APPLICATION AND CERTIFICATION

§ 232.5 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 an approved mortgagee and by the sponsor of such project. Such application 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.

[39 FR 12004, Apr. 2, 1974, as amended at 40 FR 22829, May 27, 1975]

§ 232.6 Required certificates.

(a)(1) Except as provided in paragraph (a)(2) of this section, every application for insurance of a nursing home or an intermediate care facility shall be accompanied by a certificate executed by the appropriate State agency for the State in which project is or will be located, designated in accordance with section 604(a)(1) or section 1521 of the Public Health Service Act. Such certificate shall evidence that:

(i) There is need for the project.

(ii) There are in force in the State or other political subdivision of the State reasonable minimum standards for licensure and for methods of operation for the project.

(2) If an appropriate State agency does not exist, or if the State agency exists but is not empowered to provide a certification that there is a need for the nursing home or intermediate care facility or combined home and facility as required by paragraph (a)(1)(i), the Secretary shall not insure any mortgage under this section unless the State in which the home or facility or combined home and facility is located has conducted or commissioned and paid for the preparation of an independent study of market need and feasibility that

(i) Is prepared in accordance with the principles established by the American Institute of Certified Public Accountants;

(ii) Assesses, on a marketwide basis, the impact of the proposed home or facility or combined home and facility on, and its relationship to, other health care facilities and services, the percentages of excess beds, demographic projections, alternative health care delivery systems and the reimbursement structure of the home, facility, or combined home and facility;

(iii) Is addressed to and acceptable to the Secretary in form and substance; and

(iv) In the event the State does not prepare the study, is prepared by a financial consultant who is selected by the State or the applicant for insurance and is approved by the Secretary. The proposed mortgagor may reimburse the State for the cost of the independent feasibility study required by this paragraph.

(b) In the case of a small intermediate care facility for the mentally retarded or developmentally disabled, housing less than 50 individuals, the State program agency or agencies responsible for licensing, certifying, financing, or monitoring the facility or home may, in lieu of the certification of need requirement of paragraph (a)(1)(i) of this section, provide the Secretary with written support identifying the need for the facility or home.

(c) Every application for insurance involving a board and care home shall be accompanied by a statement executed by the appropriate State agency for the State in which the project is or will be located, certifying that the State is in compliance with section 1616(e) of the Social Security Act.

(d) No mortgage shall be insured under this subpart unless the Commissioner has been furnished with acceptable assurance from the appropriate State agency that the prescribed standards of licensure and operation will be applied and enforced with respect to any project for which mortgage insurance is provided.

[53 FR 15672, May 3, 1988, as amended at 53 FR 33735, Aug. 31, 1988; 53 FR 40221, Oct. 14, 1988]

§ 232.7 Additional requirements for assisted living facilities.

In the case of an assisted living facility, or any such facility combined with any other home or facility, the Secretary shall not insure any mortgage under this part unless:

(a) The Secretary determines that the level of financing acquired by the mortgagor and any other resources available for the facility will be sufficient to ensure that the facility contains the dwelling units and facilities for the provision of supportive services in accordance with §232.1(m);

(b) The mortgagor provides assurances satisfactory to the Secretary that no dwelling unit in the facility will be occupied by more than one person without the consent of all occupant(s) of such dwelling unit; and

(c) The appropriate state licensing agency for the state, municipality or other political subdivision in which the facility is or is to be located provides such assurances as the Secretary considers necessary that the facility will comply with any applicable standards and requirements for such facilities. [59 FR 61226, Nov. 29, 1994]

FEES AND CHARGES

§ 232.10 Application-commitment fees. (a) Application fee-SAMA letter. An application fee of $1.00 per thousand dollars of the requested mortgage amount shall accompany the application for a SAMA letter.

(b) Application fee-conditional commitment. An application-commitment fee of $1.00 per thousand dollars of the requested mortgage amount shall accompany the application for conditional commitment in cases in which the application fee for an unexpired SAMA letter has been collected. A fee of $2 per one thousand dollars of the requested mortgage amount shall accompany the application for conditional commitment in cases in which the SAMA application fee has been paid but the SAMA letter has expired or in cases in which a SAMA application fee has not been paid.

(c) Application fee-firm commitment. An application for firm commitment shall be accompanied by an applicatic *ment fee which, when

added to prior fees received in connection with applications for a SAMA letter or a conditional commitment, will aggregate $3 per thousand dollars of the requested mortgage amount to be insured.

(d) The payment of an applicationcommitment fee shall not be required in connection with an insured mortgage involving the sale by the government of housing or property acquired, held or contracted, pursuant to the Atomic Energy Community Act of 1955, as provided in §207.31(b)(4) of this chapter.

[39 FR 12004, Apr. 2, 1974]

$232.11 Rejection of an application.

A significant deviation in an application from the terms or findings arrived at in an earlier stage, as evidenced by the SAMA letter or conditional commitment, shall be grounds for rejection of an application for conditional or firm commitment, respectively. The fees paid to such date shall be considered as having been earned notwithstanding such rejection.

[39 FR 12004, Apr. 2, 1974]

§ 232.12 Inspection fee.

The firm commitment may provide for the payment of an inspection fee in an amount not to exceed $5 per thousand dollars of the commitment. If an inspection fee is required, it shall be paid as follows:

(a) If the case involves the insurance of advances, it shall be paid at the time of initial endorsement.

(b) If the case involves insurance upon completion, it shall be paid prior to the date construction is begun.

§ 232.13 Fees on increases.

(a) Increase in firm commitment prior to endorsement. An application, filed prior to initial endorsement (or prior to endorsement in a case involving insurance upon completion), for an increase in the amount of an outstanding firm commitment shall be accompanied by a combined additional application and commitment fee. This combined additional fee shall be in an amount which will aggregate $3 per thousand dollars of the amount of the requested increase. If an inspection fee was re

quired in the original commitment, an additional inspection fee shall be paid in an amount computed at the same dollar rate per thousand dollars of the amount of increase in commitment as was used for the inspection fee required in the original commitment. When insurance of advances is involved, the additional inspection fee shall be paid at the time of initial endorsement. When insurance upon completion is involved, the additional inspection fee shall be paid prior to the date construction is begun or if construction has begun, it shall be paid with the application for increase.

(b) Increase in mortgage between initial and final endorsement. Upon an application, filed between initial and final endorsement, for an increase in the amount of the mortgage, either by amendment or by substitution of a new mortgage, a combined additional application and commitment fee shall accompany the application. This combined additional fee shall be in an amount which will aggregate $3 per thousand dollars of the amount of the increase requested. If an inspection fee was required in the original commitment, an additional inspection fee shall accompany the application in an amount not to exceed $5 per thousand dollars of the amount of the increase requested.

(c) Loan to cover operating losses. In connection with a loan to cover operating losses occurring during the first 2 years following completion of the project, a combined application and commitment fee of $3 per thousand dollars of the amount of the loan applied for shall be submitted with the application for the commitment. No inspection fee shall be required.

(d) Reopening of expired commitments. An expired conditional or firm commitment may be reopened if a request for reopening is received by the Commissioner within 90 days of the expiration of the commitment. The reopening request shall be accompanied by a fee of 50 cents per thousand dollars of the amount of the expired commitment. If the reopening request is not received by the Commissioner within the required 90-day period, a new application, accompanied by the required applica

tion and commitment fee, must be submitted.

§ 232.13a Transfer fee.

Upon application for approval of a transfer of physical assets or the substitution of mortgagors, a transfer fee of 50 cents per thousand dollars shall be paid on the original face amount of the mortgage in all cases, except that a transfer fee shall not be paid where both parties to the transfer transaction are nonprofit organizations.

8232.14 Refund of fees.

If the amount of the commitment issued or increase in mortgage granted is less than the amount applied for, the Commissioner shall refund the excess amount of the application and commitment fees submitted by the applicant. If an application is rejected before it is assigned for processing, or in such other instances as the Commissioner may determine, the entire application and commitment fees or any portion thereof may be returned to the applicant. Commitment, inspection and reopening fees may be refunded, in whole or in part, if it is determined by the Commissioner that there is a lack of need for the housing or that the construction or financing of the project has been prevented because of condemnation proceedings or other legal action taken by a governmental body or public agency, or in such other instances as the Commissioner may determined. A transfer fee may be refunded only in such instances as the Commissioner may determine.

§ 232.15 Maximum fees and charges by mortgagee.

The mortgagee may collect from the mortgagor the amount of the fees provided for in this subpart. The mortgagee may also collect from the mortgagor an initial service charge in an amount not to exceed 2 percent of the original principal amount of the mortgage, to reimburse the mortgagee for the cost of closing the transaction. Any additional charges or fees collected from the mortgagor shall be subject to prior approval of the Commissioner.

§ 232.17 Fees not required.

The payment of an application, commitment, inspection, or reopening fee shall not be required in connection with the insurance of a mortgage involving the sale by the Secretary of any property acquired under any section or title of the Act.

[41 FR 14861, Apr. 8, 1976]

ELIGIBLE MORTGAGORS

§ 232.20 Eligible mortgagors.

(a) In general. All mortgagors must be approved by the Commissioner and must possess the legal powers necessary and incidental to operating the project, unless a mortgagor leases the property or project to a qualified operator, in which case the lessee must be approved by the Commissioner and must possess the legal powers necessary and incidental to operating the project.

(b) Mortgagors with projects assisted through the Low-Income Housing Tax Credit program or receiving other government assistance. Mortgagors with board and care projects assisted through the Low-Income Housing Tax Credit program or receiving other government assistance (as defined in 24 CFR 12.30) may be regulated by the Commissioner as limited distribution mortgagors. [56 FR 11051, Mar. 14, 1991]

§ 232.21 Disclosure and verification of Social Security and Employer Identification Numbers.

To be eligible for mortgage insurance under this subpart, the mortgagor must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.

(Approved by the Office of Management and Budget under control number 2502-0118) [54 FR 39695, Sept. 27, 1989]

ELIGIBLE MORTGAGES

§ 232.25 Mortgage forms.

(a) Approval of forms. The mortgage shall be executed upon a form approved by the Commissioner for use in the jurisdiction where the project is located.

(b) Changes in form. No changes in the approved form shall be made without the prior written approval of the Commissioner.

§ 232.25a Eligibility of property.

The mortgage, to be eligible for insurance, shall be on property located in a State, as defined in §232.1(h). The mortgage shall be on real estate held: (a) In fee simple; or

(b) On the interest of the lessee under a lease for not less than ninety-nine years which is renewable; or

(c) Under a lease having a period of not less than fifty-five years to run from the date the mortgage is executed; or

(d) Under a lease executed by a governmental agency, an Indian, an Indian tribe, or such other lessor as the Commissioner may approve for the maximum term consistent with the legal authority for the execution of such a lease, provided that the term of any such lease shall run for a period of not less that fifty years from the date the mortgage is executed.

[36 FR 24618, Dec. 22, 1971, as amended at 44 FR 23067, Apr. 18, 1979; 50 FR 4647, Feb. 1, 1985]

§ 232.26 Mortgage lien.

The mortgagor shall certify at the final endorsement of the mortgage for insurance as to each of the following:

(a) That the mortgage is a first lien upon and covers the entire project, including the equipment financed with mortgage proceeds.

(b) That the property upon which the improvements have been made or constructed, and the equipment financed with mortgage proceeds, are free and clear of all liens other than the insured mortgage and such other liens as may be approved by the Commissioner.

(c) That the certificate sets forth all unpaid obligations in connection with the mortgage transaction, the purchase of the mortgaged property, the construction or rehabilitation of the project or the purchase of the equipment financed with mortgage proceeds. § 232.27 Maximum mortgage maturity.

The mortgage shall have a maturity not to exceed 40 years from the beginning of amortization and shall contain

amortization or sinking fund provisions satisfactory to the Commissioner.

[37 FR 5021, Mar. 9, 1972]

§ 232.28 Payment requirements.

(a) Method of payment. The mortgage shall provide for payments on the first day of each month on account of interest and principal in accordance with an amortization plan as agreed upon by the mortgagor, the mortgagee and the Commissioner.

(b) Date of first payment to principal. The Commissioner shall estimate the date of the first payment to principal so that the lapse of time between completion of the project and commencement of amortization will not be longer than necessary to obtain a sustaining level of operation.

§ 232.29 Agreed interest rate.

(a) The mortgage shall bear interest at the rate agreed upon by the mortgagee and the mortgagor.

(b) Interest shall be payable in monthly installments on the principal amount of the mortgage outstanding on the due date of each installment.

(c) The amount of any increase approved by the Commissioner in the mortgage amount between initial and final endorsement in excess of the amount that the Commissioner had committed to insure at initial endorsement shall bear interest at the rate agreed upon by the mortgagee and the mortgagor.

[36 FR 24618, Dec. 22, 1971, as amended at 49 FR 19458, May 8, 1984]

§ 232.30 Maximum mortgage amounts for new construction and substantial rehabilitation.

The mortgage for a project involving proposed new construction or substantial rehabilitation by a profit motivated mortgagor shall involve a principal obligation not in excess of 90 percent of the Commissioner's estimate of the value of the project, including equipment to be used in the operation, when the proposed improvements are completed and the equipment is installed. The mortgage for a project involving proposed new construction or substantial rehabilitation by a private

nonprofit mortgagor shall involve a principal obligation not in excess of 95 percent of such value, including equipment.

[59 FR 61227, Nov. 29, 1994]

$232.31 Increased mortgage amounts.

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.

[56 FR 18949, Apr. 24, 1991]

§ 232.31a Loans to cover operating loss.

(a) Loans to cover operating loss during first two years. (1) When the Commissioner determines that an operating loss has occurred during the first two years following completion of the project, the Commissioner may, in his or her discretion, accept for insurance under this part, a loan to cover the 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 expenses of maintenance and operation of the project (excluding depreciation) exceeds the project income.

(2) 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.

(3) The loan may bear interest at such rate agreed upon by the mortgagee and the mortgagor. Interest shall be payable in monthly installments on the principal then outstanding.

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

(b) Other operating loss loans. In addition to the insurance of loans to cover two-year operating losses under para