tion and income on a form prescribed by the Secretary. (e) The mortgagor shall agree to recertify, on a form prescribed by the Secretary, as to occupancy, employment, family composition and income in accordance with 24 CFR 235.350. (f) Homeowners, who are cooperative members and have been receiving assistance payments under section 235, are not eligible for assistance payments in connection with section 235(r) since they are not eligible for a mortgage insured under that section. §235.1218 Term of assistance payment contract in connection with mortgages insured under section 235(r) of the Act. (a) Existing contracts with original terms in excess of ten years. In cases where the existing contract has an original term in excess of ten years, the term of the new assistance payments contract in connection with section 235(r) shall commence on the date of disbursement of the mortgage proceeds as certified by the mortgagee and shall continue until the contract is terminated pursuant to 24 CFR 235.375. (b) Existing ten year contracts. (1) In cases of existing ten year contracts, the term of the new assistance payments contract in connection with section 235(r) shall commence on the date of the disbursement of the mortgage proceeds as certified by the mortgagee and shall continue for the unexpired term of the existing ten year contract, or until such earlier time as the contract is otherwise terminated pursuant to 24 CFR 235.375. The mortgagor will acknowledge receipt of a notice containing the expiration date of the new assistance payments contract. (2) If the Secretary determines that the mortgagor is unable, by reason of the new contract having reached its maturity, to resume full payments due under the mortgage insured under section 235(r) of the National Housing Act, the Secretary will, to the extent of funds available pursuant to section 235(c)(3) of the Act, contract to make, and make, continued assistance payments on behalf of the mortgagor for such period as the Secretary determines to be appropriate. 221.518 Maximum interest rate. 221.519a Mortgage release provisions. 221.531 Supervision applicable to general mortgagors. 221.532 Supervision applicable to limited distribution mortgagors. 221.536 Occupancy requirements applicable to all mortgagors. 221.537 Additional occupancy requirements; preferred purchasers or tenants. 221.542a Accounting for net income. 221.543 Advance amortization. 221.546 Commercial and community facilities. 221.559 Eligibility of miscellaneous type mortgages. 221.560 Eligibility of refinanced mortgages. 221.575 Protection of work in process. [36 FR 24643, Dec. 22, 1971, as amended at 39 FR 12005, Apr. 2, 1974; 39 FR 32437, Sept. 6, 1974] §236.2 Definitions. Adjusted income. Annual Income less the following allowances, determined in accordance with HUD instructions: (1) $480 for each Dependent; (2) $400 for any Elderly Family; (3) For any Family that is not an Elderly Family but has a Handicapped or Disabled member other than the head of household or spouse, Handicapped Assistance Expenses in excess of three percent of Annual Income, but this allowance may not exceed the employment income received by Family members who are 18 years of age or older as result of the assistance to the Handicapped or Disabled Person; (4) For any Elderly Family: (i) That has no Handicapped Assistance Expenses, an allowance for Medical Expenses equal to the amount by which the Medical Expenses exceed three percent of Annual Income; (ii) That has Handicapped Assistance Expenses greater than or equal to three percent of Annual Income, an allowance for Handicapped Assistance Expenses computed in accordance with paragraph (3) of this section, plus an allowance for Medical Expenses that is equal to the Family's Medical Expenses; (iii) That has Handicapped Assistance Expenses that are less than three percent of Annual Income, an allowance for combined Handicapped Assistance Expenses and Medical Expenses that is equal to the amount by which the sum of these expenses exceeds three percent of Annual Income; and (5) Child Care Expenses. Adjusted Monthly Income. One-twelfth of Adjusted Income. Assisted admission. Admission to a unit in the program at a rent that is less than the HUD-approved market rental. Annual income. See §236.3. Basic rent. The HUD-approved monthy rent for a unit in a section 236 project determined on the basis of operating the project with payments of principal and interest at the rate of one percent per annum. It includes the cost of utility services if such charges are paid by the project owner. Child Care Expenses. Amounts anticipated to be paid by the Family for the care of children under 13 years of age during the period for which Annual Income is computed, but only where such care is necessary to enable a Family member who is 18 years of age or older to be gainfully employed or to further his or her education and only to the extent such amounts are not reimbursed. The amount deducted shall reflect reasonable charges for child care, and, in the case of child care necessary to permit employment, the amount deducted shall not exceed the amount of Annual Income received from such employment. Commissioner. The Federal Housing Commissioner or his or her authorized representative. Dependent. A member of the Family household (excluding foster children) other than the Family head or spouse, who is under 18 years of age or is a Disabled Person or Handicapped Person, or is a Full-time Student. Disabled Person. A person under a disability, as defined in section 223 of the Social Security Act (42 U.S.C. 423) or in section 102 of the Developmental Disabilities Services and Facilities Construction Amendments of 1970 (42 U.S.C. 2691()). Displacee. A person who has been displaced from an urban renewal area, or as a result of governmental action or as a result of a disaster determined by the President to be a major disaster. Elderly Family. A Family whose head or spouse (or sole member) is an Elderly, Disabled or Handicapped Person. It may include two or more Elderly, Disabled or Handicapped Persons living together, or one or more of these Persons living with one or more Live-in Aides. Elderly person. A person who is at least 62 years of age. Family. Two or more persons related by blood, marriage, or operation of law, who occupy the same dwelling unit. Full-time student. A person who is carrying a subject load that is considered full-time for day students under the standards and practices of the educational institution attended. An educational institution includes a vocational school with a diploma or certificate program, as well as an institution offering a college degree. Gross Rent. The total monthly cost of housing a Qualified Tenant, which is the sum of the Basic Rent and any Utility Allowance for the assisted unit. Handicapped Assistance Expenses. Reasonable expenses that are anticipated, during the period for which Annual Income is computed, for attendant care and auxiliary apparatus for a Handicapped or Disabled Family member, and that are necessary to enable a Family member (including the Handicapped or Disabled member) to be employed, provided that the expenses are neither paid to a member of the Family nor reimbursed by an outside source. Handicapped Person. A person having a physical or mental impairment that: (1) is expected to be of long-continued and indefinite duration, (2) substantially impedes his or her ability to live independently, and (3) is of such a nature that such ability could be improved by more suitable housing conditions. Live-in aide. A person who resides with an Elderly, Disabled, or Handicapped Person or Persons and who: (1) Is determined to be essential to the care and well-being of the Person(s); (2) is not obligated for the support of the Person(s); and (3) would not be living in the unit except to provide the necessary supportive services. (See §236.3(c) for treatment of Live-in Aide's income.) Market Rent. The HUD-approved monthly rent determined on the basis of operating the project with payments of principal, interest and mortgage insurance premium that the mortgagor is obligated to pay under the mortgage (disregarding HUD's interest reduction and rental assistance payments). It includes the cost of utility services if such charges are paid by the project owner. Medical expenses. Those medical expenses, including medical insurance premiums, that are anticipated during the period for which Annual Income is computed, and that are not covered by insurance. Net Family Assets. Net cash value after deducting reasonable costs that would be incurred in disposing of real property, savings, stocks, bonds, and other forms of capital investment, excluding interests in Indian trust land and the equity in a housing cooperative unit in which the family resides. The value of necessary items of personal property such as furniture and automobiles shall be excluded. (In cases where a trust fund has been established and the trust is not revocable by or under the control of any member of the family, the value of the trust fund will not be considered an asset so long as the fund continues to be held in trust. Any income distributed from the trust fund should be counted when determining Annual Income.) In determining Net Family Assets, owners shall in clude the value of any business or family assets disposed of by an applicant or tenant for less than fair market value (including a disposition in trust, but not in a foreclosure or bankruptcy sale) during the two years preceding the date of application for the program or recertification, as applicable, in excess of the consideration received therefor. In the case of a disposition as part of a separation or divorce settlement, the disposition will not be considered to be for less than fair market value if the applicant or tenant receives important consideration not measurable in dollar terms. Qualified Tenant. (1) For purposes of subpart A, an individual or Family whose Annual Income does not exceed 80 percent of the median income for the area, as determined by HUD with adjustment for smaller and larger families, except that HUD may establish income limits higher or lower than 80 percent of the median for the area on the basis of its findings that such variations are necessary because of the prevailing levels of construction costs, unusually high or low family incomes, or other factors. (2) The benefits of the interest reduction payments are available only to an individual or a Family renting a dwelling unit in a project owned by an eligible housing owner or occupying such a dwelling unit as a cooperative member. (3) For restrictions on financial assistance to noncitizens with ineligible immigration status, see 24 CFR part 200, subpart G. Tenant Rent. The amount payable monthly by a Qualified Tenant as rent to the owner. Where all utilities (except telephone) and other essential housing services are supplied by the owner, Tenant Rent equals Total Tenant Payment. Where some or all utilities (except telephone) and other essential housing services are not supplied by the owner and the cost thereof is not included in the amount paid as rent, Tenant Rent equals Total Tenant Payment less the Utility Allowance for tenants receiving the benefit of Rental Assistance Payments, and Tenant Rent is the monthly amount calculated under $236.55 for section 236 tenants not receiving the benefit of Rental Assistance Payments. Total Tenant Payment. For the Rental Assistance Payments Program, the monthly amount calculated under §236.735. Utility allowance. If the cost of utilities (except telephone) and other essential housing services for an assisted unit is not included in the rent paid to the housing owner but is the responsibility of the tenant occupying the unit, an amount equal to the estimate approved by HUD of the monthly cost of a reasonable consumption of such utilities and other services for the unit by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary and healthful living environment. Utility Reimbursement. The amount, if any, by which the Utility Allowance exceeds the Family's Total Tenant Payment. This term is applicable only to the Rental Assistance Program under subpart D. Welfare Assistance. Welfare or other payments to families or individuals, based on need, that are made under programs funded, separately or jointly, by Federal, State or local governments. [51 FR 21858, June 16, 1986; 51 FR 24324, July 3, 1986; 51 FR 34590, Sept. 30, 1986; 52 FR 34112, Sept. 9, 1987; 60 FR 14833, Mar. 20, 1995] EFFECTIVE DATE NOTE: At 60 FR 14833, Mar. 20, 1995, §236.2 was amended: In the definition of “Adjusted Income" by redesignating paragraphs (a), (b), (c), (d) introductory text, (d)(1), (d)(2), (d)(3), and (e), as paragraphs (1), (2), (3), (4) introductory text, (4)(1), (4)(ii), (4)(iii), and (5), respectively, and by removing the cross-reference in newly designated paragraph (4)(ii) that reads "paragraph (c) of this section" and adding in its place "paragraph (3) of this definition"; In the definition of "Handicapped Person" by redesignating paragraphs (a), (b), and (c) to read paragraphs (1), (2), and (3), respectively; In the definition of “Live-in aide" by redesignating paragraphs (a), (b), and (c), to read paragraphs (1), (2), and (3), respectively; and In the definition of “Qualified Tenant” by redesignating paragraphs (a) and (b) as paragraphs (1) and (2) respectively, and by adding a new paragraph (3). All of the above are effective June 19, 1995. §236.3 Annual Income. (a) Annual income is the anticipated total income from all sources received by the family head and spouse (even if temporarily absent) and by each additional member of the family, including all net income derived from assets for the 12-month period following the effective date of certification of income, exclusive of certain types of income as provided in paragraph (c) of this section. (b) Annual Income includes but is not limited to: (1) The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services; (2) The net income from operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as a deduction in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the Family; (3) Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in paragraph (b)(2) of this section. Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the Family. Where the Family has Net Family Assets in excess of $5,000, Annual Income shall include the greater of the actual income derived from all Net Family Assets or a percentage of the value of such Assets based on the current passbook savings rate, as determined by HUD; (4) The full amount of periodic payments received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or |