under a lease having a period of not less than 75 years to run from the date the mortgage is executed; or (3) under a lease executed by a governmental agency for the maximum term consistent with its legal authority, provided such lease has a period of not less than 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 issuance of a Mortgage Insurance Certificate or by the endorsement of the credit instrument by the Commissioner.

(f) Mortgagor in the case of an Individual Mortgage means the original borrower under a mortgage and its successors and such of its assigns as are approved by the Commissioner.

(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) Individual Mortgage means a mortgage covering an individual single-family dwelling which has been released from a Multifamily Sales Project mortgage.

(i) 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.

$227.510 Preference in sale or rental. Priority in the sale or rental of dwellings covered by a mortgage 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

the project mortgage allocable to the property as security.

[45 FR 29278, May 2, 1980, and 48 FR 12085, Mar. 23, 1983]

§ 227.540 Mortgagor minimum investment.

At the time the mortgage is insured the mortgagor shall have paid on account of the property at least 3 percent of the Commissioner's estimate of the cost of acquisition or such larger amount as the Commissioner may determine, in cash or its equivalent.

$227.545 Maximum term.

The mortgage shall come due on the first day of a month and shall have a term of not more than 30 years from the date of the beginning of amortization.

[57 FR 58351, Dec. 9, 1992]

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 D-Contract Rights and Obligations-Individual Mort

gages

§ 227.751 Cross-reference—Individual Mortgages.

(a) All of the provisions of subpart B, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to Individual Mortgages insured under section 810 of the National Housing Act except the following provisions:

Sec.

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. 203.438 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 810 of the act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund. [36 FR 24611, Dec. 22, 1971, as amended at 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]

costs.

228.295 Debenture interest rate. 228.300 Maturity of debentures. 228.305 Applicability to outstanding mortgages and commitments.

Subpart C-Servicing Responsibilities 228.400 Cross-reference.

AUTHORITY: Secs. 903, 907, National Housing Act (12 U.S.C. 1750b, 1750f); sec. 7(d), Department of Housing and Urban Development Act (42 U.S.C. 3535(d)).

SOURCE: 36 FR 24614, Dec. 22, 1971, unless otherwise noted.

Calculation of one-time MIP.

203.282 Mortgagee's late charge and interest.

203.283 Refund of one-time MIP.

203.402 Items included in payment-con

veyed properties.

203.405 Debenture interest rate.

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 section 903 of the act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund.

[36 FR 24614, Dec. 22, 1971, as amended at 47 FR 30754, July 15, 1982; 48 FR 28807, June 23, 1983]

§ 228.255 Due date of initial MIP.

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

§ 228.260 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.

§ 228.265 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]

§ 228.270 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.

§ 228.275 Payment of delinquent interest.

The mortgagee may, with the written consent of the Commissioner, apply partial payments to delinquent interest to the exclusion of prior delinquent principal payments at a rate not in excess of the interest rate applicable to debentures to which the mortgagee may be entitled. Where the partial payments are so applied, the date of default shall be 30 days after the due date of the earliest monthly payment any part of which remains unpaid.

§ 228.280 Special forbearance reliefownership of ten unit project.

The Commissioners may consent to the mortgagee entering into a written agreement with the mortgagor providing for a postponement for a period not to exceed 1 year of that part of the monthly payment which represents amortization of principal where the mortgagor is the owner of a group of properties consisting of a project of not less than 10 rental units. Such agreement shall obligate the mortgagor to deposit with the mortgagee the entire net income from all of the properties comprising the project, under arrangements satisfactory to the Commissioner. The agreement shall also obligate the mortgagor to resume monthly payments after the effective period of the agreement in such amounts as will completely amortize the mortgage indebtedness within the original maturity. The agreement shall in no way affect the amount of the annual MIP which shall continue to be calculated in accordance with the original amortization provisions.

§ 228.285 Effect of special forbearance agreement on default and MIP.

If the mortgagee withholds foreclosure proceedings against the mortgagor pursuant to the provisions of a forbearance agreement approved by the Commissioner, partial payments on the mortgage received by the mortgagee shall be applied and reapplied in the manner prescribed in such agreement. Where payments are so applied, the date of default shall be 30 days after the due date of the earliest monthly payment, any part of which remains unpaid. In such instances, the Commis

sioner may not require the payment of MIP or any portion thereof to the extent that partial payments received from the mortgagor during the period of forbearance are insufficient to pay such premiums after applying the partial payments to delinquent interest. The rate of delinquent interest shall be not in excess of the interest rate applicable to debentures to which the mortgagee may be entitled.

§228.290 Insurance

benefits-conveyed and non-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 and non-conveyed properties, except that in lieu of the allowance for foreclosure costs or for the costs of otherwise acquiring the property provided for in paragraph (f) of $203.402 for conveyed properties or in paragraphs (f) and (n) of $203.402 for non-conveyed properties, 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 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.

[36 FR 24614, Dec. 22, 1971, as amended at 52 FR 1330, Jan. 13, 1987]

228.295 Debenture interest rate.

Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate of 21⁄2 percent per annum in the case of mortgages endorsed for insurance prior to July 8, 1953, and at the rate of 234 percent per annum in the case of mortgages endorsed for insurance on or after July 8, 1953 and pursuant to a commitments issued prior to May 29, 1954, and at the rate of 21⁄2 per