agreement, approved by the Commissioner. [59 FR 61228, Nov. 29, 1994] § 232.903 Maximum mortgage limitations. Notwithstanding the maximum mortgage limitations set forth in §232.30, a mortgage within the limits set forth in this section shall be eligible for insurance under this subpart. (a) Value limit. The mortgage shall involve a principal obligation of not in excess of eighty-five percent (85%) for a profit motivated mortgagor (ninety percent (90%) for a private nonprofit mortgagor) of the Commissioner's estimate of the value of the project, including major movable equipment to be used in its operation and any repairs and improvements. The Commissioner's estimate of value shall result from consideration of: (1) Estimated market value of the Project by capitalization, (2) Estimated market value of the Project by direct sales comparison, and (3) Total estimated replacement cost of the Project. In the event the mortgage is secured by a leasehold estate rather than a fee simple estate, the value of the property described in the mortgage shall be the value of the leasehold estate (as determined by the Commissioner) which shall in all cases be less than the value of the property in fee simple. (b) Debt service limit. The insured mortgage shall involve a principal obligation not in excess of the amount that could be amortized by eighty-five percent (85%) for a profit motivated mortgagor (ninety percent (90%) for a private nonprofit mortgagor) of the net projected project income available for payment of debt service. Net projected Project income available for debt service shall be determined by reducing the Commissioner's estimated gross income for the Project by a vacancy and collection loss factor and by the cost of all estimated operating expenses, including deposits to the reserve for replacements and taxes. (c) Project to be refinanced-additional limit. In addition to meeting the requirements of paragraphs (a) and (b) of this section, if the Project is to be refinanced by the insured mortgage (i.e., without a change of ownership or with the Project sold to a purchaser who has an identity of interest as defined by the Commissioner with the seller with the purchase to be financed with the insured mortgage), the maximum mortgage amount must not exceed the cost to refinance the existing indebtedness, which will consist of the following items, the eligibility and amounts of which must be determined by the Commissioner: (1) The amount required to pay off the existing indebtedness; (2) The amount of the initial deposit for the reserve fund for replacements; (3) Reasonable and customary legal, organization, title, and recording expenses, including mortgagee fees under § 232.15; (4) The estimated repair costs, if any; (5) Architect's and engineer's fees, municipal inspection fees, and any other required professional or inspection fees. (d) Project to be acquired—additional limit. In addition to meeting the requirements of paragraphs (a) and (b) of this section, if the project is to be acquired by the mortgagor and the purchase price is to be financed with the insured mortgage, the maximum amount must not exceed eighty-five percent (85%) for a profit motivated mortgagor (ninety percent (90%) for a private nonprofit mortgagor) of the cost of acquisition as determined by the Commissioner. The cost of acquisition shall consist of the following items, to the extent that each item (except for item numbered (1)) is paid by the purchaser separately from the purchase price. The eligibility and amounts of these items must be determined in accordance with standards established by the Commissioner. (1) Purchase price is indicated in the purchase agreement; (2) An amount for the initial deposit to the reserve fund for replacements; (3) Reasonable and customary legal, organizational, title, and recording expenses, including mortgagee fees under $232.15; (4) The estimated repair cost, if any; (5) Architect's and engineer's fees, municipal inspection fees, and any other required professional or inspection fees. [53 FR 33735, Aug. 31, 1988, as amended at 59 FR 61228, Nov. 29, 1994] § 232.904 Term of the mortgage. Notwithstanding the provisions of §232.27, a mortgage insured under this subpart must have a maturity satisfactory to the Commissioner which is not less than 10 years, nor more than the lesser of 35 years or 75 percent of the estimated remaining economic life of the physical improvements. The term of the mortgage will begin on the first day of the second month following the date of endorsement of the mortgage for insurance. § 232.905 Labor standards and prevailing wage requirements. The provisions of §§ 232.70-232.74 of this part shall not apply to mortgages insured under commitments issued in accordance with this subpart. § 232.906 Processing and commitment. Notwithstanding the provisions of §§ 232.5, 232.10 and 232.12 of this part, a mortgage insured under this subpart shall meet the following application's commitment, inspection and fee requirements. (a) Application. 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 application shall be submitted to the local HUD office on an FHA approved form. No application shall be considered unless accompanied by the exhibits required by the form. An application may, at the option of the applicant, be submitted for a firm commitment omitting the conditional commitment stage. An application may be made for a commitment which provides for the insurance of the mortgage upon completion of the improvements or for a commitment which provides, in accordance with standards established by the Commissioner, for the completing of specified repairs and improvements after endorsement. (b) Application fee-conditional commitment. An application-commitment fee of $2 per thousand dollars of the requested mortgage amount shall accom pany an application for conditional commitment. (c) Application fee-firm commitment. An application for firm commitment shall be accompanied by an application-commitment fee of $3 per thousand dollars of the requested mortgage amount to be insured less the amount of any fee previously received for a conditional commitment. (d) Inspection fee. Where an application provides for the completion of repairs and improvements, an inspection fee of up to one percent (1%) of the cost of the repairs and improvements may be charged by the Commissioner. Subpart G-Servicing Responsibilities— Homes 233.950 Cross-reference. AUTHORITY: Secs. 211, 233, National Housing Act (12 U.S.C. 1715b, 1715x); sec. 7(d), Department of Housing and Urban Development Act (42 U.S.C. 3535(d)). SOURCE: 36 FR 24626, Dec. 22, 1971, unless otherwise noted. Subpart A-Eligibility $233.1 Scope of subpart. Mortgages and loans financing construction or rehabilitation of one- to four-family dwellings (or one- to eleven-family dwellings in the case of mortgages or loans meeting the requirements of section 220 of the Act) and which involve the utilization and testing of advanced technology in housing design, material or construction or experimental property standards for neighborhood design, may be insured under section 233 of the Act. To be eligible, a mortgage or loan shall also meet the requirements of the applicable home mortgage or home improvement loan program under section 203, 213, 220, 221 or 234 of the Act. $233.5 Cross-reference. (a) To be eligible for insurance under this subpart, a mortgage or home improvement loan shall meet the eligibility requirements for insurance under $203.1 et seq. (part 203, subpart A); §213.501 et seq. (part 213, subpart C); $220.1 et seq. (part 220, subpart A); §221.1 et seq. (part 221, subpart A); §234.1 et seq. (part 234, subpart A); §235.1 et seq. (part 235, subpart A); §237.1 et seq. (part 237, subpart A); or §809.1 et seq. (part 809, subpart A) of this chapter, except that: (1) The prescribed tests of economic soundness or acceptable risk shall not be applicable. (2) In lieu of establishing mortgage limits upon the basis of a percentage of the Commissioner's estimate of appraised value, or replacement cost, or cost of repair and rehabilitation, as required by the applicable section under which the mortgage or loan would otherwise be eligible, the mortgage limits shall be determined by applying the percentage prescribed by the pertinent section to the following: (i) In cases involving new construction, such percentage shall be applied to the Commissioner's estimate of the cost of replacing the property using comparable conventional design, materials, and construction, or of using advanced housing technology or experimental property standards, whichever is the lesser. (ii) In cases involving repair and rehabilitation, such percentage shall be applied to the sum of: (a) The Commissioner's estimate of the value of the property before repair and rehabilitation; plus (b) The lesser of either the Commissioner's estimate of the cost of replacing the improvements using comparable conventional design, materials, and construction, or of using advanced housing technology or experimental property standards. (3) The limitations upon maximum mortgage amount in a case involving a nonoccupant owner shall not be applicable. (4) In cases involving home improvement loans, instead of establishing mortgage limits upon the basis of the Commissioner's estimate of the cost of such improvements, the limits shall be determined on the basis of the Commissioner's estimate of the cost of replacing the improvements using comparable conventional design, materials, and construction, or of using advanced housing technology or experimental property standards, whichever is the lesser. (b) For the purposes of this subpart, all references in parts 203, 213, 220, 221, 234, 235, 237, and 809 of this chapter to sections 203, 213, 220, 221, 234, 235, 237, and 809 of the National Housing Act shall be construed to refer to section 233 of the Act. [36 FR 24626, Dec. 22, 1971, as amended at 47 FR 16779, Apr. 20, 1982; 48 FR 11941, Mar. 22, 1983; 57 FR 58352, Dec. 9, 1992] material, or construction, or experimental property standards for neighborhood design. (b) The Commissioner shall make determinations as follows: (1) That the property is an acceptable risk, giving consideration to the need for testing advanced housing technology or experimental property standards. (2) That the utilization and testing of the advanced technology or experimental property standards involved will provide data or experience which the Commissioner deems to be significant in reducing housing costs or improving housing standards, quality, livability, or durability or improving neighborhood design. (c) The dwelling shall be approved for insurance by the Commissioner prior to the beginning of construction or repair, rehabilitation or improvement. § 233.30 Agreements, easements. covenants and Prior to insurance, the mortgagor or borrower shall execute such agreements, covenants and easements running with the land as the Commissioner shall determine are necessary to permit the Commissioner to make inspections and technical observations of the experimental features of the project. WAIVERS § 233.248 Waivers. The Secretary in any individual case may waive any requirement of subparts A and C of this part 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-Homes § 233.251 Cross-reference. (a) Mortgages and home improvement loans insured under the experimental home mortgage insurance program shall be governed by the provisions of the regulations covering contract rights and obligations, as they respectively relate to the several mortgage or home improvement loan programs set forth in §233.1 of this part, except that provisions of the foregoing regulations concerning mutuality of an insurance fund shall not apply. (b) For the purpose of this subpart, all of the references in §203.251 et seq. (part 203, subpart B); §213.751 et seq. (part 213, subpart D); §220.251 et seq. (part 220, subpart B); §221.251 et seq. (part 221, subpart B); $234.251 et seq. (part 234, subpart B); §235.201 et seq. (part 235, subpart B); §237.201 et seq. (part 237, subpart B); or §809.251 et seq. (part 809, subpart B) of this chapter to: (1) Section 203, 213, 220, 221, 234, 235, 237, or 809 shall be construed to refer to section 233 of the Act; and (2) The Mutual Mortgage Insurance Fund, the Cooperative Management Housing Insurance Fund, or the Special Risk Insurance Fund shall be construed to refer to the General Insurance Fund. § 233.253 Application for insurance benefits and accompanying fiscal data. (a) Insured mortgages. Where an insured mortgage is involved, the provisions of §§ 203.350 through 203.391 of this chapter govern the filing of an application for insurance benefits and the items to be filed with the application. (b) Insured home improvement loans. Where an insured home improvement loan is involved, the provisions of § 203.476 of this chapter (relating to claim application and items to be filed) shall be applicable. § 233.275 Method of paying insurance benefits. If the application for insurance benefits is acceptable to the Commissioner, all of the insurance claim, in a case involving either an insured mortgage or an insured home improvement loan, shall be paid in cash unless the mortgagee files a written request with the application for payment in debentures. If such a request is made, all of the claim shall be paid by issuing debentures and by making a cash payment adjusting any differences between the total amount of the claim and the amount of the debentures issued. Subpart C-Assistance Payments § 233.401 Cross-reference. (a) Section 235 type home mortgages. All of the provisions of subpart C, part 235, concerning assistance payments pursuant to section 235 of the Act, apply with full force and effect to a mortgage insured under subparts A and B of this part, if the mortgage is insured as meeting the eligibility requirements of §235.1 et seq. (part 235, subpart A), except as such requirements are modified by §233.5. (b) Section 237 type come mortgages. All of the provisions of subpart C, part 237, concerning assistance payments in connection with a mortgage insured under section 237, apply with full force and effect to a mortgage insured under subparts A and B of this part, if the mortgage is insured as meeting the eligibility requirements of §237.1 et seq. (part 237, subpart A), except as such requirements are modified by §233.5. Subpart D-Eligibility 233.501 Scope of subpart. Mortgages and loans financing construction or rehabilitation of multifamily projects which involve the utilization and testing of advanced technology in housing design, material or construction or experimental housing standards for neighborhood design, may be insured under section 233 of the Act. To be eligible, a mortgage or loan shall also meet the requirements of the applicable multifamily project or project improvement loan insurance program under sections 207, 213, 220, 221, 231, 232 or 234 of the Act. § 233.505 Cross-reference. (a) To be eligible for insurance under this subpart, a mortgage or project improvement loan shall meet the eligibility requirements for insurance under § 207.1 et seq. (part 207, subpart A); §213.1 et seq. (part 213, subpart A); §220.501 et seq. (part 220, subpart C); §221.501 et seq. (part 221, subpart C); §231.1 et seq. (part 231, subpart A); §232.1 et seq. (part 232, subpart A); §234.501 et seq. (part 234, subpart C); §235.501 et seq. (part 235, subpart D); §236.1 et seq. (part 236, subpart A); §241.1 et seq. (part 241, subpart A); §810.1 et seq. (part 810, subpart A); §1000.1 et seq. (part 1000, subpart A); or §1100.1 et seq. (part 1100, subpart A) of this chapter, except that: (1) The prescribed tests of economic soundness or acceptable risk shall not be applicable. (2) In lieu of establishing mortgage limits upon the basis of a percentage of the Commissioner's estimate of appraised value, or replacement cost, or cost of repair and rehabilitation, as required by the applicable section under which the mortgage or loan would otherwise be eligible, the mortgage limits shall be determined by applying the percentage prescribed by the pertinent section to the following: (i) In cases involving new construction, such percentage shall be applied to the Commissioner's estimate of the cost of replacing the property using comparable conventional design, materials, and construction, or of using advanced housing technology or experimental property standards, whichever is the lesser. (ii) In cases involving repair and rehabilitation, such percentage shall be applied to the sum of: (a) The Commissioner's estimate of the value of the property before repair and rehabilitation; plus (b) The lesser of either the Commissioner's estimate of the cost of replacing the improvements using comparable conventional design, materials, and construction, or of using advanced housing technology or experimental property standards. (3) In cases involving project improvements, instead of establishing mortgage limits upon the basis of the Commissioner's estimate of the cost of such improvements, the limit shall be |