203.18(f)(1) of this chapter) or certifies that his or her failure to do so is the result of his or her military assignment, or, in the case of the Coast Guard or U.S. National Oceanic and Atmospheric Administration, other assignment.

[55 FR 34811, Aug. 24, 1990]

§ 222.52 Applicability.

The provisions of §§ 222.2 (b) through (d); 222.6; 222.7; 222.8; and 222.50 apply as provided in 24 CFR 203.51 of this chapter.

[55 FR 34811, Aug. 24, 1990]

WAIVERS

§222.248 Waivers.

The Secretary in any individual case may waive any requirement of this subpart not required by statute if the Secretary finds that application of such requirement would adversely affect achievement of the purposes of the Act. Each such waiver shall be in writing and supported by a statement of the facts and grounds forming the basis for the waiver. The authority under this section may be delegated to the Assistant Secretary for Housing-Federal Housing Commissioner, but shall not be redelegated.

[47 FR 35959, Aug. 18, 1982]

Subpart B-Contract Rights and Obligations

§222.251 Cross-reference.

(a) The provisions of subpart B, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act which refer to the mortgagee shall be construed to refer to the mortgagee or the service branch, as the case may be, in connection with mortgages insured under section 222 of the National Housing Act. In addition, all of the provisions in subpart B, part 203 of this chapter, covering mortgages insured under section 203 of the National Housing Act apply to mortgages insured under section 222 of the Na

203.425 Finality of determination.

203.438 Mortgages on Indian land insured pursuant to §248 of the National Housing Act.

203.439 Mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act.

203.439a Mortgages on property in Allegany Reservation of Seneca Nation of Indians authorized by section 203(q) of the National Housing Act.

203.440 Et seq. Insured home improvement loans.

(b) For the purposes of this subpart, all references in part 203 of this chapter to section 203 of the National Housing Act shall be deemed to refer to section 222 of the National Housing Act, and all references to the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General Insurance Fund.

[36 FR 24605, Dec. 22, 1971, as amended at 48 FR 28807, June 23, 1983; 51 FR 21874, June 16, 1986; 52 FR 8069, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48204, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 55 FR 34811, Aug. 24, 1990] § 222.252 Definition of terms.

The definitions set forth in §§ 203.251 and 222.2 of this chapter shall apply with full force and effect to this subpart and in addition the terms

(a) Service branch means the military service, Coast Guard, or U.S. National Oceanic and Atmospheric Administration of which the mortgagor is a member at the time of the issuance of a mortgage insurance certificate or the endorsement of the credit instrument

by the Commissioner pursuant to section 222 of the National Housing Act.

(b) Certificate of termination means the official notice issued by the Secretary to the Federal Housing Commissioner advising the Commissioner that the period of ownership by a serviceman has been terminated and the service branch will no longer be responsible for payment of mortgage insurance premiums. [36 FR 24605, Dec. 22, 1971, as amended at 37 FR 76, Jan. 5, 1972]

§ 222.253 Annual mortgage insurance premiums and charges.

The service branch shall during the period of ownership by a serviceman have the responsibility for payment of all mortgage insurance premiums and charges. The mortgagee shall be responsible for payment of all such premiums or charges after it has been notified by the Commissioner that the period of ownership by the serviceman has been terminated.

§222.254 Substitute mortgagors.

(a) Selling mortgagor. Except as provided in paragraph (d), the mortgagee may effect the release of a mortgagor from personal liability on the mortgage note only if it obtains the Commissioner's approval of a substitute mortgagor, as provided by paragraph (b) of this section.

(b) Purchasing mortgagor. The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under this part, if the substitute mortgagor is to occupy the dwelling as a principal residence or a secondary residence (as these terms are defined in § 203.18(f) of this chapter) or is an eligible nonoccupant mortgagor (as defined in § 203.18(f)).

(c) Applicability-current mortgagor. Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor only if the mortgage executed by the original mortgagor met the conditions of § 203.258(c) of this chapter.

(d) Applicability-earlier mortgagor. The occupancy and similar requirements set forth in §203.258(d) of this chapter apply to mortgages insured under subpart A of this part.

(e) Mortgagees approved for participation in the Direct Endorsement pro

gram under § 203.3 of this chapter may, subject to limitations established by the Commissioner, themselves approve an appropriate substitute mortgagor under this section and need not obtain further specific approval from the Commissioner.

(f) Definition. As used in this section, the term substitute mortgagor includes: (1) Persons who, upon the release by a mortgagee of a previous mortgagor from personal liability on the mortgage note, assume this liability and agree to pay the mortgage debts and (2) persons who purchase without assuming liability on the mortgage note or purchase where no release is given by the mortgagee to the previous mortgagor.

[55 FR 34811, Aug. 24, 1990, as amended at 57 FR 58351, Dec. 9, 1992]

$222.255 Pro-rata refund in the event of prepayment.

Upon such prepayment the contract of insurance shall terminate and the Commissioner will refund to the service branch or to the mortgagee, as the case may be, for the account of the mortgagor an amount equal to the prorata portion of the current annual mortgage insurance premium and insurance charge in the case of open-end advances 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: Provided, That no such refund will be made in any case where the prepayment occurs in the twelfth month of the premium year.

§222.260 Waived title objections.

(a) General provisions. All of the provisions of §203.389 of this chapter (relating to the waiver by the Commissioner of objections to title) shall apply to mortgages insured under this subpart, with the exception of mortgages involving condominium units.

(b) Provisions applicable to condominium units. Where the mortgage involves a condominium unit, the Commissioner shall not object to title by reason of the following matters:

(1) Violations of a restriction based on race, color or creed, even where such restriction provides for a penalty

of reversion or forfeiture of title or a lien for liquidated damage.

(2) Easements for public utilities along one or more of the property lines, provided the exercise of the rights thereunder do not interfere with any of the buildings or improvements located on the subject property.

(3) Encroachments on the subject property by improvements on adjoining property, provided such encroachments do not interfere with the use of any improvements on the subject property.

(4) Variations between the length of the subject property lines as shown on the application for insurance and as shown by the record or possession lines, provided such variations do not interfere with the use of any of the improvements on the subject property.

(5) Customary buildings or use restrictions for breach of which there is no reversion and which have not been violated to a material extent.

SPECIAL PROVISIONS APPLICABLE ONLY ΤΟ MORTGAGES INVOLVING CONDOMINIUM UNITS

§222.265 Changes in the plan of apartment ownership.

The mortgagee shall notify the Commissioner of any changes in the plan of apartment ownership and in the administration of the property. Such notification shall be given either at the time of the conveyance of the property or at the time of the assignment of the mortgage. Any changes in such plan shall require approval by the Commissioner.

§ 222.270 Condition of the multifamily structure.

(a) When a family unit is conveyed or a mortgage is assigned to the Commissioner, the family unit and the common areas and facilities (including restricted common areas and facilities) designated for the particular unit shall be undamaged by fire, earthquake, tornado, or boiler explosion, except if the property has been damaged, either of the following actions shall be taken:

(1) The property may be repaired prior to its conveyance or prior to the assignment of the mortgage to the Commissioner.

(2) With the prior approval of the Commissioner, the property may be conveyed or the mortgage assigned to the Commissioner without repairing the damage. In such instances, the Commissioner shall deduct from the insurance benefits either his estimate of the decrease in value of the family unit or the amount of any insurance recovery received by the mortgagee, whichever is the greater.

(b) If the property has been damaged by fire and such property was not covered by fire insurance at the time of the damage, the mortgagee may convey the property or assign the mortgage to the Commissioner without deduction from the insurance benefits for any loss occasioned by such fire if the following conditions are met:

(1) The property shall have been covered by fire insurance at the time the mortgage was insured.

(2) The fire insurance shall have been later canceled or renewal shall have been refused by the insuring company.

(3) The mortgagee shall have notified the Commissioner within 30 days (or within such further time as the Commissioner may approve) of the cancellation of the fire insurance or of the refusal of the insuring company to renew the fire insurance. This notification shall have been accompanied by a certification of the mortgagee that diligent efforts were made, but it was unable to obtain fire insurance coverage at reasonably competitive rates and that it will continue its efforts to obtain adequate fire insurance coverage at competitive rates.

§222.275 Assessment of taxes.

When a family unit is conveyed to the Commissioner or a mortgage is assigned to the Commissioner, the unit shall be assessed and subject to assessment for taxes pertaining only to that unit.

§ 222.280 Certificate of tax assessment.

The mortgagee shall certify, as of the date of filing for record of the deed of assignment of the mortgage to the Commissioner, that the family unit i assessed and subject to assessment fo taxes pertaining to that unit.

§ 222.285 Certificate or statement of condition.

(a) At the time of the assignment of the mortgage or conveyance of the property to the Commissioner, the mortgagee shall, as of the date of the filing for record of the deed or assignments, either:

(1) Certify that the conditions of §222.270(a) have been met; or

(2) Submit a statement describing any such damage that may still exist.

(b) In the absence of evidence to the contrary, the mortgagee's certificate or its statement as to damage shall be accepted by the Commissioner as establishing the condition of the family unit and the common areas and facilities including restricted common areas and facilities designated for the particular unit.

(a) The mortgagee, upon the initial endorsement of the mortgage for insurance, shall agree to pay to the Commissioner a first insurance premium of $1 per project for the construction period.

(b) On the date of the first principal payment on account of the mortgage, the mortgagee shall pay the first insurance premium and a second premium equal to one-quarter of 1 percent of the average outstanding principal obligation for the following year.

(c) (1) Until the mortgage is paid in full, or until receipt by the Commissioner of an application for insurance benefits, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the mortgagee, on each anniversary date of the first principal payment, shall pay an annual mortgage insurance premium.

(2) With respect to mortgage insurance premiums:

(i) Due prior to August 1, 1965, the amount of the annual premium payment shall be equal to one-quarter of 1 percent per annum of the amount of the average outstanding principal obligation of the mortgage for the following year, without taking into account delinquent payments or prepayments.

(ii) Due on or after August 1, 1965, the amount of the annual premium payment shall be equal to one-sixth of 1 percent per annum of the amount of the average outstanding principal obligation of the mortgage for the following year, without taking into account delinquent payments or prepayments.

(d) The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments.

(e) Premiums shall be payable in cash or in debentures at par plus accrued interest. All premiums, except the first premium, are payable in advance and no refund will be made of any portion thereof except that at the time of prepayment, the Commissioner shall refund to the mortgagee for the account of the mortgagor an amount equal to the pro rata portion of the current annual mortgage insurance premium theretofore paid, which is applicable to the portion of the year subsequent to such prepayment.

(f) Upon agreement between the mortgagor and mortgagee, approved by the Commissioner, premiums due under this section may be paid directly by the mortgagor to the Commissioner. Upon such agreement, the obligation of the mortgagor to make payments to the mortgagee for mortgage insurance premiums and the obligation of the mortgagee to pay such premiums to the Commissioner shall cease so long as the agreement remains in effect and shall be reinstated upon its revocation.

(g) A mortgage may be finally endorsed for insurance after it has been assigned to the Commissioner for the purpose of making effective the military guarantee of payment and effecting an orderly closing of the transaction. In such event, them mortgage insurance premium of $1 per

project, provided in paragraph (a) of this section, shall cover both the construction period and the period of time the mortgage is held by the Commissioner, and the references in paragraphs (b), (c), and (d) of this section to the date of first principal payment shall be construed to mean the first day of the month following the date of the transfer of the mortgage from the Commissioner to another mortgagee.

§ 224.265 Insurance benefits.

All of the provisions of §207.259 of this chapter relating to the payment of insurance benefits apply to mortgages insured under this part, except in cases involving assignment of the mortgage to the Commissioner, the 1 percent deduction specified in § 207.259(b)(2)(iv) of this chapter shall not be applied in computing such benefits.

§ 224.275 Applicability to outstanding mortgages and commitments.

The provisions of this subpart shall be effective as to all mortgages with respect to which a commitment to insure is issued on or after August 15 1955.