203.423 Distribution of distributive shares. 203.424 Maximum amount of distributive

shares.

203.425 Finality of determination. 203.438 Mortgages on Indian land insured pursuant to section 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 act shall be construed to refer to section 809 of the act and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund. [36 FR 24609, Dec. 22, 1971, as amended at 48 FR 28807, June 23, 1983; 51 FR 21875, 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 34812, Aug. 24, 1990]

§ 226.252 Substitute mortgagors.

(a) Selling mortgagor. 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 pursuant to 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 non-occupant 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 if the mortgage executed by the original mortgagor of the mortgage 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) Direct endorsement. Mortgagees approved for participation in the Direct Endorsement program under § 203.3 may, subject to limitations established by the Commissioner, themselves approve an appropriate substitute mortgagor under this section for mortgages which they own or service, and need not obtain further specific approval from the Commissioner.

(f) Definition. For purposes of this section, the term substitute mortgagor is defined as provided in §203.258(f) of this chapter.

[55 FR 34812, Aug. 24, 1990, as amended at 57 FR 58351, Dec. 9, 1992]

50 years to run from the date the mortgage is executed; and the term first mortgage means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(e) Insured mortgage means a mortgage which has been insured by the endorsement of the credit instrument by the Commissioner.

(f) Mortgagor means any individual or private entity approved by the Commissioner, which until the termination of all obligations of the Commissioner under the insurance contract and during such further period of time as the Commissioner shall be the owner, holder, or reinsurer of the mortgage, is regulated or restricted by the Commissioner as to rents or sales, charges, capital structure, rate of return, and methods of operation.

(g) Mortgagee means the original lender under a mortgage, its successors and such of its assigns as are approved by the Commissioner, and includes the holders of the credit instruments issued under a trust mortgage or deed of trust pursuant to which such holders act by and through a trustee herein named.

(h) Multifamily Sales Project means a project constructed under a blanket mortgage, covering a group of not less than eight single-family dwellings constructed for eventual sale to individual purchasers.

(i) Multifamily Rental Project means a project constructed for the purpose of providing rental housing accommodations for eligible tenants.

(j) Maturity date means the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage.

§227.10 Preference in sale or rental.

Priority in the sale or rental of dwellings covered by amortgage insured under this subpart shall be given to the following classes of persons:

(a) Military personnel;

(b) Essential civilian employees of the Armed Services;

(c) Employees of contractors for the Armed Services.

(d) Essential personnel employed or assigned to duty at a research or development installation of the National Aeronautics and Space Administration or the U.S. Nuclear Regulatory Commission or employees of a contractor of such Administration or Commission who are employed at a research or development installation.

$227.15 Insurance risk and economic

soundness.

Any mortgage may be accepted for insurance by the Commissioner without regard to any requirement that the property or project be economically sound.

$227.20 Reduced mortgage amountleaseholds.

In the event the mortgage is secured by a leasehold estate rather than a fee simple estate, the value or replacement cost of the property described in the mortgage shall be the value or replacement cost of the leasehold estate (as determined by the Commissioner) which shall in all cases be less than the value or replacement cost of the property in fee simple. The mortgage amount shall be adjusted to the next lowest mortgage amount as stipulated in §227.751 for individual mortgages. [41 FR 11287, Mar. 18, 1976]

§ 227.25 Eligible mortgages-form.

(a) Form. The mortgage must be executed upon a form approved by the Commissioner for use in the jurisdiction in which the property covered by the mortgage is situated and must be a first lien upon property that conforms with property standards prescribed by the Commissioner.

(b) Disbursement of mortgage proceeds. The entire principal amount of the mortgage must have been disbursed to the mortgagor or to his creditors for his account and with his consent.

$227.27 Prepayment privilege; prepayment and late charge.

All of the provisions of § 207.14 of this chapter relating to prepayment and late charge shall apply to mortgages insured under this part, except that no prepayment charge shall be made for

A mortgage on a Multifamily Rental Project may involve a principal obligation not in excess of the lesser of the following:

(a) 90 percent of the standard value;

(b) For such part of the property or project attributable to dwelling use, an amount per family unit, depending on the number of bedrooms, which may be:

(1) $9,000 without a bedroom.

(2) $12,500 with one bedroom.

(3) $15,000 with two bedrooms.

(4) $18,500 with three or more bed

A mortgage on a Multifamily Sales Project may involve a principal obligation not in excess of a sum computed on the basis of a separate mortgage for each single-family dwelling comprising the project, equal to the total of each of the maximum principal obligations of such mortgages which would meet the requirements of section 203(b)(2) of the Act if the mortgagor were the owner and occupant who had made any required payment on account of the property described in such section of the Act; provided that special escrow arrangements, satisfactory to the Commissioner, are made by the mortgagor with respect to mortgage proceeds in excess of 90 percent of the estimated value.

[39 FR 32436, Sept. 6, 1974]

(a) In any geographical area where the Commissioner finds cost levels so require, the Commissioner may increase, by not to exceed 45 percent the dollar amount limitations set forth in §227.35(b).

(b) If the Commissioner finds that because of high costs in Alaska, Guam, Hawaii, or the Virgin Islands it is not feasible to construct dwellings without the sacrifice of sound standards of construction, design, and livability within the limitations of maximum mortgage amounts provided in this section, the principal obligation of mortgages may be increased in such amounts as may be necessary to compensate for such costs, but not to exceed in any event the maximum, including high cost area increases, if any, otherwise applicable by more than one-half thereof.

[36 FR 24611, Dec. 22, 1971, as amended at 39 FR 32436, Sept. 6, 1974; 56 FR 18949, Apr. 24, 1991]

$227.47 Loans to cover 2-year operating loss.

(a) Operating loss determination. When the Commissioner determines that an operating loss has occurred during the first 2 years following completion of the project, he may, in his discretion, accept for insurance under this part, a loan to cover such loss. For the purposes of this section, an operating loss shall occur when the Commissioner determines that the total of the taxes, interest on the mortgage debt, mortgage insurance premiums, hazard insurance premiums, and the expense of maintenance and operation of the project (excluding depreciation) exceeds the project income.

(b) Security instrument. The loan shall be secured by an instrument in a form approved by the Commissioner for use in the jurisdiction in which the project is located.

(c) Maximum interest rate. The loan may bear interest at such rate as may be agreed upon by the mortgagee and mortgagor, but in no case shall such rate exceed the rate in effect under § 207.7 of this chapter on the date the commitment is issued. Interest shall be payable in monthly installments on the principal then outstanding.

(d) Maturity. The loan shall be limited to a term not exceeding the unexpired term of the original mortgage.

$227.50 Mortgage release provisions.

A mortgage executed by a mortgagor of a Multifamily Sales Project shall provide that at any time after five years from the date the project became available for initial occupancy or at such earlier date as the Commissioner may authorize, the property underlying such mortgage may be released, in whole or in part, upon payment of the unpaid balance of the blanket mortgage allocable to the property released. Where the mortgage does not contain release provisions, no property shall, except with the consent of the Commissioner, be released from the lien thereof so long as the mortgage insurance is in force.

§227.55 Cost certification.

All of the provisions of §§ 207.25 through 207.30 of this chapter shall be applicable to a Multifamily Rental Project, but such provisions shall not be applicable to a Multifamily Sales Project.

Subpart B-Contract Rights and Obligations-Projects

§ 227.251 Cross-reference-Multifamily, Sales or Rental Project.

(a) All of the provisions of subpart B, part 207 of this chapter covering mortgages insured under section 207 of the National Housing Act apply to Multifamily, Sales, or Rental Project mortgages insured under section 810 of the National Housing Act.

(b) For the purposes of this part, all references in part 207 of this chapter to section 207 of the Act shall be construed to refer to section 810 of the Act.

[36 FR 24611, Dec. 22, 1971, as amended at 37 FR 8663, Apr. 29, 1972]

Subpart C-Eligibility

Require

ments-Individual Mortgages

§ 227.501 Cross-reference.

(a) General. All of the provisions of §§ 202.11 to 202.14, and §§ 202.16 to 202.19

of this chapter shall govern the eligibility, qualifications and requirements of mortgagees under this subpart.

(b) Individual Mortgages. (1) All of the provisions of subpart A, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to Individual Mortgages insured under this subpart except the following provisions:

Sec.

203.17 Mortgage provisions.

203.18 Maximum mortgage amount. 203.18a Solar energy systems.

203.18b Increased mortgage amount. 203.19 Mortgagor's minimum investment. 203.28 Economic soundness of project.

203.29 Eligible mortgages in Alaska, Guam

or Hawaii.

203.40 Location of property. 203.42 Rental properties.

203.43 Eligibility of miscellaneous mortgages.

type

203.43a Eligibility of housing in declining urban areas.

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. 203.50 Eligibility of rehabilitation loans. 203.51 Negotiated interest rate.

(2) 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 810 of such Act.

[36 FR 24611, Dec. 22, 1971, as amended at 45 FR 76389, Nov. 18, 1980; 47 FR 16779, Apr. 20, 1982; 51 FR 21875, June 16, 1986; 52 FR 8070, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48204, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 57 FR 58351, Dec. 9, 1992]