sales, charges, capital structure, rate of return, and methods of operation.

(d) "Public Mortgagor" means a corporation or trust approved by the Commissioner which is also a Federal or State instrumentality, a municipal corporate instrumentality of one or more States, or a limited dividend or redevelopment or housing corporation formed under and restricted by Federal or State laws or regulations of a State banking or insurance departnient as to rents, charges, capital structure, rate of return, or methods of operation.

(e) "Purchasing Cooperative" means the mortgagor of a Management Project which has purchased the project from the mortgagor of an Investor Project.

(f) "Management Project" means a project owned by a mortgagor nonprofit cooperative ownership housing corporation or trust which restricts permanent occupancy of the project to

the members of the corporation or to the beneficiaries of the trust.

(g) "Sales Project" means a project owned by a mortgagor nonprofit housing corporation or trust which is organized for the purpose of construction of homes for members of the corporation or for beneficiaries of the trust. (h) "Investor Project" means project owned by a mortgagor which intends to sell the project to the mortgagor of a Management Project.

a

(i) "Existing Construction" means a project or projects constructed prior to the filing of an application for mortgage insurance under section 213(i) of the Act which is to be owned and operated by a Consumer Cooperative as a Management Project.

(j) "Consumer Cooperative" means: (1) A nonprofit cooperative ownership housing corporation or trust which is the owner of an Existing Construction subject to an outstanding indebtedness and is approved by the Commissioner for refinancing the indebtedness with insured mortgage: or

(2) A nonprofit cooperative ownership housing corporation or trust organized for the purpose of purchasing an Existing Construction, the members and organizers of which do not have an identity of interest with the seller of the Existing Construction except where the Commissioner has approved such interest as being consistent with the objectives of the cooperative.

(3) A nonprofit cooperative housing corporation or trust initiated and organized by bona fide members of stockholders who are the ultimate consumers, or by a consumer group or sponsor, the members and organizers of which do not have an identity of interest with the builder or landowner and which conducts all transactions between it and the builder and the landowner on an arm's-length basis.

(k) "Approved percentage" means 90 percent in the case of an Investor Project, and 97 percent in the case of a Management, Sales or Existing Construction Project.

(1) "Borrower" means the mortgagor of a management project which receives and becomes primarily obligated for the payment of a supplementary loan, and such project shall be one of the following types:

(1) A project covered by a mortgage insured under section 213 of the Act.

(2) A project purchased from the Federal Government which is covered by an uninsured mortgage representing a part of the purchase price.

(m) "Supplementary Loan" means an advance of funds or credit evidenced by a note pursuant to section 213(j) of the Act.

(n) "Lender” means a financial institution meeting the requirements of §§ 203.1-203.4 and 203.6-203.8.

(o) "State" includes the several States, Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa, and the Virgin Islands.

[36 FR 24553, Dec. 22, 1971, as amended at 45 FR 33967, May 21, 1980; 50 FR 4647, Feb. 1, 1985]

APPLICATION AND COMMITMENT

§ 213.2 Application, SAMA letter and com

mitments.

(a) Application. An application for the issuance of a site appraisal and market analysis (SAMA) letter must be submitted by the project sponsor. An application for a conditional or firm commitment for insurance of a mortgage on a project shall be submitted by the sponsor and an approved mortgagee. Such applications shall be submitted to the local HUD field office on FHA approved forms. No application shall be considered unless accompanied by the exhibits required by the form. An applicant may initially elect to submit an application for a SAMA letter, a conditional commitment or a firm commitment depending upon the completeness of the drawings, specifications and other required exhibits.

(b) Effect of SAMA letter, conditional and firm commitment—(1) SAMA letter. The issuance of a SAMA letter indicates completion of the site appraisal and market analysis stage to determine initial acceptability of the site and recognition of a specific market need. The SAMA letter is not a commitment to insure a mortgage for the proposed project and does not bind the Commissioner to issue a firm commitment to insure. The SAMA